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Basics of union budget- 

• A budget is an elaborate statement of the expenditure and income of the government for the given financial year, which begins on April 1 and ends on 31st march.
• The constitution uses the words annual financial statement instead of the Budget, which is enshrined under article 112 of the constitution. 

• In addition to the estimates of receipts and expenditures, the Budget contains certain other elements, which are as follows-
  • Estimates of revenue and capital receipts
  • Ways and means to raise revenue.
  • Estimates and expenditure
  • Details of actual receipts and expenditures of the closing financial year and the reason for any deficit or surplus in that year
  • The fiscal and economic policy for the upcoming year, including proposed taxes, income projections, a spending plan, and the introduction of new programs/projects. 
• It was prepared by the Department of Expenditure, ministry of finance, and presented by the finance minister on behalf of the president on February 1.
• The Indian constitution under Article 112- 117 enshrines the power of the parliament to enact a budget. 
• The Indian government had two budgets up to 2017: the general budget and the budget for the railways

History of Budget-

• 1860- India's first Budget was prepared and presented by James Wilson.
• 1921- railway budget was separated from the general Budget in 1924 on the recommendations of the Acworth Committee (1921), as it was a very big sector contributing 70% of India's economy.
• The reasons for the separation of the Budget-
• To introduce flexibility in railway finance.
• To enable a commercial approach to the railroad policy 
• A guaranteed annual contribution from railroad revenues will be provided to ensure the general revenues' stability.
• This would allow the railways to retain their income for internal growth.

2017- after the recommendation of NITI Aayog, the general Budget and the railway budget were combined. Hence, now there is only one single Budget for the government of India, called the union budget.

Constitutional provision related to Budget-

• Article 112 provides that the president shall lay an annual financial statement before the parliament.
• Article 113- Provides that no demand for a grant shall be made except on the president's recommendation.
• Article 114- provides that no money shall be withdrawn from the consolidated fund of India except by appropriation made by law.
• A money bill imposing the tax shall be introduced in the parliament only on the president's recommendation, and such a bill shall not be introduced in rajya sabha.
• Article 265: provides that 'no tax shall be levied or collected except by authority of law'.
• Article 266: provides that 'no expenditure can be incurred except with the authorization of the Legislature'
• Parliament can reduce or abolish tax but cannot increase it.
• The estimated expenditures included in the Budget must show the expenditures made from and those charged to the Consolidated Fund of India separately. The charged expenditure is only subject to mere voting, whereas expenditure made is subject to voting and discussion.
• Constitution has also defined the roles of both houses of the parliament w.r.t the enactment of the Budget-
• A money bill or a finance bill dealing with taxation should only be introduced in the Lok Sabha and cannot be introduced in the rajya sabha.
• The Rajya Sabha cannot vote on a grant request; that authority belongs only to the Lok Sabha. 
• Within 14 days, the Rajya sabha must return the money bill to the Lok Sabha. The Lok Sabha can even reject the recommendations made by the Rajya sabha in this regard.

Stages of presentation of Budget-

• Presentation of Budget- 
• The Budget was presented in the Lok Sabha by the finance minister on February 1.
• Earlier, it used to be presented on the last day of February, but in 2017 the presentation of the Budget has been advanced to February 1.
• The finance minister represents the Budget with the 'budget speech'.
• At the end of the speech, the Budget is laid before the Rajya Sabha, which can only discuss the Budget and has no power to vote on 'demand for grants'.
• The budget document is then presented to the parliament and comprises the following-
• Budget speech
• Annual financial statement
• Demand for grants
• Appropriation bill 
• Finance bill
• Statements mandated under the FRBM act
• macroeconomic framework statement
• Fiscal policy strategy statement
• Medium-term fiscal policy statement
• Expenditure budget
• Receipts budget
• Expenditure profile
• Memorandum explaining the provisions in the finance bill.
• Budget at glance
• Outcome budget
• General Discussion- 
• The general discussion about the Budget is held a few days after the presentation. It may take place in both houses of the parliament and last for three to four days. 
• The Lok Sabha may consider the Budget as a whole or any related legal issue at this time, but no cut motion may be made, and the Budget may not be put to the vote of the house.
• The finance minister has a general right to reply at the end of the discussion.
• Scrutiny by departmental committees- 
• After the general discussion of the Budget is over, the houses are adjourned for about 3-4 weeks.
• In this period of 3-4 weeks, every need and demand made by ministries is scrutinized by the 24 department-related standing committees.
• They examine and discuss the demand for grants in detail and then prepare reports on them.
• The reports are then sent to both houses of the parliament for consideration.
• Voting on demand for grants- 
• Based on the reports of the departmental standing committees, the Lok Sabha takes up voting for demand for grants which is done ministry-wise.
• A demand becomes a grant when it has been properly voted upon. 
• The voting on demands for grants is the exclusive privilege of Lok sabha.
• Such voting is only confined to a particular part of the Budget and does not extend to the expenditure charged on the consolidated fund of India.
• The Lok Sabha votes on each demand in its chamber. During this stage, the parliament members can discuss the Budget's details.
• They can also move motions to reduce any demand for grants. Such motions are called 'cut motions' which are as follows-
• Policy cut motion- this shows the policy's disapproval, and the demand amount is reduced to Re 1.
• Economy cut motion- under this motion, demand is reduced by a specified amount.
• Token cut motion- the amount of demand is reduced by Rs 100.
• Passing of appropriation bill- 
• It was introduced to provide for the appropriation out of the Consolidated Fund of India.
• The appropriation bill becomes the appropriation act after it is assented to by the president. The act authorizes payments from the CFI.
• Passing of the finance bill- introduced to give effect to the finance side of the Budget.

Basic terms related to Budget- 

• Annual financial statement- 
• Article 112 of the Indian constitution requires the government to present to parliament a statement of estimated receipts and expenditures in respect of every financial year, i.e. from April 1 to March 31.
• Demand for grants- According to Article 113 of the Constitution, estimates of expenditure from the Consolidated Fund are presented to the Lok Sabha in the form of Demand for Grants. In contemporary democracies, it is widely accepted that no money may be taken out of national coffers without the government's consent. 
• Budget estimate- the sum of money set out in the Budget for a particular ministry or project for the upcoming fiscal year. 
• A revised estimate is the revised number for the amounts expected to be spent or earned in the current financial year when the Budget is presented. 
• Gross Domestic Product- It is the final cost of the goods and services produced within the country's geographic boundaries in a specific period of time. In other words, it is the measure to calculate the country's economic output.
• Nominal GDP- 
• It is the total value of the final goods and services produced in an economy in a year.
• It is not adjusted for inflation. 
• It is calculated by using the current prices to produce the output.
• Real GDP- 
• It is the total value of the economy's final goods and services during a given year, accounting for inflation. 
• It is calculated by using the prices of the base year. 
• To calculate Real GDP, determine how much of GDP has been changed by inflation since the base year, and divide out the inflation each year.
• The base year is 2011-12
• Inflation -
• A general rise in the prices of goods and services.
• It measures the average prices of the basket of goods and services.
• It indicates the decreasing purchasing power of the currency.
• It is calculated in percentage.
• It is measured by the Ministry of Statistics and Programme Implementation.
• The RBI has set a target inflation rate of 4% with a tolerance range of +/-2%.
• Capital account- all receipts and expenditures that liquidate or create an asset would generally be under a capital account.
• Capital receipts are loans taken by the government in the form of bonds or other borrowings. The government has to repay the amount at some point in time.
• Capital expenditure- expenditure incurred on creating assets/repayment of liabilities. 
• Components of capital receipts-
• Recovery of loans and advances
• Disinvestment
• Borrowings (domestic and external)
• Revenue account- it affects the profit and loss account of the government.
• Revenue receipt- income from taxes for the government. The government does not have to return the amount to the payers.
• Revenue expenditure- day-to-day expenditure, i.e., not incurred on the creation of assets or repayment of liabilities.
• Deficit financing- 
• It is a budgetary situation where expenditure is higher than revenue. 
• It is the practice adopted for financing excess expenditure with outside resources.
• The difference between spending and revenue is covered by borrowing or printing money. 
• Types of deficit in the Budget-
• Revenue deficit- revenue expenditure - revenue income.
• Fiscal deficit- when the government's non-borrowed receipts fall short of its entire expenditure, it has to borrow money from the public to meet the shortfall.

Fiscal deficit= (revenue expenditure + capital expenditure)-(revenue receipt + capital receipt except borrowing)

• Primary deficit.- it is the fiscal deficit minus interest payments. It tells how much of the government's borrowing is meeting expenses other than interest payments.

Accounts of the government of India-

• Consolidated fund of India-
•  it is provided under article 266(1) of the Indian constitution of india. 
• It includes all the revenue raised by the government, money borrowed, and receipts from loans given by the government flow into the consolidated fund of India,
• All government expenditure is made from this fund, except for exceptional expenses like disaster management. 
• No amount can be withdrawn from the consolidated fund with due authorization by the parliament.
• A contingency fund of India- 
• It is contained under article 267 of the constitution of India.
• The contingency Fund of India exists to meet unexpected expenses by the President of India.
• Parliamentary approval for such unforeseen expenditure, ex post facto, and an equivalent amount is drawn from the consolidated fund to recoup the contingency fund after such ex post facto approval.
• The present corpus of the contingency funds, as authorized by the parliament, is rupees 500 crores.
• Public account- 
• The provision regarding the same is contained in article 266(2) of the Indian constitution.
• It is the money held by the government in trust.
• Money retained in the public account includes provident funds, minor saving collections, and government revenue for spending on particular things like road building, primary education, other reserve special funds, etc. 
• Funds from public accounts are not the government's property and must be repaid to the relevant parties and authorities.
• Parliamentary approval is optional to withdraw money set aside for specific purposes.

Expenditure- The Budget comprises two different sorts of expenditures: those charged to the Consolidated Fund of India and those made out of it.

• Charged expenditure of consolidated fund of India- the charged expenditure is not subject to voting by the parliament, i.e. it can only be discussed in parliament.
• The list of charged expenditures is as follows-
• Emolument and allowance of the president and other expenditures relating to his office.
• Salaries and allowances-
• Chairman and deputy chairman of rajya sabha
• Speaker and deputy speaker of Lok sabha
• Salary, allowances and pensions-
• Sc judges
• Comptroller and auditor general
• Chairman and members of UPSC
• salary and allowances of judges of the high court to be charged from the consolidated fund of the state 
• The pensions of the high court judge are charged from the consolidated fund of India.
• Administrative expenses-
• Supreme court
• Office of CAG
• UPSC 
• Debt charges for which the government of India is liable
• Any charges required to satisfy the judgment, decree, or arbitral tribunal.
• Any other expenditure charged by the parliament to be so charged.
• Corporate tax-Corporate tax is the tax levied by the Government of India on the net income or profit that corporate organizations make from their operations. It is also referred to as Corporation Tax. 
• Minimum alternate tax seeks to include all firms in the income tax system. The MAT ensures that no business with substantial assets and high income may avoid paying income tax, even after claiming exemptions. The MAT levied 15% of book profits as of January 2022.