The Great Indian Budget

The news is flooded with estimates and expectations from the upcoming Union Budget 2022. Be it a shopkeeper, a student, a farmer, a businessman or even a homemaker; each one of us has our eyes and ears glued to the TV set as soon as the budget is presented. But how many of us know how the budget is prepared? What are the sources of government revenue? In this edition, we will dive into the details and interesting facts of the budget.

Preparation of the Budget

It is during the end of August or in the first week of September, that the planning process for the next financial year is set in motion wherein,  the Budget Division under the Ministry of Finance issues the forms and guidelines to all the Union government ministries/departments.

These forms and guidelines are further provided to field officers who provide details about financial expenditures and receipts of their respective department during the current and past financial year, and their financial requirements for the next financial year.

This data and estimates are then scrutinized by top officials of their departments. Post approval, the data and estimates are sent to the concerned ministries where they are scrutinized once again and after proper examination, finally, the data and estimates are sent to the Finance Ministry. 

After analyzing the submitted data, the ministry goes on to allocate revenues to various administrative ministries and to various welfare schemes. After completing the allocation of funds for future expenditures, the Finance Ministry prepares a report of the estimated revenues to be generated in the next financial year with the help of  Central Board of Direct Taxes (CBDT) and Central Board of Excise and Customs (CBIC)

The ‘Halwa Ceremony’ marks the printing process of the Union Budget papers. It is held at North Block in Delhi, where the FM along with other officials and staff involved in the budget making process eat halwa. 

Post the completion of the ‘Halwa Ceremony ‘, all the officials involved in the making of the budget, go down into the North Block basement where the officials involved in the process remain confined and isolated in the basement to ensure secrecy of the budget. They come out just as the Finance Minister starts the Budget presentation on Feb 1 in the Lok Sabha. 

What are the sources of revenue and where is the revenue spent?

The government earns from

  • Tax Revenue 
  • Non-Tax Revenue (dividends and profits from. public sector enterprises, surplus profits of the RBI)
  • Disinvestments/Borrowings 
  • Grants-in-Aid

 The government spends on 

  • Interests
  • Subsidies
  • Pensions
  • Defence
  • Grants-in-Aid
  • State’s Share of tax and duties
  • Centrally Sponsored Schemes
  • Other Expenditure

Types of Government Accounts

Just like you the government too has different accounts for different needs

  • Consolidated Fund

All expenses of the government are incurred from this fund. It consists of  all income received by the government from loan recoveries, revenue and the entire amount of new loans raised by the government. However, the government has to get authorization from the parliament to withdraw any amount from this fund.  

  • Contingency Fund

As the name suggests this fund is for urgent expenditures. The govt. does not require prior legislative approval to withdraw it. The contingency fund is of Rs 500 crores fund which is at the disposal of the President of India. However, if the government ever withdraws the money in case of an emergency, it is required to get an approval from the parliament later and withdraw the amount and from the consolidated fund and replenish the contingency fund.

  • Public Account

The money received from transactions such as the provident funds, small savings collections, other deposits, etc. is kept in the Public Account and the related disbursements are also made from there. Funds kept in this account do not belong to the Government. It  needs to be paid back at some point of time to the persons and authorities who deposited them.

Recap of the Previous 2 years Budget

Want Budget 2022 explainer in layman terms? Follow Labour Law Advisor today!

Bonus: We  have made a detailed video on Buying US stocks? Know these SECRETS first. Watch the video before you invest in stocks abroad!

Leave a Comment

Your email address will not be published. Required fields are marked *