What is Union Budget?

The Union Budget of India, also known as the Annual Financial Statement under Article 112 of the Indian Constitution, is presented annually by the Finance Minister on the last working day of February. This document outlines the government's estimated revenue and expenditure for the upcoming fiscal year, starting April 1. The budget plays a crucial role in setting the economic agenda, influencing fiscal policies, and determining resource allocation across sectors. In this blog, we will understand everything about the Union Budget of India, its importance, objectives, and more in detail. 

Budget Classification

The union budget definition offers information regarding the government's estimated receivables and payables for a certain fiscal year. This budget statement is broken into two primary parts: capital budget and revenue budget.

Capital Budget

The capital budget tracks government-related capital payments and revenues. Capital revenues include loans from the public or the Reserve Bank of India (RBI), whereas capital payments comprise costs made for health facilities, equipment development and maintenance, and educational facilities. The capital budget includes two components:

• Capital Receipts: It includes funds raised through borrowings, loans, and asset disinvestment.
• Capital Expenditure: It includes expenditures aimed at long-term development, such as health facilities, building infrastructure, or more.

Revenue Budget

A revenue budget includes all revenue receipts (tax revenue and other revenue) of the government to meet the expenditures. The government faces a revenue shortfall if the revenue expenditure exceeds the income. The revenue budget includes two components: 

• Revenue Receipts: These include revenue from tax and non-tax revenues that do not impact the government’s assets or liabilities.
• Revenue Expenditure: These include expenditures incurred by the government for running and maintaining essential services.

Importance of the Union Budget 

After understanding what is union budget of India is, let’s look into the importance of the union budget in India. The overall goal of the India Union budget is to achieve quick and balanced economic growth for our country while promoting social justice and equality. The following are the primary objectives that demonstrate the importance of the annual budget of India.

• Optimal Resource Allocation: Ensures resources are used effectively for public welfare.
• Reducing Unemployment and Poverty: Aims to eliminate poverty and create job opportunities.
• Reducing Wealth and Income Inequality: Balances income distribution through subsidies and taxes.
• Economic Stability: Controls inflation and deflation, maintaining price stability.
• Tax Structure Changes: Introduces modifications to direct and indirect taxes.

The union budget is extremely important since it affects so many different sectors. As a result, understanding what it represents and why it is so important is critical.

Key Budget Terms & Concepts

Understanding key terms and concepts is crucial:

• Fiscal Deficit: The gap between total expenditure and revenue (excluding borrowing).
• Revenue Deficit: Difference between revenue expenditure and revenue receipts.
• Primary Deficit: Fiscal deficit minus interest payments.
• Capital Expenditure: Spending on acquiring assets.
• Revenue Expenditure: Day-to-day government spending.

Objective of Budget:  Balanced Growth

Encouraging rapid and balanced economic growth while maintaining social justice and equality is the main goal of the Union Budget.

This budget aims to address income inequality, lower unemployment, and efficiently allocate resources. Through an understanding of the Union Budget and its delicate balance, the general public can acquire knowledge about the policies aimed at augmenting economic growth.

The fiscal deficit is an important factor of the Union Budget. A fiscal deficit arises when the government spends more than it takes in. In essence, it shows how much borrowing the government needs to do in order to pay for its operations. To prevent a fiscal deficit, the government works to balance its revenue and spending. To achieve this balance, one could raise taxes, encourage economic expansion, or cut expenditures.

Another significant component of the Budget is the distinction between direct and indirect taxes. Direct taxes are levied directly on individuals, such as income tax and corporate tax. Indirect taxes are imposed on suppliers or manufacturers and are passed on to consumers, with the Goods and Services Tax (GST) being a notable example. Grasping the difference between these tax types is crucial for understanding how the government generates revenue and its impact on citizens.

Conclusion 
Understanding the Union Budget of India is essential for comprehending the nation's financial roadmap, fiscal policies, and economic priorities. The budget, presented annually by the Finance Minister, influences various sectors, taxation policies, and public expenditure allocations. Through its significance, citizens and businesses gauge the implications of taxation, subsidies, and sectoral allocations on economic activities and overall growth.