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Things related to the Union Budget of India

Facts related to the Union Budget of India

About the budget

  • According to Article 112 of the Indian Constitution, a union budget is an annual financial statement capturing the government's estimated receipts and expenditures for a fiscal year.
  • Every year, the Government of India prepares and delivers a document to the Lok Sabha. It includes projected revenues and proposed spending for the future fiscal year (which starts on April 1 and extends until March 31 of the following year). 
  • The government budget covers a country's monetary demands and challenges and how to resolve them.
  • Budgeting is vital since it determines a country's economic development and advancement.

About the preparation of the union budget

  • Under Articles 112-117 of the Indian Constitution, the parliament can enact the budget.
  • According to Article 112, the president of India is responsible for presenting the budget to the Lok Sabha.
  • The Union Budget is prepared by the Budget Division of the Department of Economic Affairs, Ministry of Finance.
    • It issues a circular in September to all the Union Ministries, states, UTs, defence forces, autonomous bodies, and departments to prepare the estimates for the upcoming financial year.
    • Once the estimates are sent, extensive consultations are held between all the ministries and the Department of expenditure of the Finance ministry.
    • Also, the Department of Economic Affairs and the Department of Revenue meet stakeholders, such as farmers, businessmen, economists, etc., to take their views.
  • Once all the pre-budget meetings are done, the finance minister takes the final call on tax proposals. Everything is discussed with the prime minister, and finally, the budget is frozen.
  • On February 1, the Finance Minister presented the budget to the parliament.
  • The Minister of Finance first presents the general budget in the Lok Sabha. After the conclusion of the budget speech in Lok Sabha, the annual financial statement is laid on the table of Rajya Sabha.

The objective of the budget

  • Economic Growth- Savings and investments are critical to a country's overall economic growth. Therefore, budgetary strategies are implemented to instil sufficient alternatives in various public sectors. The government provides provisions to increase the rate of savings and investment in the economy.
  • Reallocation of resources- The government allocates resources and wealth fairly through a budget. They stimulate the growth of small companies such as "Khadi" by providing subsidized loans and lower taxes on raw materials used in production. To discourage the development of dangerous items such as cigarettes and alcohol, the government might put high taxes on their production.
  • Income redistribution- The government implements many budgeting initiatives to narrow the income gap between the affluent and the poor. Subsidies, taxes, and other fiscal tools are effectively employed to attain this purpose.
  • Financial stability- The budget focuses on reducing market price volatility. Programs such as the deficit budget during deflation and the surplus budget during inflation thrive on delivering economic stability.
  • Reducing economic inequality- The government strives to achieve economic equality in society. They accomplish this by levying taxes on the wealthy sections of society and using the proceeds to benefit the economically disadvantaged members of society.

Iconic budgets of india

Name 

Description

Black budget

  • The Finance Minister in Indira Gandhi's government, Yashwantrao B. Chavan, presented this budget for 1973-74 on February 28, 1973.
  • It is known as the "Black Budget" due to a significant budget deficit of Rs 550 crore—the highest until then. 
  • During the 1971 Indo-Pak conflict, the budget collapsed during the monsoon season.
  • This was done to provide an ongoing coal supply in response to the increased demand for coal in sectors such as electricity, cement, and steel.

Carrot and Stick Budget

  • On February 28, 1986, VP Singh submitted the Union budget to the Congress government, which was the first step towards abolishing the licensing raj in India. 
  • It was termed the "Carrot and Stick" budget as it offered incentives and punishment. 
  • It implemented the MODVAT (Modified Value Added Tax) credit to reduce the cascading impact of tax that customers had to pay while simultaneously undertaking an aggressive campaign against smugglers, black marketers, and tax evaders.
  • This effect occurs when a product is taxed at every stage of manufacture. Such a product is taxed until it is sold to the customer.

Epochal Budget

  • On July 24, 1991, Manmohan Singh, Finance Minister in the Narasimha Rao cabinet, introduced this budget.
  • The "Epochal Budget"—a budget that permanently transformed India as it signalled the nation's economic liberalization.
  • It abolished the licensing raj and inaugurated the age of economic reform.
  • It was presented when India was on the verge of economic collapse, including measures such as lowering the customs tax from 220 to 150 per cent and encouraging exports.
  • The import-export strategy was revised under this budget. 

Dream Budget

  • The 1997-98 Budget, given by P Chidambaram, was dubbed a "Dream Budget" because it laid down the groundwork for substantial reforms such as lower personal income and corporate taxes.
  • In the 1997-98 budget, P Chidambaram employed the Laffer Curve idea to cut tax rates in order to boost revenue. 
  • He reduced the highest marginal income tax rate for individuals from 40% to 30% and for domestic corporations from 35% to 35%, among other important tax measures, including voluntary disclosure of income plans to collect black money.

Millennium Budget

  • On February 29, 2000, Finance Minister Yashwant Sinha introduced this budget with the objective of promoting India as a major software development hub.
  • The introduction of software export accelerated the expansion of the Indian IT (Information Technology) sector.
  • The expansion of India's IT industry by phasing out incentives for software exporters and lowering customs duties on 21 products such as computers and computer equipment.

Rollback Budget

  • Yashwant Sinha's 2002-03 budget for the NDA government led by Atal Bihari Vajpayee is referred to as the "Rollback Budget" since some proposals were canceled or rolled back.
    • He eventually turned back some of his ideas, ranging from a service tax hike to an increase in LPG rates.
  • Not all budgets are expected to offer new initiatives; at least one budget became known for rollback measures. 

Once-in-a-century Budget

  • Nirmala Sitharaman announced a "once-in-a-century budget" on February 1, 2021, with the goal of revitalizing Asia's third-largest economy through investments in infrastructure and healthcare, as well as an aggressive privatization plan and substantial tax collections.

Interesting facts about the Union Budget

    • The Budget is presented on February 1 because that gives enough time to enact any legislative changes for the coming fiscal year, which begins on April 1 and ends on March 30 of the following year.
  • Halwa Ceremony
      • Once the Budget is sealed, the Finance Minister, Finance Ministry officials, and Budget staff members gather for a one-of-a-kind custom known as the halwa ceremony. 
      • The dessert, which signals the start of any important celebration in Indian traditions, is prepared in a big pot and delivered by the FM to all Present attendees.
  • First Budget of India
      • The East India Company presented the British Queen with the first Union Budget of Colonial India on April 7, 1860. 
      • James Wilson, a Scottish economist and politician, delivered it.
  • First Budget of Independent India
      • R K Shanmukham Chetty, India's first finance minister, delivered the first Budget of Independent India. This was from August 15, 1947, to March 31, 1948, a span of seven and a half years.
  • Budget leak 
      • The Budget was printed in Rashtrapati Bhavan until it was leaked in 1950 when it had to be moved to a press on Minto Road in New Delhi. A government press was established in the North Block, the finance ministry's headquarters, in 1980.
      • To prevent leaks, those involved directly in the budget-making process are relocated to the North Block's basement for ten days before the Union Budget. They are cut off from their relatives and friends until February 1, when the Budget is presented.
  • The Republic of India's First Budget was presented in 1951.
      • This Budget, presented by John Mathai, the finance minister in the Congress administration, paved the way for establishing the Planning Commission.
        •  The Planning Commission evaluates and plans how to best employ the country's resources.
  • The Union Budget was used to address in English till 1955.
      • On the other hand, the Congress-led government eventually chose to print the Budget documents in both Hindi and English. 
      • The Budget has undergone several alterations since then, with the 2021-22 version being paperless.
  • Change of Budget Presentation Date
      • Another custom in the United Kingdom was to present the Budget on the final business day of February. Former Finance Minister Arun Jaitley modified this norm in 2017 by changing the Budget presentation date to February 1.
    • Until 2017, the Railway and Union Budget was presented separately. After 92 years of being presented separately, the Railway Budget was combined into the Union Budget in 2017 and presented concurrently.
  • The first female to present the Budget.
      • Former Prime Minister Indira Gandhi, who delivered the Union Budget in 1970, was the first woman to do so.  
  • Maximum biggest present by the Finance Minister 
      • Moraji Desai has a record of presenting ten budgets.
  • Maximum Budget presented by the female Finance Minister
      • Nirmala Sitharaman presently holds the record for the most budgets presented in Indian history. 
      • Sitharaman became the second woman in 2019 to present the Budget, following Indira Gandhi, who did it in 1970-71.
    • Sitharaman ditched the conventional budget briefcase in favour of a traditional 'bahi-khata' with the National Emblem to carry the speech and other papers that year.
  • Longest budget speech
      • Sitharaman holds the record for delivering the longest speech, speaking for two hours and 42 minutes on February 1, 2020, when presenting the 2020-21 Union Budget. She had to cut her speech short since she only had two pages left.
  • Shortest Budget speech  
      • Hirubhai Mulljibhai Patel, Finance Minister, gave the 1977 Budget, which was only 800 words long.
  • Budget speech with the most words
      • Former Prime Minister Manmohan Singh was a man of few words, yet as Finance Minister, he made the speech with the most words - 18,650 - in 1991.
  • Change in Budget Presentation Time
    • Former Finance Minister Jaswant Singh moved the schedule of the Government Budget presentation from 5 p.m. to 11 a.m. in 1999. The 5 p.m. budget presentation was a British practice that ended in 1999.

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