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Budget

The budget is a statement of the estimated receipts (revenue or income) and expenditure of the government
in respect to a financial year. In other words, it is a financial document of the government presented to the
legislature and as sanctioned by the legislature. It unveils fiscal policy of the government

The term ‘Budget’ has its origin in the French word ‘Bougette’ which means a sack or pouch. It was a leather
bag from which the British Chancellor of Exchequer(in England the finance minister is called by this name)
brought his speech and papers to present to the Parliament the government’s financial programme for the
ensuing fiscal year. There he opened the bougettet(the bag). A news paper in the year 1773 published a
cartoon showing Chancellor Walpole with the caption ‘the budget opened’. Since then this word has become
popular.

Indian budgeting – significance and constitutional provisions

Budget is the financial statement of the government. As a financial statement, it contains proposed
expenditure and estimated receipts of the government for the coming financial year. Besides, budget contains
lot of other important ingredients. It brings various programmes and schemes for enhancing the welfare of the
people, to support different sectors like infrastructure, to facilitate faster economic growth etc. Similarly, the
budget contains different policy statements by the government; including reform packages.

Why budget is important ?


 Budget brings tax changes
 Budget launches different welfare schemes
 Budget brings economic reform measures
 Budget is often designed as a response to the prevailing macroeconomic environment in the country.
Budget is definitely known for all the above ingredients. A first glance itself may reveal that budget is not just
expenditure and revenue statement of the government. Measures to tackle recent economic challenges are
often launched in the budget.

Constitutional provisions for budget


 The Constitution refers to the budget as the ‘annual financial statement’. The term ‘budget’ has
nowhere been used in the Constitution. It is the popular name for the ‘annual financial statement’.
 There is a constitutional requirement in India (Article 112) to present before the Parliament a
statement of estimated receipts and expenditures of the government in respect of every financial year
which runs from 1 April to 31 March. This ‘Annual Financial Statement’ constitutes the main budget
document. The President shall in respect of every financial year cause to be laid before both the
Houses of Parliament a statement of estimated receipts and expenditure of the Government of India
for that year.
 The Constitution states that “no money shall be withdrawn from the Consolidated Fund of India
without the consent of the Parliament. For getting such an approval, it is to be presented in the form of
an Appropriation Bill. Similarly, no tax should be levied or collected without the authorization of the
Parliament. Here, a Finance Bill is to be submitted. These constitutional provisions necessitate the
presentation of a budget in every year.
Thus, the budget is presented in two parts :
 Finance bill : It consists of provisions relating to sources from where revenue would be
collected by the government in coming year.
 Appropriation bill : It contains provisions relating to areas in which expenses will be incurred in
the coming year .
 Parliament can reduce or abolish a tax but cannot increase it.

BUDGET DOCUMENTS
The list of Budget documents presented to the Parliament, besides the FinanceMinister's Budget Speech, is
given below:
A. Annual Financial Statement (AFS)
B. Demands for Grants (DG)
C. Finance Bill
D. Statements mandated under FRBM Act:
i. Macro-Economic Framework Statement
ii. Medium-Term Fiscal Policy cum Fiscal Policy Strategy Statement
E. Expenditure Budget
F. Receipt Budget
G. Expenditure Profile
H. Budget at a Glance
The documents shown at Serial A, B, and C are mandated by Art. 112,113, and 110(a) of the Constitution of
India respectively, while the documents at Serial No. D (i) and (ii) are presented as per the provisions of the
Fiscal Responsibility and Budget Management Act, 2003.

Budget reforms
1. Time of Budget announcement
Until the year 1999, the Union Budget was announced at 5:00 pm on the last working day of the month of
February. This practice was inherited from the Colonial Era. It was Mr.Yashwant Sinha, the then Finance
Minister of India in the NDA government (led by Bharatiya Janata Party) of Atal Bihari Vajpayee, who changed
the ritual by announcing the 1999 Union Budget at 11 am.

2. Date of Budget announcement


The Government presents budget on the first day of February so that it could be materialized before the
commencement of new financial year in April. Till 2016 it was presented on the last working day of February
by the Finance Minister of India in Parliament.

3. Merger of rail budget with general budget:


The Railway Budget was separated from the General Budget in 1921 on the recommendations of the Acworth
Committee. In August 2016, the Central Government merged the railway budget into the general budget.

4. Dispense with Plan and Non Plan classification in Budget and Accounts
Government of India has scrapped the plan and non-plan expenditures in budget exercise from 2017-18
budget and their place has been now taken by capital and revenue spending classifications.

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