Budget 2024: What is the Union Budget? How is it prepared? Know everything, from Significance to objectives

Welcome, budget enthusiasts! Ever wondered about the Union Budget and how the Indian government plans its finances for the year? Well, you’re in the right place! Let’s dive into the nitty-gritty of Budget 2024 and unravel the mysteries behind this crucial financial plan.

As per Article 112 of the Indian Constitution, the Union Budget, also referred to as the annual financial statement, serves as an announcement of the anticipated receipts and expenditures of the government for the respective year. Annually, on February 1, the Government of India unveils the Union Budget.

This financial plan outlines the government’s financial activities for the fiscal year spanning from April 1 to March 31.

Types of Union Budget  

Revenue Budget: Managing Daily Finances

The revenue budget is all about the day-to-day financial operations of the government.

It comprises revenue receipts, which include tax and non-tax income, and revenue expenditure, covering the routine costs of running the government and delivering services to the citizens. A revenue deficit occurs when the government’s spending surpasses its revenue collection.

Capital Budget: Building for the Future

The capital budget focuses on the government’s assets and liabilities. It involves capital receipts, such as loans from various sources like the government, foreign entities, and the Reserve Bank of India (RBI).

Capital expenditure includes investments in machinery, buildings, healthcare facilities, education, and other long-term development projects. A fiscal deficit arises when the government’s total expenditure exceeds its overall revenue.

Here is an easy breakdown of Union Budget Types

Ever wondered where India spends its cash? Well, just like you, the government has two main wallets for its money: the revenue budget and the capital budget. Let’s see what each one holds!

Revenue Budget: Day-to-Day Expenses

• Think of it as the running costs of our country.
• It covers things like salaries for teachers, doctors, and police officers.
• It also pays for electricity bills, repairs to bridges, and even free midday meals in schools.
• Money comes in through taxes we pay and fees for different services.
• If spending is more than income, a “revenue deficit” happens.

Capital Budget: Investing in the Future

• This is like your savings to make big purchases.
• It’s used to build new roads, hospitals, and schools, and even buy fancy machines for factories.
• Money comes from loans or selling old stuff.
• If total spending is higher than total income, it’s called a “fiscal deficit”.

So, What Does This Mean for You?

Understanding the budget helps you see how your tax money is used and how it affects your life. By knowing the different types, you can be more informed about how the government invests in the future of India and its citizens!

Remember:

• Budget = Government’s financial plan for the year.
• Revenue Budget = Day-to-day expenses like salaries and services.
• Capital Budget = Long-term investments like roads and schools.
• Balanced Budget = Income = Expenses (No deficit).
• Deficit = When expenses are more than income (Govt. borrows money).

Hope this makes the Union Budget a bit clearer! If you have any more questions, just ask!

In summary, the Union Budget can be classified into two types: the revenue budget, which addresses daily financial matters, and the capital budget, which revolves around building and investing for the future.

Budget 2024: How the Union Budget is prepared?  

The Union Budget-making kicks off around August-September, a good six months before it’s presented.

The Finance Minister takes the lead, working closely with advisors and bureaucrats. Before diving into the nitty-gritty, the Finance Minister seeks input from business leaders and experts. Various accounting and financial institutions also chip in with their thoughts and proposals.

The whole process unfolds in four key stages: first, there are estimates of what’s going to be spent and earned. Then, there’s the initial estimate of the deficit. After that, efforts are made to narrow down that deficit. Finally, the budget gets presented and needs approval.

In the lead-up to this year’s Union Budget, Finance Minister Nirmala Sitharaman had already held pre-budget meetings with different ministries and sections, gearing up for the big financial plan ahead.

What are the Steps to Prepare the Union Budget?

Ever wondered how India decides where to spend all its money? It’s not just a magic trick – it’s a well-oiled machine called the Union Budget-making process, and it has some pretty cool steps!

Stage 1: Whispers Start Spreading (June-August)

• The Finance Ministry sends out letters (like whisperers) to everyone – ministries, states, even universities!
• These letters have special forms and tips to help everyone tell the Ministry their needs and wishes for the next year’s budget.
• Each department shares its past year’s spending and income, like a mini report card.

Stage 2: Sorting the Wishes (September-October)

• Big government officials gather (like the wise owls) to carefully examine everyone’s requests.
• They talk to departments and the “expenditure department” (like financial advisors) to understand everything.
• Once all the information is checked and double-checked, the Finance Ministry divides the “budget pie” (money) among different departments for their upcoming plans.
• If there’s a disagreement about who gets what slice, they even ask the Prime Minister or the whole Cabinet for advice!

Stage 3: Listening to Everyone (October-November)

• To understand what people really need, the “Economics” and “Revenue” departments chat with farmers, small business owners, and even foreign investors!
• These are like open-ears sessions where everyone gets to share their hopes and concerns about the budget.

Stage 4: Pre-Budget Buzz (December-January)

• The Finance Ministry throws a big party called “pre-budget meetings” where they invite everyone – state leaders, farmers, bankers, even labor unions!
• It’s like a giant brainstorming session where everyone shares their ideas and wishes for the budget.
• In the end, the Prime Minister takes a final look at all the requests before giving the thumbs-up.

Stage 5: The Sweet Celebration (February 1st)

• A few days before the big reveal, the Finance Ministry holds a special ceremony called the “Halwa Ceremony”!
• It’s like a mini-festival where everyone in the Ministry makes and enjoys a big pot of sweet “halwa” together.
• This marks the official start of printing the final budget document!

Stage 6: The Big Announcement (February 1st)

• Finally, the big day arrives! The Finance Minister presents the budget to Parliament, like a grand speech to the whole country.
• They explain all the important parts of the budget and why certain decisions were made.
• After that, both houses of Parliament discuss and debate the budget like a big family meeting.
• If everyone agrees, the budget goes to the President for their final stamp of approval.

And that’s how, my friends, India’s Union Budget comes to life! It’s a long and careful process that makes sure every penny is spent wisely for the good of our country. So next time you hear about the budget, remember this exciting journey it takes before reaching our hands!

Bonus Tip: Want to learn more about specific parts of the budget? Check out the table below!

What is the objective of presenting the budget? 

Presenting the budget serves several crucial objectives for a nation like India:

1. Setting Financial Roadmap:

• Allocation of Resources: The budget acts as a blueprint, outlining how the government plans to allocate its limited resources across various sectors like infrastructure, education, healthcare, defense, and social welfare. This ensures balanced and targeted spending based on national priorities.

• Fiscal Discipline: The budget sets a framework for the government’s spending and borrowing, promoting fiscal discipline and long-term financial stability. By presenting revenue and expenditure estimates, it fosters transparency and accountability, allowing citizens to understand how their tax money is being utilized.

2. Driving Economic Growth:

• Stimulating Economy: The budget can be used to stimulate the economy by investing in critical sectors like infrastructure and manufacturing. This can create jobs, boost productivity, and increase overall economic output.

• Attracting Investments: A well-defined budget with clear policies can attract domestic and foreign investors, further fueling economic growth and development. Additionally, it provides businesses with information on potential incentives and tax breaks, influencing their investment decisions.

3. Social Welfare and Equity:

• Reducing Poverty and Inequality: The budget can be used to address social issues like poverty and inequality by allocating funds for targeted programs in education, healthcare, and social security. This helps ensure equitable distribution of resources and promotes social welfare.

• Promoting Public Services: The budget allocates funds for essential public services like education, healthcare, sanitation, and transportation. This ensures the well-being of citizens and improves their quality of life.

4. Political Communication:

• Public Trust and Confidence: The budget presentation serves as an opportunity for the government to communicate its economic vision and priorities to the public. This fosters transparency, builds trust, and strengthens public confidence in the government’s economic management.

• Legislative Approval and Debate: By presenting the budget to Parliament, the government seeks its approval for financial allocations. This leads to open discussions and debates on economic policies, engaging various stakeholders in the decision-making process.

In conclusion, the presentation of the budget goes beyond mere numbers. It represents a nation’s economic vision, sets the direction for future growth, and reflects the government’s commitment to its citizens’ well-being.