Knowing the budget process will help in understanding how the Union Budget in India is prepared and presented and implemented. Here’s the detailed view of the budget process:
1. Preparation Stage:
a. Budget Circular
The Ministry of Finance issues a budget circular to all ministries, departments, and autonomous bodies.
This circular includes guidelines and timelines for submitting budget proposals.
b. Consultations
The Finance Ministry holds consultations with various stakeholders, including:
Central Ministries and Departments: Their requirement of funds and projects.
State Governments: State-level requirements on the financial front and issues.
Economic Experts and Industry Representatives: Inputs and recommendations from economists, industry bodies and think tanks.
Public and Citizen Groups: Pre-budget suggestions and feedback from citizens through multiple channels, including through online means.
c. Estimates of Revenue Receipts
The Department of Revenue prepares estimates of receipts from different sources of revenue such as taxes and non-tax revenue, and other receipts.
d. Spending Estimates
Every ministry and department sends its spending estimates for the coming fiscal year.
They are scrutinized and modified by the Ministry of Finance in light of general fiscal policy and priorities.
e. Economic Survey
One day before the budget, an Economic Survey is presented in Parliament.
It provides a review of the performance of the economy during the last year, together with prospects for the future in setting the context for the Budget.
2. Approval Stage
a. Budget Presentation
The Union Budget is presented to Parliament by the Finance Minister, generally on 1st February
The Budget speech gives an account of the government’s fiscal policy, proposed changes in taxation, and major allocations.
b. Budget Documents
The document comprises mainly of:
Annual Financial Statement: This is the main budget document showing estimated receipts and expenditure.
Finance Bill: It contains the proposals of imposing new taxes or altering the present tax structure.
Appropriation Bill: It sanctions the government to withdraw money from the Consolidated Fund of India in order to meet the expenses.
c. Parliamentary Debates
After the Presentation, the budget is debated upon in both the houses of Parliament (Lok Sabha and Rajya Sabha).
The MPs discuss, debate, and minutely scrutinize various proposals and allocations.
d. Standing Committees
The budget proposals are forwarded to various parliamentary standing committees.
These committees study the proposals falling under their respective ministries and send in their recommendations.
3. Enactment Stage.
a. Voting on Demands for Grants
The Lok Sabha votes on the demands for grants of various ministries and departments.
Through this mechanism, each ministry’s budgetary allocation is discussed threadbare and voted upon.
b. Passage of the Finance Bill
The tax proposals are a part of a bill known as the Finance Bill, which is introduced in the Lok Sabha and debated and passed.
It is then sent to the Rajya Sabha, which may recommend changes but the decision of the Lok Sabha prevails.
c. Passage of the Appropriation Bill
The Appropriation Bill authorising expenditure is also passed by the Lok Sabha and then sent to the Rajya Sabha.
Whichever form the house passes and is agreed to by both houses, it becomes an Act, then making the drawing of funds from the Consolidated Fund of India possible.
4. Implementation Stage
a. Allocation of Funds
The Ministry of Finance, after the budget has been approved, allots funds to different ministries and departments based on the approved budget.
b. Monitoring and Control
The budget is implemented while being kept under close monitor through various mechanisms, including the following :
Quarterly Reviews: Ministries have to submit quarterly reports about money spent and progress.
a. Performance Audits: The audit is conducted to ensure proper utilization of funds by the Comptroller and Auditor General.
c. Mid-Year Reviews
The Ministry of Finance conducts the mid-year review to assess progress in the implementation of the budget and make correctional measures where necessary.
