As the curtains rise on 1 February for budget, all eyes turn to the grand stage where India’s financial future takes center stage. However, Union budget preparation starts around August-September, approximately 6 months before its presentation.
The annual financial statement, known as the Union Budget, unveils the government’s financial strategies, blueprints, and initiatives for the forthcoming financial year, spanning from April 1st to March 31st. The presentation occurs in the Parliament and is conducted by the Union Finance Minister.
Ministry of Finance prepares the comprehensive document in collaboration with Niti Aayog and relevant ministries. Department of Economic Affairs (DEA) within the finance ministry is tasked with creating the budget. The budget is a roadmap for the government’s revenue and expenditures, addressing various development initiatives and urgent needs for the specified fiscal year.
Union budget isn’t just numbers and jargon, it’s a roadmap, a compass for the country’s economic journey over the next twelve months.
Have you ever thought about Union budget preparation, how India prepares Union budgets and what factors impact it?. In this blog, we will understand how the budget is prepared, from the planning to its announcement.
How Budget Is Prepared : Union budget preparation Steps
- Step1: Blueprint of Budget 2024
Planning for the Union budget starts about 6 months before it’s presented in Parliament by the finance minister. So, discussions and decisions about the budget kick off around August-September of the year before.
At the start of the Union budget, finance ministry sends circulars to all government bodies, like ministries and states. These circulars contain basic forms and guidelines for them to share their requirements.
The ministries then share their income and spending details from the past year and provide estimates for the upcoming one. After getting these requests, high-ranking government officials review and discuss them with the concerned ministries and the department that handles expenses.
- Step 2: Reviewing received proposals
Once the finance ministry confirms the information, they decide how to allocate funds to different government sectors for upcoming expenses. If there are disagreements, they discuss it with the Union Cabinet or the prime minister.
Also talk to different groups of people like farmers, small business owners, and foreign investors to get their input. The economic affairs and revenue departments are in charge of this. The centre also asks the chief economic advisor for advice and figure out how much money the government needs to borrow to cover any gaps in the budget. Finance ministry, NITI Aayog, and other ministries work together to ensure the budget makes sense.
- Step 3: Pre-Budget Meetings
Before finalizing the budget, the finance ministry meets with various groups like state representatives, farmers, bankers, economists, and trade unions to understand their suggestions and needs. These ideas are then discussed with the prime minister. Finance Minister Nirmala Sitharaman recently had such meetings for this year budget. After these discussions, the finance minister, with input from the Prime Minister, makes the final decisions on what the different groups have requested.
- Step 4: Budget Printing
A few days before revealing the budget, the government follows a unique tradition called the ‘halwa ceremony.’ As part of the tradition, a large pot of ‘halwa’ is made and shared among all the staff. The event marks the start of printing of budget documents.
After the event, staff involved in budget preparations stay at the Ministry of Finance without going home. This lock-in period, lasting about 10 days, is crucial to prevent any leaks of the budget details. Around 100 people work on the budget and stay at the ministry headquarters until the Union Finance Minister presents the budget.
- Step 5: Presentation Day Budget
Presenting the Budget to Parliament is the final step in making the budget. Finance minister does this on the first day of the Budget session. FM talk about the main points and reasons behind the proposals.
After the presentation, the Budget goes to both houses of Parliament for discussion. Once both houses agree, it goes to the President for approval.
Making a budget is a long process with many steps and talks. Each step is important to make sure that public money is used wisely. The budget decides how the government works and spends money to develop the country.
Finance Minister unveils the budget in the Lok Sabha. Until 2016, this unveiling took place on the last day of February. However, since 2017, the tradition shifted, and the budget is now presented on 1 February each year.
A notable change occurred in the Union Budget 2021 when Finance Minister Nirmala Sitharaman introduced a paperless format, moving away from the traditional ‘bahi khata’ to a tablet. To enhance accessibility, all budget-related documents are now available on the “Union Budget Mobile App,” launched by Sitharaman on January 23, 2021.
So, that’s it, these are the Union budget preparation key steps involved in preparing the Union Budget and how each step helps shape India’s financial future.
Final Words: Union Budget’s Role in Shaping India’s Future
Union Budget plays a crucial role in shaping India’s economic and social progress. It’s more than just a financial statement, it reflects the country’s priorities and serves as a roadmap for its future.
In the face of global economic uncertainties and rapid technological advancements, Union budget preparation comes with both challenges and opportunities. To ensure sustainable growth, India’s budget process should balance careful spending with economic growth to build a stronger and more stable future.
FAQs on How Union Budget Prepared
What is the Indian Union Budget?
Indian Union Budget is an annual financial plan showing the government’s estimated income and expenses, guiding fund allocation and economic planning across various sectors.
Who is responsible for preparing the Indian Union Budget?
Union Budget is prepared by the Budget Division of the Department of Economic Affairs, which operates under the Finance Ministry.
What are the steps involved in the preparation of the Indian Union Budget?
The process involves planning, data analysis, consultations, budget presentation, discussions, and parliamentary approval before implementation.
