A budget is an estimate of one’s income and expenses over a set period of time. “What is the Union Budget?” he said, simplifying the first inquiry. It is the government of India’s estimate of receipts and expenditures that is presented to parliament. However, when it comes to union budget vs finance budget, the former is for the country’s economy, while the latter is for businesses based on long- and short-term criteria. Union and finance budgets have one thing in common: they both make the best use of cash flow.
The purpose of this article is to discuss India’s union budget and the steps involved in passing it.
In India, four significant procedures make up the budgetary process.
- Preparation of the budget
- Enactment of the budget
- Execution of the budget
- Parliamentary control over finance
Preparation of the budget
Annually, the ministry of finance begins the process of budget preparation, which typically begins in September. The Department of Economic Affairs of India’s Finance Ministry has a budget Division for this purpose.
In order to develop an estimate or plan outlay, the ministry of finance compiles and coordinates the estimates of several ministers and departments’ expenditures. The Planning Commission scrutinises plan outlay estimates.
Enactment of the budget
Following the preparation of the budget, it is presented to the parliament for enactment and legislation. The following stages must be completed before the budget may be approved:
- The finance minister submits the budget to the Lok Sabha. He proposes his budget in the Lok Sabha.
- The finance bill is presented to parliament once the budget is presented. Proposals for new taxes, revisions to existing taxes, or repeal of prior taxes are all included in the Finance Bill.
- Parliament debates the revenue and expenditure proposals. Members of Parliament take an active role in the discussion.
- The budget and grant requests are presented to Parliament at the same time. These grant proposals illustrate that Parliament must vote on the estimates of expenditure for various ministries.
- The Appropriation Bill is introduced, discussed, and approved by the Parliament’s Appropriation Committee after the parliament votes on grant requests. It lays up the legal framework for taking money out of the Consolidated Fund of India.
- The finance bill is debated and passed after the appropriation bill is passed. At this point, members of parliament can propose and make changes, which the finance minister can approve or reject.
- The Appropriation Bill and the Finance Bill are presented to the Rajya Sabha. The Rajya Sabha has total fourteen days to return these bills to the Lok Sabha, revised or not. The Lok Sabha, on the other hand, may or may not embrace the bill.
- The Finance Bill is sent to the President for signature. The bill becomes a statute after the president signs it. The president does not have the power to veto the bill.
Execution of the budget
- When the finance and the appropriation bill is passed, the budget’s execution begins. The executive department is permitted to start collecting funds and spending them on approved projects.
- The revenue collection is the duty of the ministry of finance’s Revenue Department. The authority to draw and spend the necessary monies has been delegated to various ministries.
- In this regard, the Secretary of the Ministry is the primary accounting authority.
- The several ministries’ accounts are compiled per the established procedures—the Comptroller and Auditor General of India audit these accounts.
Parliament Control over Finance
- The Finance and Appropriation Bills must be proposed, debated, and passed according to a set of rules.
- The executive, as the sovereign, imposes demands on the Parliament. These requests can include requests for grants, supplementary grants, additional grants, and other types of requests.
- Other than the Consolidated Fund of India, expenditure estimates are provided to the Lok Sabha in grant demands.
- The Lok Sabha has the ultimate authority to accept or reject any order and accept a need with a reduction in the sum provided. The requests for grants of several ministries are made to the Lok Sabha once the general debate on the budget is over.
- Previously, all demands were presented by the finance minister; however, they are now officially presented by the ministers of the respective departments. Despite the fact that the Rajya Sabha also has a general budget debate, these demands are not transmitted there.
- Due to the scope or perpetual nature of the service, the Constitution specifies that the Parliament may issue a grant to offset an unanticipated demand on the nation’s resources where the need cannot be defined with the specifics generally supplied in the yearly financial statement.
- Passage of an Appropriation Act is required to pass such a grant. It’s created with a specific purpose in mind, such as meeting wartime requirements.
Budget advancement:
The goal is to have the Budget constitutionally approved by Parliament and signed by the President, as well as all tiers of allocations transmitted to budget holders, before the fiscal year begins on April 1.
In January 2016, several of the government’s most senior bureaucrats proposed a change in the budget presentation date as part of a ‘Transforming India’ campaign.
Way ahead:
It is a good idea to present the Budget earlier so that Parliament can vote on tax and spending plans before the start of the new fiscal year on April 1. It would eliminate the necessity for a vote on account and provide new direct tax policies a full year of consideration. To make this work, members of Parliament will have to put in a lot of effort over the next two months to examine budget ideas.
Wrapping Up
These reforms make sense, but they need to go further, incorporating a multi-year time horizon and a transition to outcome-linked expenditure management, as advocated by a group led by C Rangarajan in 2011. If you wish to read about our Union Budget 2022, you must check out https://canbankindia.com/union-budget-2022/.
