What is union budget (Union Budget 2021)

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What is union budget (Union Budget 2021)

What is Budget?

The Union Budget is an annual financial statement which encapsulates the estimated earnings from revenues and estimated expenditures of the government during a particular fiscal year.

The union Budget is prepared by the department of Economic affairs in the ministry of Finance, which will be presented in the Lok Sabha of the Parliament by the Finance Minister.

Budget in History

• First Indian budget was presented by James Wilson on 18th Feb, 1869

• First budget of independent India was presented by then Finance minister RK Shanmugham chetty on 26th Nov,1947, which was meant for only 7 and half months.

• Formation of planning commission & Five – year plans was laid in the Budget of 1949-50, which happens to be the first budget of United India, which included the princely states.

• From 1955-56, the budget documents are printed in both English & Hindi. Earlier it used to be printed only in the English language.

• Union Budget of 1973-74 was known as the ‘BLACK BUDGET’ due to the high budget deficit of Rs 550 crore.

• The tradition of presenting budget at 11 am was started by Yashwant Sinha, who announced the union budget 1999 at 11 am rather than 5 pm which used to be a previous ritual.

• Until 2016 budget was used to be presented on the last working day February, however from 2017 presentation of the budget has been shifted to 1st Feb following the changes as made by the former Finance Minister Arun Jaitley.

• Finance Minister Nirmala Sitharaman delivered the longest ever budget speech on 1st Feb, 2020 for a duration of about 2 hours & 41 minutes.

• It was Nirmala Sitharaman in 2020, who did away with a colonial-era tradition of carrying Budget papers in a briefcase and introduced the Budget ‘Bahi Khata’ or a ledger, enclosed in a red cloth folder and tied with a string.

Constitution & Budget

The Indian constitution has made the Parliament supreme in financial matters.

• Article 112 of the constitution requires the Union Government to lay an annual financial statement of estimated receipts and expenditure before both Houses of Parliament.

• Article 114 of the constitution lays that the government can withdraw money from the Consolidated Fund of India only on approval from Parliament and so it has to get the Appropriation Bills approved by Parliament.

• Since Article 265 of the Constitution prohibits the government from collecting any taxes without the authority of law, the Union government lays the Finance Bill every year before both houses of parliament for approval.

Other Budgets

• Indian Railways, Department of Telecom and Posts have their own Budgets, funds and accounts for which separate budgets will be presented.

• Besides the Union Budget, each state government will have their own budget presented by the state’s finance minister in their respective legislative assembly’s.

Union Budget Documents

• Budget at a glance
• Key to Budget Documents
• Annual Financial Statements which shows the Receipts & payments of government in three parts

  • Consolidated Fund
  • Contingency Fund
  • Public Account

• Finance bill: includes the tax rates and proposals
• Memorandum: Explanatory Memorandum provides overview of tax provisions contained in the Finance Bill
• Expenditure Budget
• Receipts Budget
• Customs & Central Excise
• Implementation of Budget Announcements
• Macro-economic framework Statement
• Medium term Fiscal policy statement
• Fiscal policy Strategy Framework
• Conclusion

Do You Know?

• In an election year, the Budget is prepared and presented twice – Interim budget is presented before the election, Once the election is over and the new government comes to power, Budget is presented again.

• The Proposed budget will come into effect from 1st April, between the presentation and effective date, the Lok Sabha can review and modify the government’s budget proposals.

• The stats of Budgets presented by Finance Ministers

Budget Presented By No.of Times
Morarji Desai 10
P Chidambaram 9
Pranab Mukherjee 8
Yashwanth Sinha 7
Yashwanth Rao Chavan 7
C.D.Deshmukh 7

Budget 2021

• This is going to be the third Budget to be presented by Union finance minister Nirmala Sitharaman.

• Union Budget 2021 is set to go digital. Rather than handing printed copies of the Budget and economic survey, soft copies will be provided to everyone amid the ongoing pandemic.

• For the First time, the budget documents will be made available on the mobile app ‘Union Budget Mobile App’.

• The documents will be made available in the mobile app after Finance minister Nirmala Sitharaman finishes presenting the union budget 2021 in the Parliament on 1st Feb,2021