Nuts and Bolts of Union Budget

Nuts and Bolts of Union Budget

News: On February 1, Finance Minister Nirmala Sitharaman will present the Union Budget for the next financial year (2023-24). Given that the next general elections will be in early 2024, this Budget is likely to be the last full-fledged Budget for the current government. 

What is Annual Financial Statement?
• The Union Budget is more technically called the Annual Financial Statement. To be precise Article 112 of the Indian Constitution refers to it as Annual Financial Statement.

What are the components of the Budget?
• Any budget essentially provides three big details.
• One, the total amount of money that the government will raise in the coming year; this is called the total receipts.
• Two, the total amount of money it will spend; this is called the total expenditure.
• Three, the total amount of money it will borrow from the market to plug the gap between what it spends and what it earns; this is referred to as the fiscal deficit. 

What are the forces that shape Budget?
• Demand for a lower rate of taxation and/or a higher rate of exemptions. In other words, people and firms lobby to get their tax burden reduced.
• Demands from people/firms wanting higher or newer subsidies. For example,  a firm that produces green energy or produces products that run on cleaner fuels. Such a firm/entrepreneur may argue that subsidising (or increasing existing subsidies) will help India transition to a cleaner environment in the coming years.
• A third group (small but influential) demands something called “fiscal rectitude or prudence”. They demand that the government cuts down on its fiscal deficit (essentially the total amount of money the government borrows from the market in order to bridge the gap between its total expenditure and its total receipts). 

What are different stages that Budget goes through in Parliament?

Interesting Trivia that you should know regarding Budget:
• RK Shanmukham Chetty presented the 1st Union Budget of independent India on Nov 26, 1947.
• 10 – is the number of Budgets presented by Morarji Desai, the Highest by one person. 
• Jawaharlal Nehru, Indira Gandhi and Rajiv Gandhi are the only prime ministers to have presented a Budget.
• In 2017, the Rail Budget was merged with Union Budget. 
• Former PM, Dr. Manmohan Singh, during his stint as FM, delivered the longest budget in terms of word count (18,650 words) in 1991.
• The date of the Union Budget presentation was changed in 2017 by then finance minister Arun Jaitley from ‘last 

working day of February’ to ‘February 1’.
• FM Nirmala Sitharaman delivered the longest budget speech. She spoke for 2.42 hours while presenting Union Budget 2020. 
• On 1st Feb 2021, FM Nirmala Sitharaman presented the first paperless budget. This was done due to the ongoing COVID- 19 pandemic in India.