The Union Budget is the annual financial statement of the Government of India. It lists the government's expected income (receipts) and spending (expenditure) for a financial year. Its constitutional basis, parts and key terms are very common in competitive exams.
Constitutional Basis
- The Budget is mentioned in the Constitution as the Annual Financial Statement under Article 112.
- It is presented in the Lok Sabha, usually on 1 February every year.
- The financial year in India runs from 1 April to 31 March.
- The Railway Budget was merged with the Union Budget in 2017.
Two Main Parts
- Revenue Budget - covers revenue receipts (taxes, interest) and revenue expenditure (salaries, subsidies).
- Capital Budget - covers capital receipts (loans, disinvestment) and capital expenditure (assets, infrastructure).
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Important Budget Terms
- Fiscal deficit - total expenditure minus total receipts excluding borrowings.
- Revenue deficit - revenue expenditure minus revenue receipts.
- Primary deficit - fiscal deficit minus interest payments.
- Finance Bill - contains the government's tax proposals.
- Appropriation Bill - allows the government to draw money from the Consolidated Fund.
Budget Process
- The Budget is prepared by the Department of Economic Affairs, Ministry of Finance.
- It must be passed by Parliament before the start of the financial year.
- Vote on Account allows the government to meet expenses until the full Budget is passed.
Quick Revision Points
- Budget = Annual Financial Statement, Article 112.
- Presented in Lok Sabha on 1 February.
- Financial year: 1 April to 31 March.
- Two parts: Revenue Budget and Capital Budget.
- Fiscal deficit = total expenditure - receipts excluding borrowing.
- Finance Bill = tax proposals.
- Railway Budget merged with Union Budget in 2017.