Union Budget of India: What it is and why it is so important

Business Standard explains the importance of Union Budget of India and the whole process of its making and passing in Parliament

 

In a federal country like ours, the constitution of India demarcates the governance structure through a three-tier system – the Union government, state governments, and local governments. In the scheme of distribution of power among them, the central or Union government enjoys the highest position.

Budget 2018 Under Article 112 of the Constitution of India, the central government is constitutionally bound to lay down the ‘annual financial report’ of the country. This report is commonly known as the Union Budget of India.

The Union Budget holds the same character as the budgets of other levels of government, except in the source of revenue and expenditure.

The Union Budget comprises the most extensive account of the Indian government, and it can be considered the statement of the government’s income and expenditure. Presented in Parliament every year, the Budget document details how much money the Union government expects to raise in the coming financial year, and how and where it intends to spend that money.

The Union budget gives the statement of receipts and expenditure of three consecutive years:

1. Actuals for the preceding year
2. Estimates for the present year
3. Estimates for the coming year

The Union Budget also includes the Finance Bill and Appropriation Bill, both of which are to be passed by both Houses of Parliament before implementation on April 1 of the new financial year.

Union Budget is usually presented in Parliament on the last working day of February by the Finance Minister of India and it comes into effect a little more than a month later from April 1.

However, for the first time, the Union Budget for the 2017-18 financial year was presented on the first working day of February by Finance Minister Arun Jaitley.

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