We all know that the government presents the budget every year, in which it tells how much it will spend in the new financial year. It also tells where the money to be spent will come from. How much money will be raised through tax and other means and how much will be borrowed.
The round of consultation begins for the general budget
You must be wondering why we are talking about the budget right now when it will come on 1st February next year. Actually, the government is starting the formal preparation of the general budget from today i.e. 12 October 2021. Under this, there will be a pre-budget meeting of the Finance Ministry from today to the first week of November.
Finance Minister Nirmala Sitharaman’s fourth budget
Let us tell you that next year will be the second term of the Modi government and the fourth budget of Finance Minister Nirmala Sitharaman. You must remember that till 2016 the General Budget was presented on the last parliamentary working day of every February but since 2017 it is being presented on 1st February.
Begins in early December quarter
The consultation phase for budget preparation begins in the third quarter of the financial year, ie the beginning of the December quarter. It is completed in four phases: (1) Expenditure and Revenue Estimates (2) Preliminary Estimates of Budget Deficit (3) Deficit Mitigation Exercise (4) Budget Presentation and Approval.
Important role of Finance, Revenue and Expenditure Secretary
The role of the Finance Secretary, Revenue Secretary and Expenditure Secretary of the Central Government is important in preparing the general budget. In the preparation of the budget, he meets several times daily at the North Block or at the residence of the Finance Minister. In this regard, the offices of the Finance Secretary, Prime Minister and Finance Minister are called.
Interaction with Industry Chambers, Institutions and Organizations
The Finance Minister calls representatives of industry chambers like CII and FICCI, interest groups like industrialists, academicians, etc. to take inputs about the budget. But the general public can also send their suggestions regarding the budget to the Finance Ministry.
The process runs for six months from August to September
Budget preparation is the responsibility of the budget wing of the Department of Economic Affairs. The budget making process starts from August-September and is completed in six months. It has to be passed in both the Houses of Parliament – Lok Sabha and Rajya Sabha before the start of the new financial year.
The whole process goes something like this:
1. First of all, the Finance Ministry issues a circular asking all the ministries, states, union territories, autonomous organizations to make estimates for the new year. Apart from giving estimates for the new year, they also have to give details of expenditure and income of the previous year.
2. After getting the estimate, the top officers of the central government investigate it. There is an in-depth discussion on this with the officials of the concerned Ministries and Department of Expenditure. The data is then sent to the Finance Ministry along with the recommendations.
3. The Finance Ministry after considering all the recommendations allocates revenue to the departments for their expenditure. The Department of Revenue and Economic Affairs liaises with farmers and small business representatives and foreign institutional investors for an in-depth understanding of the situation.
4. In the Pre-Budget meeting, the Finance Minister meets the concerned parties to know their proposals and demands. These include representatives of the states, bankers, agronomists, economists and representatives of employees’ unions. After the pre-budget meeting is over, the Finance Minister takes the final decision on all the demands. Before finalizing the budget, the Finance Minister also talks to the Prime Minister about it.
5. A few days before the presentation of the budget, there is a Halwa Ceremony. The halwa prepared in a large pan is distributed among the staff of the Ministry of Finance. With this the printing process of the budget begins. The officers and support staff involved in the process remain in the ministry till the budget is presented. The budget for this financial year was not printed and the soft copy was given to the Members of Parliament.
6. The Finance Minister presents the General Budget in the Lok Sabha. Till 2016 it used to appear on the last day of February. From 2017 it started appearing on 1st February every year. For the first time this year, all budget documents were made available on Union Budget Mobile.
Let us now talk about some interesting facts related to the Union Budget. As such, the use of the term budget began in the British parliamentary system in the mid-18th century. Budget was derived from the French word meaning leather bag.