How is the Union budget made?
The Union Budget is one of the most important announcements by the government for which the whole country waits eagerly. The Union Budget, which is usually presented on the last working day of February every year, attracts attention because of the secrecy around the budget-making process and the government's announcement of new policies and programmes. The Budget 2016-17 will be presented on 29 February.
The Union budget or the annual financial statement is an annual account of the government's finances including revenues and expenditure. Article 112 of the Constitution mandates the government to present before the parliament its management of finances. The government in the Union Budget, also presents the policies and programmes for the upcoming year along with the tax rates which affect citizens.
Independent India's first budget was presented by the then finance minister, RK Shanmukham Chetty on 26th November 1947.
The budget preparation is a consultative process which starts in September of the previous year (2015) and continues till February (2016). The budget preparation involves consultation among ministries, the Ministry of Finance, and NITI Ayog. In September, the Ministry of Finance issued a circular to the various ministries, states, Union Territories, autonomous bodies, departments, etc. asking for estimates for the next year.
After the ministries and departments send their demands, consultations happen at 2 levels. Internal consultations take place between various ministries and the Ministry of Finance. Externally, consultations are held between the government and various pressure groups such as farmers bodies, industry bodies, etc. The consultation process and pre-budget meetings continue till late January after which the Finance Minister decides on tax proposals.
The budget proposals are then discussed with the Prime Minister before they are finalised. The printing process for the budget starts with the 'halwa' ceremony in which 'halwa' is prepared in a big 'kadhai' (pan) and is served to all the staff. After this ceremony, the officials involved in the budget preparation are required to stay in the ministry till the budget presentation.
Around 100 officials and the support staff involved in the budget-making process are "locked" in the North Block to maintain the secrecy of the budget. They cannot even contact their family members.
The Union Budget is presented by the Finance Minister (FM) in the Lok Sabha and is tabled in the Rajya Sabha only after the Finance Minister's speech. The budget speech of the FM has 2 parts- Part-A details the economic survey and policy statements, and Part-B details the tax proposals. Discussion on the budget doesn't happen immediately but after 2-3 days.
Once the budget is passed by both the houses, it receives assent from the President and comes into effect. The whole process has to be completed within 75 days.