India’s Union Budget: Here’s what you need to know

Let us start with the simple question: What is the Union Budget? A nation’s Union Budget is the country’s annual financial statement, giving an estimate of the revenue and expenditure for the upcoming financial year. The Union Budget is an instrument helpful for implementing government policies, setting direction for the country’s economy, and taking stock of the country’s financial position.

What is the Union Budget in India?

The India yearly budget is tabled in the parliament on the 1^st of February every year and presented by the Union Finance Minister, it is prepared for the upcoming annual period from 1^st April to 31^st March.

The Indian Constitution mandates the Union Budget under its Article 112. According to this article, the Union Budget of India should give a detailed account of the money that the government expects to earn and plans to spend. Till 2016, a separate Railway Budget was prepared and presented. However, this practice has now been done away with. Another type of budget in India is the interim budget, which is presented by an incumbent government in the election year.

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Components of the budget in India

In India, the Union Budget has three significant parts. These are the revenue budget, the capital budget, and the finance bill.

• The revenue budget gives an account of the regular income and expenses of the government. Incomes include direct and indirect tax collections, while expenses include salaries, subsidies, and interest costs.
• The capital budget provides information on the long-term expenditures that the government plans to make, such as civil infrastructure. It also identifies receipts like loans and disinvestments.
• The finance bill provides information on proposed changes in the tax laws, including new tax slabs and tax exemptions.

While these three components are vital, there are several documents that comprise the Indian Union Budget. These documents are,

1. Finance Minister’s Budget Speech
2. Annual Financial Statement (AFS)
3. Demands for Grants (DG)
4. Finance Bill
5. Statements mandated under the FRBM Act:
   1. Macro-Economic Framework Statement
   1. Medium-Term Fiscal Policy cum Fiscal Policy Strategy Statement
6. Expenditure Budget
7. Receipt Budget
8. Expenditure Profile
9. Budget at a Glance
10. Memorandum Explaining the Provisions in the Finance Bill
11. Output Outcome Monitoring Framework
12. Key Features of Budget 2020-21
13. Key to Budget Documents

The much-awaited Economic Survey does not form a part of the above dossier; it is presented a day before the Union Budget.

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Importance of a national budget

The importance of the budget in India cannot be overemphasised. It shapes the way the financial year pans out for the nation and the economy, thus impacting each citizen.

• Highlight economic priorities: From infrastructure development to rural development, welfare schemes to healthcare, industry to climate action, the budget reflects the economic priorities of the government.
• Impacts the common person: Changes in income tax impact salaries, while indirect taxes affect the cost of living. The same goes for health and education schemes or even fertiliser subsidies. No wonder common people anxiously wait to find out what the budget has in store for them.
• Effect on businesses: The budget declares changes in corporate tax rates, incentives for small businesses, specific industries, export and manufacturing, and also declares measures for ease of doing business.
• Promotes upliftment: The budget proposals are also initiatives that address the needs of the marginalized sections of society. Be it farmers, women, or economically backward communities and regions, the budget tries to find ways to propose measures for their upliftment.

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Interesting facts about India’s Union Budget

• The first budget of independent India was presented on 26^th November 1947, about 100 days after our independence.
• A separate railway budget was presented in India for 92 years, till 2016.
• Indira Gandhi is the only Prime Minister to present a Union Budget.
• By presenting 10 Union Budgets, Morarji Desai holds the record for the highest number of Union Budget presentations in India.

The nation’s compass

The budget indicates the direction of the country’s finances and policies. It helps the country maintain financial discipline and transparency. It also upholds the accountability of the executive towards the legislature, and triggers informed public debate on national policies and priorities.