What is the Union Budget of India?
The Union Budget is the annual financial statement presented by the Government of India, outlining its revenue and expenditure for the upcoming financial year. It is a crucial policy document that reflects the government’s economic planning and priorities.
Key Components of the Union Budget
The Union Budget consists of two major parts:
1. Revenue Budget
It includes:
- Revenue Receipts: Money received by the government through taxes (direct and indirect) and non-tax sources (dividends, interest, etc.).
- Revenue Expenditure: Government spending on day-to-day expenses like salaries, pensions, and subsidies.
2. Capital Budget
It includes:
- Capital Receipts: Loans, disinvestments, and recovery of past loans.
- Capital Expenditure: Spending on infrastructure, development projects, and asset creation.
Key Terms in the Union Budget
Understanding these terms helps in analyzing the budget:
1. Fiscal Deficit
The difference between total expenditure and total revenue (excluding borrowings). A high fiscal deficit may indicate excessive borrowing.
2. Revenue Deficit
When revenue expenditure exceeds revenue receipts, it implies that the government is spending more on running expenses than it earns.
3. Primary Deficit
It is the fiscal deficit minus interest payments on previous borrowings.
4. Direct and Indirect Taxes
- Direct Taxes: Paid directly by individuals and businesses (e.g., Income Tax, Corporate Tax).
- Indirect Taxes: Levied on goods and services (e.g., GST, Customs Duty, Excise Duty).
5. Disinvestment
Selling government-owned assets or stakes in public sector enterprises to raise funds.
6. Subsidies
Financial aid given by the government to support sectors like agriculture, fuel, and food distribution.
7. Public Debt
Total borrowings of the government, both internal (from RBI, banks) and external (from foreign sources).
Process of Budget Presentation
- Preparation: The Ministry of Finance prepares the budget after consulting various ministries and economic experts.
- Presentation: The Finance Minister presents the budget in Parliament, usually on February 1.
- Discussion and Approval: Parliament debates and approves the budget before implementation from April 1.
Impact of the Union Budget
- On Economy: Influences GDP growth, inflation, and employment.
- On Businesses: Changes in tax rates and policies affect corporate profitability.
- On Common Citizens: Affects tax liabilities, subsidies, and welfare programs.
Conclusion
The Union Budget of India is a crucial financial plan that shapes the nation’s economy. Understanding its key components and terms helps individuals, businesses, and policymakers make informed financial decisions.