The Union Budget of India also known as the Annual Financial Statement in Article 112 of the Constitution of India, is the annual budget that estimates the receipts and expenditure of the government for that particular year.
The government introduces it on the first day of February so that it can be implemented before the start of the new financial year in April. Till 2016 it was presented by the Finance Minister in Parliament on the last working day of February. The budget, presented through the Finance Bill and the Appropriation Bill, has to be passed by the Lok Sabha before it comes into force on April 1, the beginning of India’s financial year.
*Union budget is classified into revenue budget and capital budget*
*Revenue Budget*
Revenue budget includes revenue receipts and expenditures of the government. Revenue receipts can be further classified into tax revenue and non-tax revenue. Tax revenue includes: income tax, excise duty, corporate tax, etc and Non-tax revenue includes: interest, fines, profit, fees etc. Revenue expenditure, on the other hand, refers to the expenditure incurred on day to day functioning of the government and on various services offered to the citizens. When the government’s expenditure is greater than the revenue receipts, then there is a revenue deficit for the government and vice versa will be counted as a revenue surplus.
*Capital Budget*
The capital budget consists of the capital receipts and payments of the government. The primary sources of government capital receipts include loans from the public, Reserve Bank of India (RBI) and foreign governments. Capital expenditure is the expenditure on the development of machinery, equipment, building, health facilities, education etc. Fiscal deficit occurs when the total expenditure of the government exceeds its total revenue and vice versa will be counted as a surplus.
The Budget Presentation Speech of the Finance Minister in Lok Sabha consists of the following parts:
Annual Financial Statement (AFS)
Demand for Grants (DG)
Appropriation Bill
Finance Bill
Expenditure Profile
Expenditure Budget
Receipts Budget
Macro-economic framework
Medium Term Fiscal Policy
*Time of budget announcement*
Till the year 1999, the Union Budget was announced at 5:00 PM on the last working day of the month of February. This practice was inherited from the colonial period. It was Yashwant Sinha, the then Finance Minister of India, who changed this tradition by announcing the 1999 Union Budget at 11 am.
*Date of the budget announcement*
Also again in 2016, departing from the colonial-era tradition of presenting the Union Budget on the last working day of February, then India’s Finance Minister Arun Jaitley announced that it would now be presented on 1st February. Apart from this, the Railway Budget that used to be presented separately for 92 years, got merged with the Union Budget. In 2017, late BJP leader Arun Jaitley became the first Finance Minister to present the unified Budget for 2017-18.
*Halwa ceremony and budget briefcase*
The printing of budget documents begins about a week before its presentation in Parliament with a customary ‘halwa ceremony’ in which halwa (a sweet dish) is prepared in large quantities and served to the officers and support staff involved. Halwa is served by the Finance Minister. This ceremony is performed as a part of the Indian tradition of eating something sweet before starting an important task.
Until 2018, as a part of the tradition, finance ministers carried the budget in leather briefcases. On July 5, 2019, Finance Minister Nirmala Sitharaman broke this tradition by carrying the budget in a Bahi-Khata.
