What is Union Budget?
The word “Budget” is derived from old French word “Bougette” which means a “leather bag” or “Purse”.
The dictionary meaning of Budget is An itemized summary of estimated or intended expenditures for a given period along with proposals for financing them, or A systematic plan for the expenditure of a usually fixed resource during a given period.
Thus, Union Budget, which is a yearly affair, is a comprehensive display of the Government’s finances. Budget is most significant economic and financial event that outlines all the economic planning of the Government of India. The Union Budget of India is also called as the general budget which is presented each year on the last working day of February. The Finance Minister of India presents the budget, in Parliament, that contains Government of India’s revenue and expenditure for one fiscal year i.e. 01st April to 31st March.
Needless to say, Budget is one of the most powerful instruments of legislative control and executive management as it effectively indicates the financial health of the Country.
History of Indian Union Budget
The first Union budget of independent India was presented by India’s First Finance Minister R. K. Shanmukham Chetty on November 26, 1947. Since then, 28 Union Finance Ministers have been presenting the budget every year. Initially, much attention was given to the agricultural sector but as later on, the focus shifted to the other sectors including the industrial, financial and other sectors.
There was a change in the approach which was led by Manmohan singh who was the Finance Minister under Mr. P.V. Narsimha Rao. He started the new phase of economic liberalization. The control of the Government over public sector units was reduced through disinvestment. The liberalization process which he had started still continues.
Until the year 2000, the Union Budget was announced at 5 pm on the last working day of the month of February. This practice was inherited from the Colonial Era, when the British Parliament would pass the budget in the noon followed by India in the evening of the day.
It was Mr.Yashwant Sinha, the then Finance Minister of India under Mr. Atal Bihari Vajpayee, who changed the ritual by announcing the 2001 Union Budget at 11 am.
• First Finance Minister: Shanmugham Chetty
• Number of Finance Minister Since Independence:
• Maximum Number of Budgets Presented by: Morarji Desai (8 times)
• Economic Liberalization Started by: Mr. Manmohan Singh ( Finance Minister 1991)
• Current Finance Minister: Mr. Arun Jaitley
Although the Ministry of Finance has the overall responsibility for framing the Union budget, four different organs of the Government are involved in budget making; namely,
i) the Finance Ministry
ii) the Administrative Ministries
iii) the Planning Commission, and
iv) the Comptroller & Auditor General
In Parliament, the budget goes through five stages:
i) presentation of budget with Finance Minister's speech,
ii) general discussions;
iii) voting on demand for grants;
iv) passing of appropriation bills
v) passing of finance bill.
The Lok Sabha has one month to review and modify the government's budget proposals. If by April 1, the beginning of the fiscal year, the parliamentary discussion of the budget has not been completed, the budget as proposed by the minister of finance goes into effect, subject to retroactive modifications after the parliamentary review. On completion of its budget discussions, the Lok Sabha passes the annual appropriations act, authorizing the executive to spend money, and the finance act, authorizing the executive to impose and collect taxes. Supplemental requests for funds are presented during the course of the fiscal year to cover emergencies, such as war or other catastrophes. The bills are forwarded to the Rajya Sabha. The Lok Sabha, however, is not bound by the comments, and the Rajya Sabha cannot delay passage of money bills. When signed by the president, the bills become law.
State Level Budget
Each state government in India maintains its own budget, prepared by the state's minister of finance in consultation with appropriate officials of the central government. Primary control over state finances rests with the state legislature in the same manner as at the central government level. State finances are supervised by the central government, however, through the comptroller and the auditor general; the latter reviews state government accounts annually and reports the findings to the appropriate state governor for submission to the state's legislature. The central and state budgets consist of a budget for current expenditures, known as the budget on revenue account, and a capital budget for economic and social development expenditures.
Separate Budget for Railway
The national railroad (Indian Railways), the largest public-sector enterprise, and the Department of Posts and Telegraph have their own budgets, funds, and accounts. The appropriations and disbursements under their budgets are subject to the same form of parliamentary and audit control as other government revenues and expenditures. Dividends accrue to the central government, and deficits are subsidized by it, a pattern that holds true also, directly or indirectly, for other government enterprises.