Ever wondered what the Union Budget is about? Get Ahead presents a three-part series for young readers on why the budget is important, what the jargon really means and how it affects you and me!
ebruary is here.
There is something very momentous happening this month. And it's not Valentine's Day.
It is the presentation of the Budget, the most important economic event in the country.
In case you are under the impression that this does not concern you, let me assure you otherwise.
The Budget tells you how the government outlines major economic initiatives for the coming year.
Take, for instance, corporate taxes. They may not concern you, but they will definitely impact you. It will either make the goods you buy cheaper or more expensive.
The income tax rates are also declared in the Budget. Ah! That's closer home, right?
Why do we need a Budget?
Being a democracy, the Indian public has a right to know where and on what government money is being spent on.
So in the Budget, the government will state how much money it earned from taxes and how it spent it in the previous year.
It will also need Parliament's permission for its proposed taxes and spending for the coming year.
How often is the Budget presented?
Once a year.
Article 112 of the Constitution makes it mandatory that the central government introduces in Parliament a statement of estimated receipts (income) and expenditure. This must be done for every financial year.
Incidentally, the financial year runs from April 1 to March 31.
Who draws up the Budget?
The finance ministry has a Budget Division, which takes responsibility for the Budget. All government ministries and departments send the division its proposals and requirement of funds.
This division will then draw up allocations for the various ministries, and how much goes to each.
This will then be approved by the finance minister and, finally, the prime minister.
Only then will it be presented in Parliament.
When is the Budget presented?
The actual date is fixed by the President of India.
By convention, it is presented in Parliament (Lok Sabha) on the last working day of February.
This year, it will be on February 28, a Monday.
Does it have to be approved immediately?
No. Here are the very broad steps:
1. The FM will introduce the Budget to the Lok Sabha with a small speech and an overall view of the Budget.
2. A general discussion on the Budget takes place and the FM replies to queries.
3. Then comes the Demand for Grants stage. Here, the Lok Sabha discusses each ministry's expenditure proposals and these are voted upon.
4. The bills are then introduced in the Lok Sabha: the Appropriation Bill (final demand for grants to be given to each ministry) and the Finance Bill (all taxation proposals).
At this stage, amendments for tax proposals can be discussed and voted upon.
5. The passing of Appropriation Bill results in the Appropriation Act, and the passing of the Finance Bill enters the statute as the Finance Act. Thus, the final Budget gets approved.
How is the Budget different from the Economic Survey?
The Economic Survey reviews the entire economy.
It is an annual commentary on the state of the economy put together by the finance ministry. This is an important source of data for economists and academicians.
It is presented in Parliament just before the annual Budget and soon after the Railway Budget (targeted only for the railway ministry).
The Budget is an estimate of inflows (money to come in) and outflows (money to be spent) of the Government during a year. They are all projections on how the government is going to allocate its money this year.
So the Budget presented in February 2005 will be an estimate of the inflows and outflows of the funds for the period beginning from April 1, 2005 to March 31, 2006.
In other words, the Economic Survey will tell you how the economy performed the previous year, while the Budget will tell you what to expect in the coming year.
Is there a web site where one can look at previous Budgets?
Sure. Click on any of the below to see relevant previous links.
Illustration: Dominic Xavier
DON'T MISS!
- February 2: Understand the Budget!
- February 3: How the Budget affects you and me!
