Chanakya defines “Economics is the most important aspect as it provides the basis for human existence and survival”. Economy of any country depends on financial administration by the government. Whole World’s eye is on India now, Since it is one of the fastest growing economy in the world. Budget prepared by the government will also play a crucial role in the growth of the country’s economy. Preparation of the Budget is also crucial because it involves public money ( withdraw from Consolidated fund of India) and public money should be properly used in welfare of the country.
How is the Budget prepared ?
It takes months to prepare a budget, usually it begins in August – September i.e. six months before the budget presentation date. The Finance Ministry prepares a budget in consultation with the concerned ministry & Niti Ayog. Afterwards it should be passed in the joint parliamentary session of both Lok Sabha & Rajya Sabha on 1st Feb every year.
How Budget is prepared & `Why union budget on 1st Feb only
- While preparing budget finance ministry issues circular to all Ministries, States and Union Territories to prepare estimates for the coming financial year.
Ministries present their estimates with Revenue and Expenditure in the past year (Revenue statement & Budget Statement). - The Revenue Secretary along with the Budget division critically observe and examine these estimates and consult various divisions. After approval it is sent to the Finance Ministry.
- The Finance Ministry then analyses the data and matches it with Revenue and Expenditure. They also consult the Chief Economic advisor and its team and further discussion on optimum levels of fiscal deficit.
- The Finance Ministry then prepares revenue allocation for their future expenditure. After this the Finance Ministry also consults the Cabinet and Prime Minister to further the process.
- Ministry also conducts Pre Budget Meet with State representatives, Bankers, agriculturist,etc.
- After pre pre-budget meeting, the ministry prepares the final budget by considering such points after consultation with the Prime Minister.
- In India the government follows the tradition of Halwa ceremony which indicates the final stage for preparation of budget. It is conducted at the beginning of printing of Budget after serving Halwa.
To maintain confidentiality officials are locked in who were involved in preparation of budget.
Why Budget on 1st February each year?
Budget should be conducted before start of new Financial year (i.e. 1st April). Usually Budget was presented on last working day of February, But from 2017 Finance Minister Arun Jaitley changed the date to 1st February. Major reason behind this is to “change British Era Practices”. This will also help government as they will get more time to implement new policies and provisions announced in budget.
