The Union Budget is all about big numbers. Presented every year, it is a detailed account of the government’s finances.
The Finance Minister presents the budget in the Lok Sabha, one of the two houses of the Parliament, on the last working day of February every year. It has to be passed by the Houses before it comes into effect on 1st April that year, which is the start of the new financial year.
The Constitution does not use the word ‘Budget’, but refers to it as ‘Annual Financial Statement’.
A brief history
- The first Union Budget was presented on November 26, 1947 by R.K. Shanmukham Chetty, who was independent India’s first finance minister.
- Indira Gandhi has been the only woman finance minister of the country, who took over the post while being the Prime Minister.
- Manmohan Singh, who was India’s Prime Minister from 2004-2014, had opened the Indian economy in the 1992-1993 Budget by encouraging foreign investments.
- Till the year 1999, the Union Budget used to be announced at 5:00 pm on the last working day of February, a ritual which was followed right from the British Era. In 2001, Yashwant Singh changed the time to 11 AM.
- The printing of the Budget document starts a week before the presentation. A ceremony takes place, where large amounts of Halwa is prepared and served to support staff.
- All budget documents are printed in a Budget Press, which is located in the basement of North Block, (Secretariat in Delhi) under heavy security.
- A powerful mobile jammer is installed to prevent the leaking of information outside.
- The Budget Press puts all the officials in a lock-in, and prevents them from contacting the outside world.
- The speech of the Finance Minister is secretly guarded, and is prepared by the minister himself or with the help of the Chief Economic Advisor.
The Budget Presentation
It gives a detailed explanation of the expenditures and receipts of three consecutive years: the previous year, estimates for the current year, and estimates for the next year.
The Budget is divided into two parts:
- Revenue Capital
- Capital Budget
The Revenue Capital gives the revenue receipts and expenditure from revenue generated. It includes profits and investments.
Capital receipts are the ones which reduce financial assets for the government, like borrowings and disinvestments.
The Budget speech has two parts: the first part deals with a general economic study and policies. The second part contains tax proposals.
Last year’s Budget
Here are some of the highlights of the 2015 Budget:
- Service Tax increased: Eating outside, buying mineral water and soft drinks, and watching movies became expensive.
- Wealth tax (Tax imposed on wealth) has been abolished.
- Education: Rs. 69,074 Crores allocated
- Income tax (Tax imposed on income) stayed the same.
- For Farmer: More agriculture credit provided, irrigation schemes increased.
- For Defence: The expenditure on defence was increased from Rs. 2.29 lakh crores to Rs. 2.46 lakh crores
- Health: Expenditure was reduced from Rs.39,238 crores to Rs.33,152 crores.
- Corporate tax (tax paid by a corporation on the basis of profit earned) got reduced from 30% to 25%.
- PAN (Personal Account Number) is required for any transaction over Rs. 1 Lakh
The 2016 Union Budget will be presented by Arun Jaitley on 29th February 2016. The Halwa ceremony took place on 19th February 2016.
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