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Union Budget 2024
A budget serves as a projection of the government’s income and expenditures for an upcoming period, typically the approaching fiscal year. The Union Budget provides a comprehensive overview of the government’s financial activities in the preceding fiscal year, outlines new tax proposals for the upcoming fiscal year, and projects anticipated revenue and spending for the following fiscal year.
Covering the government’s financial affairs from April 1 to March 31, the Union Budget has been a practice since the presentation of the inaugural budget in pre-independent India in 1860 by James Wilson of the British Indian Government. Following independence in 1947, India’s initial post-independence Budget was delivered by Finance Minister RK Shanmukham Chetty.
What is the Union Budget?
The Union Budget stands as the annual financial statement of the Union Government of India, presented each year on the 1st of February by the Finance Minister (FM) in the Lok Sabha.
- Budget preparation: The Department of Economic Affairs within the Ministry of Finance serves as the central authority responsible for formulating the Budget document.
- Budget classification: The Union Budget is categorized into the Revenue Budget and the Capital Budget.
- Revenue Budget: This segment of the budget addresses the government’s anticipated income and expenditures for a given year, encompassing revenue from taxes and other regular sources.
- Capital Budget: This section of the budget focuses on the government’s assets and liabilities, covering substantial expenses like infrastructure development or equipment acquisition.
- Budget Parts:
- Part A: This constitutes the macroeconomic component of the budget, where the government declares various schemes and priorities, alongside allocating funds to different sectors.
- Part B: This section pertains to the Finance Bill, encompassing taxation proposals such as revisions to income tax and indirect taxes.
- A Finance Bill qualifies as a Money Bill under the definition outlined in Article 110 of the Constitution.
- The Speaker holds ultimate authority in determining whether a bill qualifies as a Money Bill.
Constitutional Provisions Regarding India’s Union Budget
- Constitutional provision: Article 112 of the Indian Constitution stipulates that the Union Budget serves as a declaration of the government’s anticipated receipts and expenditures. Despite being commonly referred to as the Annual Financial Statement of the Government, the term “budget” is not explicitly mentioned in the Constitution.
- Key Budget documents: In addition to the Budget Speech, other significant documents include:
- Annual Financial Statement (Article 112)
- Demands for Grants (Article 113)
- Finance Bill (Article 110)
- Fiscal Policy Statements, as mandated by the FRBM Act, 2003, which encompass the Macro-Economic Framework Statement and the Medium-Term Fiscal Policy cum Fiscal Policy Strategy Statement.
- Additional Documents: Supplementary explanatory documents presented encompass:
- Expenditure & Receipt of Budget
- Expenditure Profile
- Budget at a Glance
- Memorandum Explaining the Provisions in the Finance Bill
- Output Outcome Monitoring Framework
- Key Features of the Upcoming Financial Year Budget
- Implementation of Budget Announcements for the Closing financial year.
Objectives of the Union Budget
The Union Budget serves as the cornerstone of India’s economic system and holds immense significance for the overall functioning of the economy. The Union Budget strives to accomplish various key objectives:
- Economic growth: The budget endeavors to foster rapid and balanced economic growth throughout the country.
- Social Justice and Equality: It aims to advance social justice and equality, ensuring the equitable distribution of benefits across all segments of society.
- Resource allocation: The budget works towards the efficient allocation of resources to minimize unemployment and poverty.
- Fiscal stability: It seeks to maintain fiscal stability by controlling prices, reducing wealth and income disparities, and reforming the tax system.
How is the Union Budget Prepared?
The preparation of the Union Budget is a systematic process that commences approximately six months before its presentation. The process unfolds through several stages:
- The budget-making procedure involves ministries/departments formulating expenditure estimates and the Finance Ministry crafting revenue estimates.
- These estimates undergo consolidation, scrutiny, and finalization by December.
- Halwa ceremony: Leading up to the Budget presentation, the government conducts a halwa ceremony, signifying the initiation of Budget document printing.
- Budget presentation: Subsequently, the budget is presented to Parliament on the final working day of February, followed by a comprehensive discussion on the government’s overarching economic and fiscal policies.
- Approval: This phase entails a detailed examination of the demands for grants pertaining to specific ministries or departments.
- Members of Parliament have the option to propose various cut motions, encompassing policy cuts, economy cuts, and token cuts.
- If it becomes impractical to deliberate on each demand individually, the remaining demands are grouped together and voted upon towards the conclusion of the allocated discussion period. Once passed, they are forwarded to the President for approval.
- Following discussions and approval in the Lok Sabha, an Appropriation Bill is introduced and passed to authorize expenditures from the Consolidated Fund of India.
Different Stages of the Budget Session in Parliament
The Union Budget is not confined to a single-day affair; rather, it unfolds during the Budget Session of the Parliament each year. The Budget Session encompasses several distinct stages:
| Stage | Descripation |
| 1. President’s Address
|
-The Budget Session initiates with a joint address by the President of India to both Houses of Parliament.
-This address outlines the government’s policy priorities, achievements, and legislative agenda for the forthcoming session. |
| 2. Economic Survey Presentation
|
–Prepared by the Economics Division of the Department of Economic Affairs under the guidance of the Chief Economic Advisor, the Economic Survey is tabled in the Lok Sabha by the Finance Minister a day before the Union Budget presentation.
–The survey evaluates the economic developments of the previous year and provides an economic outlook for the upcoming fiscal year. |
| 3. Railway Budget (Till 2016)
|
-Until 2016, the Railway Budget was presented independently a few days prior to the main Union Budget. However, since 2017, it has been amalgamated with the General Budget. |
| 4. Union Budget Presentation
|
-The primary Union Budget is presented by the Finance Minister on February 1st. |
| 5. General Budget Discussion
|
-Subsequent to the Budget presentation, both Houses of Parliament engage in discussions.
-This forum enables parliamentarians to scrutinize the Budget and deliberate on its merits. |
| 6. Voting on Demands for Grants
|
-Parliament sanctions the Demand for Grants allocated to various ministries and departments.
-This approval empowers the government to execute the proposed expenditures. |
| 7. The passing of Finance Bill
|
-The Finance Bill, housing taxation proposals, is ratified by both Houses of Parliament.
-The Budget officially takes effect upon the Finance Bill receiving Presidential assent. |
Types of Budgets
Governments employ three primary types of budgets: balanced, surplus, and deficit. Additionally, various other budgetary approaches are elucidated below:
| Types of Budgets | Description |
| 1. Balanced Budget
|
-A budget where the government’s anticipated revenue for the financial year matches its projected expenditure. |
| 2. Deficit Budget
|
-A budget where the government’s anticipated spending surpasses the expected revenue for the financial year.
-Typically, the deficit is managed by borrowing or utilizing a reserve surplus. |
| 3. Surplus Budget
|
-A budget where the government’s forecasted income or revenue exceeds the planned expenditures.
-It can be utilized to mitigate aggregate demand and curtail inflation. |
| 4. Zero-Based Budget
|
-An approach to crafting the budget anew, or ‘zero bases.’
-This systematic cost management process considers the efficient allocation of income to fixed expenditures, variable expenses, and savings. |
| 5. Gender Budget
|
-A procedure that scrutinizes the budget of a government or another organization to evaluate its contribution to gender equality.
-It aids in identifying and monitoring the allocation of resources for women, men, and gender-related issues. |
Iconic Budgets
Throughout the years, budgets have played a pivotal role in instigating structural reforms and shaping the economic trajectory of India. Several noteworthy budgets that have had a profound impact on the country include:
- Black Budget (1973-74): Presented by Y B Chavan, this budget earned the moniker ‘Black Budget’ due to a fiscal deficit of Rs 550 crore during a period of financial distress.
- Carrot & Stick Budget (1986): VP Singh’s budget marked a step towards dismantling the license raj in India.
- It introduced the Modified Value Added Tax (MODVAT) to alleviate tax cascading and initiated a crackdown on economic offenders.
- Epochal Budget (1991): Manmohan Singh’s budget signified the initiation of economic liberalization in India, with reductions in customs duty and a focus on promoting exports.
- Dream Budget (1997-98): P Chidambaram utilized the Laffer Curve principle to lower tax rates and boost collections.
- This budget introduced significant tax reforms and streamlined the excise duty structure.
- Millennium Budget (2000): Yashwant Sinha’s budget laid the groundwork for the growth of India’s IT industry by phasing out software export incentives and reducing customs duty on computer-related items.
- Rollback Budget (2002-03): Also presented by Yashwant Sinha, this budget is remembered for the withdrawal or rollback of several proposals.
- Once-in-a-Century Budget (2021): Nirmala Sitharaman’s budget aimed at reviving the economy through investments in infrastructure and healthcare, privatization, and robust tax collections.
Reference: The Hindu
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Frequently Asked Questions:
1. Question: Define the term “ethnic movement” and provide an example from India.
Answer: An ethnic movement refers to a collective effort by a group sharing common cultural, linguistic, or religious traits, seeking to assert their identity and rights; an example from India is the Khalistan Movement in Punjab.
2. Question: Identify the main objectives behind the Gorkhaland ethnic movement.
Answer: The Gorkhaland ethnic movement primarily seeks to establish a separate state for India’s Nepali-speaking population in the Darjeeling region, advocating for linguistic and cultural recognition and political autonomy.
3. Question: What was the Operation Blue Star, and which ethnic movement was it related to?
Answer: Operation Blue Star was a military action in 1984, aiming to remove Sikh militants hiding in the Golden Temple in Amritsar; it is related to the Khalistan movement, which sought a separate Sikh country.
4. Question: Mention a critical factor that triggered the emergence of ethnic movements in India, as discussed by Dipankar Gupta.
Answer: Dipankar Gupta emphasized that ethnicity is fundamentally a political process, wherein caste and religion, the key components of identity formation, are politicized by leaders for vested interests.
5. Question: What were the primary reasons for the Assam Ethnicity conflicts involving Bodo tribals and Bengali Muslim settlers?
Answer: The Assam Ethnicity conflicts primarily stemmed from issues related to immigration, land rights, and resource allocation, leading to clashes, riots, and evolving relationships among indigenous communities to address challenges.
6. Question: Briefly describe the role of the Dravidian Movement in terms of caste and societal structure.
Answer: The Dravidian Movement, led notably by E.V. Ramasamy, aimed to establish an egalitarian society, focusing on anti-Brahmanism and advocating for equal rights for backward castes, while also introducing reforms like self-respect marriages.
7. Question: Name the prominent ethnic movements in North-East India and specify one common objective.
Answer: Prominent ethnic movements in North-East India include the Nagas’ and Mizos’ struggles; a common objective was to gain autonomy and recognition for their distinct tribal identities and cultural uniqueness.
8. Question: What is the key argument of Gail Omveldt regarding traditional Indian society and multiculturalism?
Answer: Gail Omveldt opposed romanticizing traditional Indian society, arguing that hierarchy has always dominated it and dismissing the notion that multiculturalism is an intrinsic feature of Indian society as a myth.
9. Question: Briefly explain the social hierarchy factor as a contributing element to ethnic movements as suggested by Olzak.
Answer: Olzak suggests that the construction of hierarchies among ethnic communities, which often leads to the suppression of one group by another, is a key factor that can instigate social and ethnic movements.
10. Question: Identify one consequence of the unequal economic development factor within the context of ethnic movements in India.
Answer: One consequence of unequal economic development is the marginalization and underdevelopment of certain groups, leading to feelings of alienation and sometimes initiating ethnic movements as these groups strive for equality and recognition.
GS Related Practices Questions…
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