Budget is the annual financial statement of a government which lays out fiscal roadmap for the country for the next one year. It is prepared by the ministry of finance in consultation with Niti Aayog and other concerned ministries.Budget is the annual financial statement of a government which lays out fiscal roadmap for the country for the next one year. It is prepared by the ministry of finance in consultation with Niti Aayog and other concerned ministries.The Union Budget of India, referred to as the annual Financial Statement in Article 112 of the Constitution of India, is the annual budget of the Republic of India, presented each year on the last working day of February by the Finance Minister of India in Parliament. The budget has to be passed by the House before it can come into effect on April 1, the start of India's financial year.The origins of the modern Budget can be traced to the Norman period, where two departments dealt with finance the Treasury and the Exchequer. The Treasury received and paid out money on behalf of the monarch. The Exchequer, had a 'lower office' which received money, and an 'upper office', concerned with regulating the Kings accountsThe term budget has been derived from the old French word bougette, which means a leather bag or wallet. The first use of the term 'budget' may date back to 1733 financial statement by Walpole as Prime Minister and Chancellor of the Exchequer. A cartoon of him opening a patent medicine seller's wares was published at the time, as a satirical comment with the caption 'The Budget Opened'. ('Budge' is an old word for a bag or small case). Initially, budget referred solely to the Chancellor’s annual speech on the nations finances. Now, the term is used for an annual financial statement of income and expenditure of a government.

1. Preparation and
Presentation of
budget
Sivaranjani. S.
II – M.A.Economics
sivaranjani.economic@gmail.com

2. Budget is the annual financial statement of a government
which lays out fiscal roadmap for the country for the next
one year. It is prepared by the ministry of finance in
consultation with Niti Aayog and other concerned
ministries.
Budget is the annual financial statement of a government
which lays out fiscal roadmap for the country for the next
one year. It is prepared by the ministry of finance in
consultation with Niti Aayog and other concerned
ministries.
Meaning of Budget

3. The Union Budget of India, referred to as the annual Financial Statement in Article 112 of
the Constitution of India, is the annual budget of the Republic of India, presented each year
on the last working day of February by the Finance Minister of India in Parliament. The
budget has to be passed by the House before it can come into effect on April 1, the start of
India's financial year.
The origins of the modern Budget can be traced to the Norman period, where two
departments dealt with finance the Treasury and the Exchequer. The Treasury received and
paid out money on behalf of the monarch. The Exchequer, had a 'lower office' which
received money, and an 'upper office', concerned with regulating the Kings accounts

4. .
The term budget has been derived from the old French word bougette, which means a
leather bag or wallet. The first use of the term 'budget' may date back to 1733 financial
statement by Walpole as Prime Minister and Chancellor of the Exchequer. A cartoon of him
opening a patent medicine seller's wares was published at the time, as a satirical comment
with the caption 'The Budget Opened'. ('Budge' is an old word for a bag or small case).
Initially, budget referred solely to the Chancellor’s annual speech on the nations finances.
Now, the term is used for an annual financial statement of income and expenditure of a
government.

5. History of the Union Budget
India’s first budget was presented on April 7, 1860, when India was still under the British
colonial rule. It was introduced by the then Finance Minister of India, James Wilson.
The first Union Budget of Independent India was presented by the first Finance Minister of
Independent India, Sir R.K. Shanmugham Chetty, on November 26, 1947. It is noteworthy
that the first Union Budget was presented amidst widespread riots due to the partition of
India. This budget was meant for seven and a half months, following which the next
budget was to be implemented from April 1, 1948. It was the first Union Budget wherein it
was decided that both India and Pakistan would share the same currency till September
1948.
Sir Chetty resigned as the Finance Minister of India, and the responsibility ultimately was
passed on to John Mathai, who presented the subsequent Union Budgets of 1949-50 and
1950-51. The budget of 1949-50 was the first instance of a budget being prepared for a
United India, including all princely states.

6. First FM was Sir RK Shanmukham Chetty
The first FM's post went to Sir RK Shanmukham Chetty, industrialist, erstwhile Diwan of
Cochin state and Constitutional Adviser to the Chamber of Princes. He had been a member
of the pro-British Justice Party. The first budget of Independent India was presented by Mr.
Chetty on November 26, 1947, in the backdrop of partition and riots. Since then India has
had as many 80 budgets.
Our Budget follows the UK Budget in many ways, including, for many years, timing, since
it used to be held at 5:30 pm which was noon in the UK.
First Indian Budget
The Budget was first introduced in India on 7th April, 1860 from the East-India Company to
the British Crown. The first Indian Budget was presented by James Wilson on February 18,
1869. Mr Wilson was the Finance Member of the India Council that advised the Indian
Viceroy. He was a Scottish businessman, economist and Liberal politician. He founded The
Economist and the Standard Chartered Bank.

7.  The Union Budget is prepared by the finance minister with the assistance of advisors and
bureaucrats.
 The finance minister seeks the view of the industry leaders and economists prior to
preparation. The Budget division of the department of economic affairs (DEA) in the finance
ministry is the nodal body responsible for producing the budget.
 The Union Budget is prepared by following a well-defined process that involves consultation,
planning, and implementation. The budget-making activity usually begins in August-
September, six months prior to the date of its presentation.
 After presentation, it needs to be passed by both houses of Parliament before the start of
the financial year, that is, April 1.
 The budget is presented by the finance minister on February 1 every year.
 Nirmala Sitharaman will present her fifth straight Union Budget for fiscal year 2023–24 (April
2023 to March 2024 on February 1.

8. Step 1
Issue of circular to all ministries
 The first step involves the finance ministry issuing a circular to all the ministries,
states, Union territories, and autonomous bodies asking them to prepare estimates for
the coming year.
 This circular consists of skeleton forms along with the requisite guidelines based on
which ministries present their demands. Apart from providing estimates, the
ministries also give details of their revenues and expenditures in the last one year.
 The finance ministry issues circulars to all ministries, states, union territories, and
autonomous entities at the initial stage in the budget-making process. These circulars
include skeletal forms as well as the necessary guidelines, which are used by ministries
to express their needs and demands.
 These ministries disclose their earnings and expenses for the previous year in addition
to offering estimates. After receiving requests, top government officials evaluate them
and have discussions with ministries and the department of expenditure

9. Step 2
Consultations on proposals received
• Accumulation of data includes estimates of expenditure, revenue and deficit. Ministries
along with planning commission are required to provide initial estimates of the plan and
non planned Expenditure. After the estimation of expenditure, revenue assessment is
done as to how much money is expected to flow into the government’s treasury.
• After requests are received, they scrutinised by the top officials of the government.
Extensive consultations are undertaken between the ministries and the department of
expenditure.
• Upon approval, the data is then sent to the finance ministry. The finance ministry further
scrutinizes these and correlates the estimates with the current economic state and the
available resources to determine their feasibility.

10. Step 2
Once the information has been validated, the finance ministry then
allocates revenue to numerous divisions for their impending outlays.
In the event of any disagreements over the splitting up of money,
the finance ministry deliberates with the Union Cabinet or the prime
minister.
Other stakeholders including agriculturists, small business
proprietors, and foreign institutional investors are also consulted by
the department of economic affairs and the department of revenue
for further understanding.

11. Step 3
Composing the budget
After analyzing all aspects, the finance ministry then allocates revenues to
various administrative ministries and devises new public welfare schemes.
Often, there are disputes between ministries over the allocation of resources.
In such scenarios, the finance ministry consults the Union Cabinet or the Prime
Minister and their decision is deemed final in such scenarios. Other
stakeholders like farmers, small business owners, foreign institutional investors
are also consulted by the DEA and department of revenue to gain more
insights.
The Centre also consults the chief economic advisor (CEA) and determines the
optimal level of borrowing required by the government to meet the deficit.

12. Pre-budget meetings
The finance minister holds pre-budget meetings with various stakeholders to know
about their proposals and demands. These stakeholders include state representatives,
bankers, agriculturists, economists and trade unions.
Once the pre-budget consultations are done, the finance minister takes the final call on
all demands. It is also discussed with the Prime Minister before finalisation.
For this year's budget, the week-long pre-budget consultation meetings were held
virtually between November 21 and 28, 2022. Following the conclusion of pre-budget
meetings, the finance minister makes the final decision on the demands of various
stakeholders after extensive consultation with the Prime Minister.

13. Budget printing
Every year, the government follows an annual tradition of hosting a halwa
ceremony, a few days before the Budget is presented. The ceremony marks
the beginning of printing of Budget documents.
As part of the ritual, 'halwa' is prepared in a big 'kadhai' and served to the
entire staff in the finance ministry. To maintain the secrecy of the Budget,
there is a "lock-in" of officials involved in making the Budget. These officers
and staff only come out of the North Block after the budget is presented by
the Union Finance Minister.

14. * Presentation of the budget
Finance minister presents the budget in Lok Sabha. Until 2016, it was
presented on the last day of February. However, from 2017 the budget has
been presented on February 1 every year
The Union Budget 2021 was delivered in paperless form for the first time, as
finance minister Nirmala Sitharaman replaced the Swadeshi 'bahi khata' and
switched to a tablet.
Everyone can access all budget-related documents on "Union Budget Mobile
App", which was launched by Sitharaman on January 23, 2021.

15. Halwa ceremony
A few days before the Budget is announced, the government has an annual
tradition of conducting a halwa ceremony. The ceremony heralds the start of
Budget document printing. A giant "kadhai" (large frying pot) is used to produce
"halwa," which is then fed to the whole workforce of the finance ministry as part
of the ceremony.

16. The Halwa Ceremony is a famous ritual, which marks the start of the printing
of the budget documents. Understandably, officials who are directly in contact
with the budget papers and data are locked down in the basement of the
North Block. The Halwa ceremony marks the lockdown of the Finance Ministry.
In this premise, even the Finance Minister is not allowed to carry a mobile
phone.

17. Budget: Printing, formalities,
ceremonies and utmost secrecy:
The Union Budget documents are treated with utmost secrecy, because any leak in official
figures can have catastrophic effects. These documents are treated with so much secrecy
that even the Finance Minister is not authorized to keep the Blue Sheet. The Union Budget
is prepared on the basis of data and key numbers in the Blue Sheet. Only the Joint
Secretary (Budget) is allowed to keep this important sheet.
Until 1950, all important budget papers were printed inside the Rashtrapati Bhavan
premises. However, an imminent data leak left the government with no option but to shift
the process to a government-operated press in Minto Road till 1980. Post 1980, the printing
of budget papers is done in a basement in the North Block, where the Finance Ministry is
located.

18. Key notes :
The Government of India presents the Union Budget every year on February 1.
The Union Budget is an important document that outlines the government’s fiscal
policies, plans and programmes for the upcoming financial year. The budget-making
process begins in August-September, almost six months before its presentation date.
It lays out a plan for the government to spend its revenue and allocate funds for
various development initiatives and other urgent needs. The process of making a
Budget involves a number of steps. Let us understand it one by one.

19. The presentation of the Budget to the Parliament is the last phase in the budget-making
process. On the first day of the Budget session, the finance minister conducts the
presentation. The minister summarizes the document's key points and explains the
thinking behind the proposals during the presentation.
Following the presentation, the Budget is laid before both houses of Parliament for
discussion. Following approval by both houses, the Budget is forwarded to the President
for approval.
Formation of a Budget is a long-drawn process involving multiple steps and consultations.
Each step is essential to ensure that the public money is used judiciously and allocated
appropriately. The importance of this document can never be overlooked as it determines
how the government functions and spends its resources to develop the nation.

20. Under Article 114 of the Constitution, the government can withdraw money from the
Consolidated Fund of India only on approval from Parliament and so it has to get the
Appropriation Bills approved by Parliament. This authorises the executive to spend
money. Article 265 of the Constitution prohibits the government from collecting any taxes
without the authority of law. Therefore, the government comes up with the Finance Bill.
The Bill may levy new taxes, modify the existing tax structure or continue the existing tax
structure beyond the period approved by Parliament earlier.
The bills are forwarded to the Rajya Sabha for comment. The Lok Sabha, however, is not
obligated to accept the comments and the Rajya Sabha cannot delay passage of these
bills. The bills become law when signed by the President. The Lok Sabha cannot increase
the request for funds submitted by the executive, nor can it authorize new expenditures.

21. The proposals in the budget come into force on April 1. Between the presentation and
effective date there is a gap of 1 month during which the Lok Sabha can review and modify
the government's budget proposals. This does not happen most of the time and the
Parliamentary scrutiny of proposals and the passage of the budget gets completed in May,
well after the commencement of the new fiscal year. Since the proposed budget has to be
effective from April 1, the government usually seeks an interim approval to meet emergent
expenditures that have to be incurred pending the approval of the budget.
This is called the vote-on-account and the sanctions given by the passage of the vote-on-
account get automatically overridden once the Budget is approved by Parliament.

22. The History of Union Budget
All about Union Budget
The Union Budget is a financial statement of government’s estimated revenue and
expenditure for that particular year, according to the Article 112 of the Indian
Constitution. The Union Budget is prepared for a period between April 1 to March 31
each year and is classified into (a) revenue budget and (b) capital budget.
The Union Budget presented for 2017-18 was path-breaking in many ways. With it, the
day of the budget presentation was shifted from the end of February to the first day of
February. The Railway Budget was also integrated with the Union Budget from 2017.

23. Some of the lesser known facts of the Union Budget:
• The Railway Budget of the country has always been introduced as a separate
budget for the past 92 years till the year 2017, which saw the merger of the
railway budget into the Union budget.
• Indira Gandhi was the only woman Finance Minister who was also the Prime
Minister while presenting the budget.
• The present government has shifted the budget announcement from the last
working day of February to the first working day of February.
• Indian Media termed the Union Budget of India for the year 1997-98, as the
"Dream Budget" because it was the road map for economic reforms in India
including dropping of income tax rates, removal of the surcharge on corporate
taxes, and reduced corporate tax rates.

24. The Budget of the financial year 1973-74 is known as the "Black Budget" as the nation had a
deficit of Rs550cr.
How Union Budgets can change the course of the future
The one Union Budget that changed India future and was responsible for putting India on the
road to accelerated growth was the Budget of 1991-92, presented by the then Finance Minister,
Dr. Manmohan Singh. Under the leadership of P.V. Narasimha Rao, Dr. Manmohan Singh opened
up India economy to foreign investors and eased up trade blockages.
The Union Budget of 1997-98, presented by P. Chidambaram is also regarded as one of the
turning points of the economy. This budget saw easing up of income tax rates and lowering of
customs duties. Chidambaram presented the Voluntary Disclosure of Income Scheme in this
budget. The scheme was aimed to curb black money in the economy and widen the tax net.
The Millennium Budget, i.e., the Union Budget of 2000-01, is touted to have transformed the
Indian economy into a tech-hub. Yashwant Sinha, who presented the budget, announced a
reduction in customs duties for a few raw materials required for the production of the optical
fiber by almost 10%, and by 20% in case of mobile phones.

25. ICONIC BUDGETS
• The Black Budget: The 1973-74 Budget presented by Yashwantrao B Chavan in the
Indira Gandhi government was called the Black Budget as the fiscal deficit during that
year was Rs 550 crore. It was a time when India was going through acute financial
distress.
• Carrot & Stick Budget: The Union budget presented by VP Singh for the Congress
government on February 28, 1986, was the first step towards dismantling licence raj in
India. It was called the 'Carrot and Stick' budget as it offered both rewards and
punishment. It introduced MODVAT (Modified Value Added Tax) credit for lowering
the cascading effect of tax that consumers had to pay while also launching an intense
drive against smugglers, black marketers, and tax evaders

26. ICONIC BUDGET
• Epochal budget: Manmohan Singh's landmark 1991 budget under the PV Narasimha
Rao government that ended licence raj and began the era of economic liberalisation, is
known as 'Epochal Budget'. Presented at a time when India was on the brink of an
economic collapse, it among other things slashed customs duty from 220 per cent to
150 per cent and took steps to promote exports.
• Dream Budget: P Chidambaram in the 1997-98 budget used the Laffer Curve principle
to lower tax rates to increase collections. He slashed maximum marginal income tax
rate for individuals from 40 per cent to 30 per cent and that for domestic companies to
35 per cent besides unleashing a number of major tax reforms including a voluntary
disclosure of income scheme to recover black money. Referred to as the 'Dream
Budget', it also slashed customs duty to 40 per cent and simplified excise duty
structure.

27. ICONIC BUDGET
• Millennium Budget: Yashwant Sinha's Millennium Budget in 2000 laid the road
map for the growth of India's Information Technology (IT) industry as it phased out
incentives on software exporters and lowered customs duty on 21 items such as
the computer and computer accessories.
• Rollback Budget: Yashwant Sinha's 2002-03 budget for the NDA government
headed by Atal Bihari Vajpayee is popularly remembered as the Rollback Budget as
several proposals in it were withdrawn or rolled back.
• Once-in-a-Century Budget: Nirmala Sitharaman on February 1, 2021 presented
what she called was 'once-in-a-century budget' as it looked to revive Asia's third-
largest economy via investing in infrastructure and healthcare while relying on an
aggressive privatisation strategy and robust tax collections