All you wanted to know about the Budget

The 2022 Union Budget was presented on February 1 by Finance Minister Nirmala Sitharaman. This is the third budget of Modi-led NDA govt's second term.

Finance Minister Nirmala Sitharaman

What is a budget and what does it consist of?

A Budget is an estimate of outflows and inflows that a Government will incur during a financial year. It consists of actual figures for the preceding year and the budgetary estimate for the current year. For instance, a Budget presented in March 2022 will have the preceding year, i.e. 2021-22’s actual figures and the estimates for 2022-23.

When is it presented and by whom?

The Budget is presented on a day that is determined by the Parliament. While traditionally it was presented on the last working day of February, this year, it will be presented on February 1.

The Budget is presented by the Finance Minister. The Budget division in the Finance Ministry has complete responsibility over it, though it requires final approval from the Prime Minister.

A timetable is drawn up by the Budget Advisory Committee of the Parliament. In this schedule, a fixed time is given for each Ministry to discuss their needs prior to the Budget presentation.

Is an annual Budget necessary?

It is not only necessary, but compulsory. Under Article 112 of the Constitution, a Statement of Receipts and Payments (estimated) has to be tabled in the Parliament for every financial year. The Receipts and Payments statement contains consolidated fund, contingency fund and the public account.

The consolidated fund is a statement of all the inflows, such as tax revenues; and all expenditure, which constitute outflows. To withdraw from this fund the government requires parliamentary authorisation.

The contingency fund is a corpus of about Rs.30,000 crore kept aside for unforeseen expenses. The public account is one where all money raised from government schemes, such as Provident Fund, is accounted for.

What does the Budget document contain?

The budget speech and the document has two parts – Part A and B. Part A is the macroeconomic part of the budget where various schemes are announced, and allocations are made to several sectors. The priorities of the government are also announced in this part.

Part B deals with the Finance Bill, which contains taxation proposals such as income tax revisions and indirect taxes.

What is the process of Budget approval? What will happen if a Budget is not presented before said date?

The Finance Minister introduces the Budget in the Lok Sabha by way of a speech and gives an overview of the Budget. He/She then tables it in Rajya Sabha.

Both Houses of the Parliament then allot time for a general discussion on the Budget, to which the Finance Minister replies at the end.

Lok Sabha then takes up a discussion on each ministry’s expenditure proposals. After this prescribed period, known as the Demand for Grants, the Speaker applies what is called the ‘guillotine’. Once the ‘guillotine’ is applied, all outstanding demands are put to vote. Though both the Houses of Parliament discuss the Budget, only the Lok Sabha votes on it.

The Appropriation Bill is then introduced after all demands are passed, and once this Bill is passed, the government receives authorisation to draw from the consolidated fund. Once the Appropriation Bill becomes an Act, the Finance Bill is passed. Once this is done, the final Budget gets approved.

If the Budget is not passed within the announced date, Article 116 of the Constitution empowers the Lok Sabha to pass the Vote-On-Account, a document which covers only the expenditure incurred.

Compiled by Sruthi Radhakrishnan