Who will present Union Budget 2023 and How is it prepared?
On the day of the budget presentation, it is the Finance Minister who assumes the role of a larger than life superstar. However, behind the pomp and pageantry of the Union Budget, there is months of hard work and meticulous planning that goes into the budget preparation exercise. The budget exercise starts well in advance. While the Finance Minister has the responsibility of approving and presenting the Union Budget, there is the Niti Aayog (formerly Planning Commission) as well as various individual ministries that are also involved in the Budget process. The entire activity is coordinated by the Budget division of the Department of Economic Affairs (DEA), Ministry of Finance, as the nodal agency.
Steps to the budget preparation process
It would be instructive to lay down the complete budget preparation process from start to finish. Here is how it is done.
While the Union Budget is presented in Feb, the budget-making process starts as early as August of the previous year; a full 6 months ahead of the actual date of Union Budget presentation. Here are some of the key steps that go into the exercise.
The first step is to issue a circular from the Finance Ministry to all the concerned ministries, states, Union territories and autonomous bodies to prepare detailed and elaborate estimates of inflows and outflows for the coming year. Union Budget always pertains to the next fiscal year.
The circular also includes some data sheets and forms which the respective ministries and other bodies can fill up with the requisite details to present their demands. All demands for funds have to be backed by adequate justification about the implications and the social and the economic costs and benefits of the same.
Once these detailed estimates from the various ministries and states are received by the Finance Ministry, the top officials pore over the finer details and scrutinise the merits and demerits of each demand. At this stage, there is extensive consultation between the ministries and the department of expenditures.
Post the discussions and arriving at a consensus, the expenditures are approved and sent for final approval by the Finance Ministry. At this stage, the Finance Ministry will go through all the requests, recommendations and allocations in detail. There is a template for most items but many of them also involve an element of discretion.
Once the Finance Ministry goes through all the recommendations and is satisfied, it allocates revenues to various departments for their future expenditures. The next step is to work on the more important aspect of legislative changes. The Finance Ministry needs to announce key changes required that can be procedural, direct tax related, indirect tax related etc.
Before taking a call on legislative and tax changes, the Finance Minister is personally involved in steering discussions with various stakeholders. Typically, the finance minister conducts pre-Budget meetings with business associations (CII, FICCI, ASSOCHAM), trade bodies, agriculturists, economists, exporters, importers, large corporates, stock brokers, mutual funds, bankers, insurance companies, tax experts etc. It is based on the summation of all these inputs and demands that the Finance Ministry collates a list of viable and feasible demands to be fulfilled.
The final call is still of the Finance Minister. Once the pre-Budget consultations are done, and the Finance Ministry officials complete collating and evaluating all the demands of various stakeholders, the finance minister takes the final call on demands and it is also discussed with the PM before finalisation.
Once the Union Budget is presented by the Finance Minister in a joint session, the budget is taken to both the Lower House and the Upper House for final approval through vote. Once both the houses pass the Budget (during the special budget session of parliament), the Union Budget becomes an Act. All Direct Proposals are effective from the next financial year starting on April of the same year. However, all indirect proposals are given effect immediately.
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