Union budget making in india 2025- 26

The Union Budget for India for the fiscal year 2025-26 will be presented by the Finance Minister, typically on February 1st, unless otherwise specified. The budget is an important policy document that outlines the government’s revenue and expenditure plans, tax proposals, and strategies for economic growth for the upcoming fiscal year.

1.Budget :Meaning & Definition:-

*An item wise estimate of income and expenditure of the government for a fixed period of time -annual financial statement
*A budget is basically a financial plan for a defined period ,normally a year
*A plan of operation based on those estimates
*An instrument of fiscal policy for the government
*One of the major instruments by which the use of public resoures are planned and controlled and public welfare are delivered.

2.Features of Budget:-

*Budget is basically a policy statement funding to different program /scheme reflect policy decision ,fiscal policy is solely expressed through budget.
*Through presented on a particular day of year ,the budgeting process continue round the year.
*Till 2016 railway budget was presented separate from general budget
*Budget is finest examples of how excutive & legislature collaborate in policy process in democracies
*Budget is not everything about indian economy:
Monitory policy is managed by RBI, outside the budget
*Budget is only about govt income and expenditure only 26%of GDP does not include income and expenditure /investment of private sector
*Importance of budget is further diluted due to GST ,and major tax proposals and program annoucement outside budget.

3.Types of Budget:-

1.Arena of budget
A.union budget ,B.state budget ,C.budget of local bodies
2.Feasibility
A.income Vs Expenditure
B.Balanced ,surplus,deficit
3.Asset generateing nature of income /expenditure
A.revenue Vs capital budget
4.Method and principles of budgeting
A.Line item budget
B.Performance budget
C.Zero base budget
D.Planning programming and budgeting
E.Budgeting by objective

4.Two Componets of Budget:-

1.Revenue Budget
.Estimates of revenue receipts and revenue expenditure
.Revenue receipts:such as income tax which cannot be taken back from govt
.Revenue expenditure :operational expenses which do not create asset
2.Capital Budget
.Estimates of revenue recepits and revenue expenditure
.Capital recepits :such a govt bonds which is loan to govt shall be returned
.Capital expenditure :investment expenses which create assets

5.Balanced ,Surplus,Deficit Budget:-

1.balanced Budget
.Expenditure is same as income
2.Surplus Budget
.Income is more than the expenditure
.Our first budget of 1950-51 provided surplus of Rs 71 lakhs
3.Deficit Budget
.Expenditure is more than the income

6.Budget Deficits:-

A.Revenue Defecits
.Difference between revenue expenditure and revenue receipts
B.Fiscal Deficit
.Difference between total expenditure and total receipts
.Fiscal deficit is met by borrowing or my money printing by RBI

7.Function of Budget:-

1.Allocation Function
.Resources are allocated to different sectors and segments of population as per the societal need and priority. EX:2020 Budget allocated Rs.2.83 lakhs crore for
agricultre and rural development,69,000 for health care ,99,300 for education
2.Distribution Function
.Progressive taxation and subsidies are the way of income /wealth distribution
3.Stabilization of the domestic economic
.By tweaking fiscal policy demand is increased /decresed to stability economy

8.Budget :as socio-economic tool of deveopment in india:-

.Instead of being merely an estimate of govt income and expenditure it has become prime instrument of distributive justice and welfare delivery
.Through budget various interest preferences desires and needs of citizens are aggregated in from of different welfare programe backed by financial resources
.By allocating resources to different sectors ,various programes and schemes socio-economic priorities of govt are expressed through budget.budgEX the allocation
to education is increased from 3 to 10 %in a budget
.Tax Policy(fiscal policy)through the budget is major instrument which income & wealth re-distribution is done

9.Who makes Budget in india:-

.Prepared by the budget division in the department of economic affairs of the ministry of finance
.The prime minister through finance minister personally supervises and guides the budget proposals
.Cabinet approves the budget before it is presented in lok sabha president approvals is also required for presenting the budget
.Secretaries of nodal ministries and their financial advisors prepare demand for grant DFG of their ministry
.Department of expenditure in finance ministry does extensive consultation with nodal ministries to finalize DFG or expenditure budget
.Estimate committe ,standing committe of ministries /department scrutinizes the budget estimates and DFGs
.PM and FM also obtain in the inputs of stakeholders industry leaders business community farmers civil society economic and others experts
.Niti ayog also play vital role in providing inputs and expert advise for fiscal policy program evaluation -output/outcome framework

10.Budget making process in india:-

A.Budget making in executive arena
.Beginning september,each nodal ministry prepare budget estimate(BE) in form of demand for grants (DFG)for coming years ;DFG contain item wise BF,RE(revised estimates)
and actual expenditure till sept month of current years -in two parts -revenue &capital
.Department of expenditure in finance ministry combine,adjust /modify BFs and DFGs to estimate total expenditure november-December
.Department of revenue in finance ministry then prepare revenue/income proposal to by deciding on fiscal (tax)policy -November-January
.Budget division in finance ministry then combine expenditure and income proposal to prepare the budget-December-January
.Consultation negotiations and legislative oversight-October-January
.Budget is then put to the cabinet for approvals -Febuary ;approvals of presidents is also obtain
.Budget is presented in lok sabha by the finance minister on 1st Febuary 11 am in form of annul financial statement -statement of the estimated receipts and expenditure
for next financial year.

11.Budgeting Processes in legislative arena:-

.FM presents the budget in lokh sabha and thereafter put up the annual financial statement (Article 112) .Passage of DFG:Lok sabha debates and approve thev DFG by voting in the budget session ( March-April ) cut motion
.Appropriation Bill (Article 114)is tabled and passed by the parliament .Appropriation act authorized executives to withdraw money from consolidated foud of india as per the voted DFG
.Finance Bill (Article 110) is tax proposals and amendments in income tax and other taxtion laws -is tabled and passed by the parliament .Both appropriation and finance bill are money bill
.Vote on account :government usually seeks an interim approval to meet emergent expenditures beyond 1st april in case Appropriation bill is not passed -usually for 2 months .When elections are scheduled a few months into the new financial year the government seeks vote on account for few months instead of presenting full years budget.

12Line item,Performance ,and zero base budget:-

1.Line Item Budget
.Most common way in which govt budgets are made
.One line for each item and quantity on left side ,against which cost are written on right side
example :paper clip 500 Rs.100
.It covers only inputs and their cost-entire project /program is not visualized
.Budget making considered as administrative routine devoid of policy
.Plus:transparency,efficiency ,economy ,simplicity
.Minus:Inflexibility ,not linked to performance ,micro-management
2.Performance Budgeting
.Also called program budget;started in USA in 1930s after great depression
.Organisation of budget by program:budget state major program /scheme funding to them (inputs)and expected output and outcome
example:park program 10 lakh output:10 park outcome :health benefits to negibourhood -clean air,exercise,leisure
.Budget making shifted from accounting to managerial domain
.Deals with policy issues for what policy budget is paying for and efficiency &effectiveness in program implementation
.Plus:Complete visualisation -input ,output,income ,instrument of public welfare help in policy evaluation
.Minus:Complex ,perfformance measurement issue ,loss of transparency
3.Zero based budgeting
.Introduced in USA in 1980s in india during 1987-1988
.Each program of an govt agency is evaluated from zero baseline budget,only those program which needs to continue are funded
.Agency required to justify continuance of the program
.Opposite to incrementalism in which programs are hardly terminated ,they continue with reduced funding
.Focuses on alternative -in place of this program what should we do instead ?
example:alternative to park program -gymnasium,air purifier tower -are considered
.Plus:more participation of program managers,better communication in bureaucracy idea infusion for alternative ,cost effective
.Minus:more paperwork ,not so radical not much attention to input output and outcomes

Conclusion

.Budget is annual financial in form of estimates of income & Expenditure for coming year
.Budget is important policy instrument for socio-economic measures,distributive justice,and welfare delivery
.PM,FM budget division of finance ministry ,department of expenditure revenue,nitiayog,nodal ministries,parliamentary committe ,cobinet ,prsideent are main actors in budget
making in india
.Because of its allocative ,distributional and stabilization roles ,budget is most important policy tools for socio-economic development and change
.Budget may be categorized into may types-balanced,surplus,deficit-revenue ,capital -and line item,performance,and zero base budget etc.

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