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Formulation of India's Union Budget
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Formulation of India's Union Budget


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The Indian Union Budget is an annual exercise that lays down the fiscal policy of the government for the year. Indicus looks into the mechanics of the exercise.

The Indian Union Budget is an annual exercise that lays down the fiscal policy of the government for the year. Indicus looks into the mechanics of the exercise.

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  • 1. Formulation of Budget in India Presented By: Deepa Nayak Indicus Analytics Pvt. Ltd.
  • 2. Origin
    • Derived from French word ‘Bougette’ meaning “Sack or Pouch”.
    • Bag used by the British chancellor to keep his papers to be presented to the parliament.
    • Present sense of the term was used for the first time in 1873.
  • 3. History of Budget - India
    • First Budget presented in 26 th November 1947 by finance minister Sir R K Shanmugam Chetty.
    • Plural Budget – Railway and General Budget
    • 1921- Separation of Railway budget from General Budget on the recommendation of Acworth Committee.
  • 4. Budget Types
    • I. Line item or traditional or incremental Budgeting :
    • Budget in terms of object-wise (line item) classification.
    • II. Performance Budgeting :
    • Emphasizes purpose of expenditure rather than the items of expenditure.
  • 5. Budget Types …contd..
    • III. Programme Budgeting (PPBS):
    • Selecting the best out of a
    • number of available programmes.
    • IV. Zero Based Budgeting (ZBB):
    • Opposite of incremental budgeting.
    • Departmental demands are reviewed comprehensively and all expenditure are approved.
  • 6. Outcome Budget
    • "Outlays do not necessarily mean outcomes.
    • The people of the country are concerned with outcomes….“ P Chidambaram
    • Introduced in Budget 2005-06 to measure the development outcomes of all major programmes.
  • 7. Formulation of Budget
    • Main Players
    • Ministry of Finance
    • Administrative Ministries
    • Planning Commission
    • Comptroller & Auditor General
  • 8. Stages of Formulation
    • Stage I Preparation of Estimates –
    • Sending Circulars by Finance ministry
    • to different ministeries.
    • Particulars of the Form
    • Actual figures of the previous year
    • Sanctioned Budget estimates for current year
    • Proposed estimates for next year
    • Actual figures of current year
    • Actual figures for the corresponding period of previous year.
  • 9. Stages of Formulation …Contd.
    • Stage II Scrutiny & Consolidation of estimates by
    • Deptts. & Ministeries
    • Stage III Scrutiny by Finance Ministry
    • Settlement of disputes
    • Stage IV Consolidation by the Finance Ministry
    • Preparation of estimates of revenue
    • Stage V Approval of the cabinet
  • 10. Enactment of Budget - Stages
    • I. Presentation of Budget – Rule 213
    • II. General Discussion – 3 to 4 days
    • III. Voting on Demands for Grants
    • IV. Passing of Appropriation Bill
  • 11. Execution of Budget
    • Implementation of the Budget after enactment by Parliament
    • Executed by various ministeries/departments under control of Finance Ministry
  • 12. THANK YOU