Union Budget Process

 

The origin of the Indian Union Budget can be traced back to the colonial era when the British introduced budgetary planning and financial administration. The roots of the modern Indian budgetary process can be found in the Government of India Act of 1860, which established the framework for fiscal governance during British rule. However, it was the Government of India Act of 1919, also known as the Montagu-Chelmsford Reforms, that laid the foundation for a more structured budgetary system in India.

The Indian government presents the Union Budget every year on 1st February. It is an important document that tells the government's plans programs, and fiscal policies for the upcoming financial year. Behind the scenes lies a meticulous and intricate process that culminates in the presentation of this crucial document. In this article, we look at the Union Budget process, shedding light on its various stages and intricacies.

Process of Union Budget

Here is the step-by-step process of the Union Budget

Step 1: The first step starts months before the presentation. The FM issues circulars to all ministries, union territories, states, and autonomous entities at the initial stage of the budget-making process. Ministries and departments submit their budget estimates, outlining their expenditure requirements and revenue projections for the upcoming financial year. The Economic Survey, prepared by the Chief Economic Advisor, provides an overview of the country's economic performance, prospects, and policy recommendations. It serves as a crucial input for budget formulation.

Step 2: In the second step, the information is validated. Next, the finance ministry allocates revenue to numerous divisions for impending outlays. Simultaneously, revenue projections, including tax receipts and non-tax revenue, are scrutinized to assess the government's revenue potential.

Step 3: The FM arranges pre-budget meetings with different stakeholders to gain knowledge of their recommendations and requirements. These participants comprise of state representatives, bankers, agriculturists, economists, and trade unions. Once all the requests are taken into consideration, it is further discussed with the prime minister before confirmation.

Step 4: Around 10 days before the Budget is announced, the government has a tradition of conducting a halwa ceremony. The ceremony heralds the start of Budget document printing. You can check the details of the Halwa Ceremony

Step 5: The budget presentation to the Parliament is the last phase in the budget-making process. On the first day of the Budget session, the finance minister conducts the presentation. The Finance Minister presents the Union Budget in the Lok Sabha, outlining the government's fiscal policies, revenue and expenditure proposals, taxation reforms, and other significant announcements. The budget is then subjected to a detailed debate and discussion in both houses of Parliament, allowing members to scrutinize its provisions, raise concerns, and propose amendments.

Step 6: Following its presentation and approval by Parliament, the Union Budget sets in motion a series of post-budget activities aimed at implementing its provisions and achieving the outlined objectives.

Rail Budget Process

Historically, the Indian railways and Department of Posts had their own budgets. The Rail Budget Process in India involves the formulation and presentation of a separate budget specifically dedicated to the Indian Railways, one of the largest railway networks in the world.

The Rail Budget was presented separately from the Union Budget, with its own set of allocations and policy announcements. However, since 2017, the Rail Budget has been merged with the Union Budget, eliminating the need for a separate presentation.