Union Budget and its importance
Article 112 of the Indian Constitution mandates that a budget should be presented to Parliament prior to the start of each fiscal year. For the upcoming fiscal year, which starts on April 1 and ends on March 31 of the following year, the Union Budget is expected to show some positive changes in mitigating the rise of inflation.
The estimated government payables and receivables for a given fiscal year are described in detail in the Union Budget. Capital budget and revenue budget are the two main sections of this budget statement.
Both the government's revenue inflows and outflows are reflected in its revenue budget. The two categories of revenue receipts are tax income and non-tax revenue. The expenses incurred to keep the government's operations running smoothly and offer inhabitants a variety of services are known as revenue expenditures. If revenue expenditures exceed revenue inflows, the government has a revenue deficit.
Government capital payments and receipts are included in the capital budget. Loans from the general public, other governments, and the RBI account for the majority of the government's capital receipts. Capital expenditure is the term used to describe the creation of tools, furnishings, structures, buildings, healthcare facilities, educational facilities, etc. A fiscal deficit occurs when the government's overall spending is higher than its overall revenue.
Knowing the importance of a Union Budget:
The primary goal of the Union Budget is to promote social justice and equality while also encouraging quick and balanced economic growth in our nation. The main goals that emphasize the significance of the Union Budget in India are listed below:
- Ensuring structured allocation of resources: In order to serve the interests of the nation, it is vital to use the resources at hand. In order to promote public welfare, the government must maximize profits, which is accomplished through allocating resources as efficiently as possible.
- Work towards reducing the unemployment and poverty level: The elimination of poverty and the expansion of employment possibilities are two other goals of the Union Budget. This will make sure that every person of the nation has access to facilities for health care, education, and basic needs like food, shelter, and clothing.
- Reduce income disparities and wealth related concerns: Through taxes and subsidies, the budget helps to shape the distribution of income. It contributes to ensuring that the rich class pay a high rate of tax, hence lowering their disposable income. On the other hand, the lower income group, gets taxed at a reduced rate to make sure they have enough money, whenever required.
- Keep an eye on the prices: The Union Budget also assists in minimizing economic turbulence. It ensures that inflation and deflation are handled properly, resulting in economic stability. When there is inflation, surplus budget plans are implemented, and when there is deflation, deficit budget tactics are created. As a result, prices in the economy are kept stable.
- Changes in the Tax System: The country's direct and indirect taxes may alter, according to the Union Budget. The income tax rates and tax brackets are changes as a result. For instance, this budget is anticipated to chalk out some important aspects of tax, and how are we planning to manage it effectively in the next fiscal year.
Who prepares the Budget?
The process of creating and presenting the budget is given to the finance minister, however the NITI Aayog, other ministries, and the ministry of finance all participate in the budget-making process through discussions. The ministry of finance releases spending recommendations at the start of each new fiscal year. Different ministries, Union Territories, departments, and the armed forces produce their budget estimates in accordance with the standards. The departments/ministries and the department of expenditure, a crucial division of the ministry of finance, meet in-depth after that. The budget is ultimately created by the finance ministry's budget section. Pre-budget discussions are also held with stakeholders like economists, farmers, the Federation of Indian Industries, and others in addition to these. The finance minister meets with the prime minister to discuss the tax suggestions after making a decision. The Union Budget of India is then presented by the finance minister after briefing the Cabinet. The finance bill, appropriation bill, revenues budget, spending budget, annual financial statement, macroeconomic framework, medium term fiscal policy, and others are all included in the finance minister's budget speech to the Lok Sabha.
This year’s Union Budget 2023 is to be declared on February 01, 2023.