The Union Finance Minister, Nirmala Sitharaman, will soon rise in the Lok Sabha to present the Union Budget 2024-25. This budget will outline the government’s estimated receipts and expenditures for the upcoming fiscal year. Let’s delve into how the Union Budget is prepared through a systematic process that involves meticulous planning and consultation.
How the Budget is prepared?
The fiscal year runs from April 1 to March 31, necessitating parliamentary approval of the budget before April 1. The process of crafting the budget commences almost six months before its presentation in Parliament, initiating deliberations in August-September of the previous year.
FM circular to all ministries, UTs, and autonomous bodies
The union finance ministry kickstarts the budget-making process by issuing circulars to all ministries, states, union territories, and autonomous entities, requesting them to prepare estimates for the upcoming financial year. These circulars include guidelines and forms to assist the ministries in presenting their demands while also requiring them to disclose their earnings and expenses from the previous year alongside their estimates.
Review of proposals received
Once the proposals from the various ministries and UTs are submitted, the revenue secretary meticulously reviews them, and extensive consultations and evaluations are conducted by the Department of Expenditures and Niti Aayog. After verification and approval, the data is forwarded to the finance ministry for further scrutiny.
Estimates of revenue and expenditure
Upon receiving the data from the Department of Expenditures, the finance ministry compares the estimates of revenue and expenditure to ascertain the overall budget deficit. Subsequently, consultations with the Chief Economic Advisor are initiated to determine the government’s borrowing requirements to address the Budget deficit.
Following comprehensive deliberations and recommendations, the Finance Ministry allocates revenue to various ministries and departments for their future expenditure. In the event of discrepancies in fund allocation, discussions with the Union Cabinet or the Prime Minister are conducted before proceeding with the final decisions.
After revenue allocation, the Finance Ministry engages in pre-budget consultations with a diverse set of stakeholders such as state representatives, bankers, agriculturists, economists, and trade unions to gauge their demands and recommendations. Following extensive discussions and consideration of all requests raised during the pre-budget consultations, the Finance Minister makes the final decision after consulting with the Prime Minister.
A unique tradition associated with the budget-making process is the ‘Halwa Ceremony’. This pre-budget event marks the official commencement of activities, where the Finance Minister stirs a massive kadhai of Indian sweet dessert (Halwa) and serves it to the Ministry staff, signifying the ‘lock-in’ to prevent leaks until the budget is presented.
Finally, the Union Budget is presented in the Lok Sabha by the Finance Minister on February 1, after receiving approval from the President. The Finance Minister elucidates the key points and rationale behind the proposals during the presentation. Subsequently, the Budget is laid before both houses of Parliament for discussion and, upon approval, is forwarded to the President for final approval.
In conclusion, the preparation of the Union Budget is a thoroughly planned and consultative process that involves extensive interaction with various stakeholders and rigorous scrutiny of financial data. The Budget not only outlines the government’s financial plans but also reflects the collective efforts and considerations of multiple entities, ultimately shaping the country’s economic landscape.