Arjuna (Fictional Character): Krishna, Honourable Finance Minister Mrs. Nirmala Sitharaman will be declaring the Finance Budget of 2022-23 on 01st February in the Lok Sabha. Everyone is excited for the Budget. But Krishna, what is Budget and by whom it is prepared?
Krishna (Fictional Character): Arjuna, the term ‘budget’ has been derived from the old French word ‘bougette’. In simple language, A budget is an estimation of revenue and expenses over a specified future period and is usually compiled and re-evaluated on a periodic basis. Aside from earmarking resources, a budget can also aid in setting goals, measuring outcomes, and planning for contingencies. In India, the Union Budget is prepared by the Department of Economic Affairs of Ministry of Finance.
Arjuna (Fictional Character): Krishna, please explain the various stages followed in India for the preparation of budget?
Krishna (Fictional Character): Arjuna, the following are the various stages through which a Budget has to pass in India.
a) Preparation of Budget: The budget is prepared by the finance minister with the assistance of number of advisors. The finance minister seeks the view of the industry and economists prior to preparation. Various accounting and finance related organizations send in their opinions and suggestions.
b) Parliamentary Approval: In parliament, the budget goes through four stages namely,
√ Presentation of budget by Finance Minister: The general budget is presented in the Lok Sabha by Minister of Finance. At the conclusion of the speech of the finance minister in Lok Sabha, annual financial statement is laid on the table of Rajya Sabha.
√ General discussion on budget: Discussion is done in two stages. In the first stage, broad outlines of the budget, principle and policies. In second stage discussion is held based on reports of concerned Departments/Ministries standing committees.
√ Voting on demand for grants in Lok Sabha: Introduction and voting on Demands for Grants is confined only to the Lok Sabha. The Lok Sabha has the power to assent, refuse to assent and even to reduce the amount of the Demand for Grant. In Rajya Sabha, there is only general discussion of the budget. The upper house does not vote on the Demands for Grants.
√ Passing of appropriation bills: An appropriation bill is intended to give authority to the Government of India to incur expenditure from the consolidated fund of India. After the voting of Demand for grants has been completed, the government introduces an appropriation bill.
Arjuna (Fictional Character): Krishna, How Finance bill is passed in India after passing appropriation bills?
Krishna (Fictional Character): Arjuna, All the taxation proposals of the government for a financial year are embodied in a Finance Bill. The rates of taxes, such as Income Tax, Custom Duty, etc., are annually determined by the legislature. The discussion on Finance Bill is opened by the finance minister. After the Bill and the amendments have been discussed, a motion is moved that the Bill be passed by the Lok Sabha. After the Bill is passed by Lok Sabha, it referred to the Rajya Sabha. When both the house have agreed, the Bill goes for Presidential assent.
Arjuna (Fictional Character): Krishna, what should one learn from this?
Krishna (Fictional Character): Arjuna, Budget is highly technical and very difficult to understand. It is very long process which is discussed for many years. Budget is very important to manage funds of country as well as revenue and expenses. A budget allows the government to control the taxation of various industries. Through the budgetary policy, Government aims to reallocate resources in accordance with the economic (profit maximisation) and social (public welfare) priorities of the country.