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

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Budget 2024: According to Article 112 of the Indian Constitution, the Union Budget of the year, commonly known as the annual financial statement, is a declaration of the government's expected receipts and expenditures for that year. Every year on February 1, the Government of India presents the Union Budget. 

The Union Budget accounts for the government's finances during the fiscal year that runs from April 1 to March 31.

Types of Union Budget  

The Union Budget is divided into two parts: the revenue budget and the capital budget.

While the revenue budget contains items that do not affect the government's assets and obligations, the capital budget includes goods that do. The government develops an annual budget, which comprises capital and revenue budgets. 

The revenue budget details the government's revenue and spending. Tax income and non-tax revenue are the two types of revenue receipts. Revenue expenditure refers to the costs of running the government daily and providing various services to residents. The government incurs a revenue deficit when revenue spending exceeds revenue collections. 

The capital budget comprises the government's capital receipts and payments. Loans from the government, foreign governments, and the RBI account for a large portion of the government's capital receipts. Capital expenditure is defined as spending on the development of machinery, equipment, buildings, health facilities, education, and so on. When the government's entire expenditure exceeds its total revenue, a fiscal deficit is created.

The capital budget includes the government's capital receipts and expenditures. A considerable amount of the government's capital receipts is accounted for by loans from the government, foreign governments, and the RBI. Capital expenditure is described as spending on the development of machinery, equipment, buildings, health care facilities, education, and other such items. A fiscal deficit occurs when the government's total expenditure exceeds its total revenue.

Budget 2024: How the Union Budget is prepared?  

The budget-making process begins in August–September, over six months before the date of presentation. It is prepared by the Finance Minister with the help of advisors and bureaucrats. Before preparation, the Finance Minister invites input from business leaders and experts. In the process, various accounting and financial institutions also provide their thoughts and proposals.

The budget has four stages that include estimates of expenditures and revenues, first estimate of the deficit, the narrowing of the deficit, and the presentation and approval of the budget.
For this year's Union Budget, Finance Minister Nirmala Sitharaman had already done pre-budget meetings with different ministries and sections.

Steps to prepare Union Budget: 

1- At the start of the budget-making process, the finance ministry sends circulars to all ministries, states, union territories, and autonomous organisations. These circulars contain basic forms as well as essential guidelines, which ministries utilise to convey their requirements and expectations.

These ministries provide their previous year's earnings and spending, as well as provide estimates. After receiving requests, key government officials examine them and consult with ministries and the expenditure department.

Once the data has been authenticated, the finance ministry assigns revenue to several divisions for upcoming outlays. If there is a disagreement over how money should be divided, the finance ministry consults with the Union Cabinet or the Prime Minister. 

2- For a better understanding, the Department of Economic Affairs and Revenue communicate with other stakeholders, such as agriculturists, small company owners, and foreign institutional investors.

3- The finance ministry regularly has pre-budget discussions with various stakeholders to learn about their views and needs. Participants include state leaders, agriculturists, bankers, economists, and labour organisations. Before confirmation, all requests are considered further by the Prime Minister.

4- The government has a yearly custom of holding a halwa ceremony a few days before the Budget is presented. The event marks the beginning of Budget document printing. As part of the celebration, a massive "kadhai" (big frying pot) is used to make "halwa," which is then fed to the whole finance ministry workers. 

5- The last stage of the budget-making process is the presentation of the budget to Parliament. The finance minister gives the presentation on the first day of the Budget session. During the presentation, the minister summarises the important aspects of the text and explains the logic behind the suggestions.

Following the presentation, the Budget is presented to both chambers of the Parliament for debate. The Budget is sent to the President for approval once it has been approved by both chambers.
Budget creation is a time-consuming procedure that involves several processes and consultations. Each stage is critical to ensuring that public funds are used wisely and allocated effectively. The significance of this document cannot be overstated since it governs how the government operates and uses its resources to build the country. 

Union Budget 2024: What is the objective of presenting the Budget? 

The overall goal of the Union Budget is to achieve our country's quick and balanced economic growth while also promoting social justice and equality. The goal is to ensure effective resource allocation, minimise unemployment and poverty, reduce wealth and income disparities, keep prices under control, and reform the tax system.