Introduction
The annual financial statement is the term used for the budget in Article 112 of the constitution and is the estimate for all expenditures. The budget is presented by the government on 1st February before the beginning of the financial year. Independent India’s first finance minister Mr. RK Shanmukham Chetty presented the first budget (1947-48) on 26th November 1947 and the budget was about 197 crores. On 28th February 1950, John Mathai presented the budget which led to the creation of the planning commission. The carrot and stick budget by VP Singh in 1986 touched on a policy that offers a combination of reward and punishment. The Epochal Budget of 1991 by Manmohan Singh overhauled the import-export policy and was exposed to global competition. The millennial budget in 2000 advanced India as a software hub which led to the growth of the Indian IT industry. Since 1947 a total of 73 annual budgets have been there.
Importance of Union Budget of India
The union budget is a statement of the estimated receipts and expenditures of the government for that particular year. This is required for the government to function smoothly and effectively. To maintain the country’s social and economic structures, the government needs sufficient resources. Union Budget helps to make optimum use of limited resources. Its goals also include the eradication of poverty, more employment opportunities so that no one goes below the poverty line. It also plays a key role in economic stability by handling inflation and deflation. The possible changes in the direct and indirect taxes are also dictated by the union budget. Intended to achieve economic growth quickly, by considering all the factors above union budget is important.
How does the Government prepare the Union Budget?
The nodal body responsible for producing the budget is the Budget Division of the department of economic affairs in the finance ministry. The process starts in August. First, a circular asking to prepare estimates for the coming year will be sent to all ministries, union territories, autonomous bodies by the finance ministry. After receiving the requests higher officials scrutinize them and substantial consultation is undertaken between ministries and departments of expenditure when approved, data is sent to the finance ministry. After going through all recommendations, the finance ministry allocates revenue for future expenditure to all departments. If a dispute arises regarding this prime minister or union cabinet will be consulted. Then pre-budget meetings are held with stakeholders to know their demands. Once it’s done, the finance minister consults the prime minister before finalization. The budget is presented by the Finance Minister in Lok Sabha.
Key Terms used in Budget
Gross Domestic Product – It is the total market value of all the finished goods and services produced within a country in a specific period of time.
Direct and indirect taxes – direct tax is paid by individuals directly to the government and indirect tax is paid by individuals to an entity or individual who has the burden to pay tax to the government.
Customs duty – The tax levied on import and export goods.
Monetary policy – To achieve sustainable growth, RBI has a set of actions to control liquidity (supply of money) in the economy. It is known as monetary policy.
Fiscal Policy – The tax and spending policies of the federal government are known as fiscal policy.
Revised estimates – The maximum amount it is willing to spend on a particular aspect of the economy.
Budget estimates – The finance minister announces the budget and funds are allocated for different tasks and ministries. These allocations are budget estimates.
Goods and service tax – Almost all goods or services sold in the country are levied with goods and service tax (GST) except alcohol and petroleum products.
Excess grants – The government is also allocated a certain amount of money for expenditure. If the allocated money turns out to be insufficient then the government can seek additional funds. This is known as excess grants.
Consolidated fund of India – One of the most important government accounts which include the revenues received and the expenses made by the government.
Halwa Ceremony
The government hosts a halwa ceremony a few days before the budget is presented. This is held to begin the printing of budget documents. As part of the ritual, halwa is prepared and served to the entire staff. The finance minister starts the ceremony by stirring the dessert in a kadhai. The halwa ceremony is held as a token of appreciation for the efforts of the staff which lasted months. This tradition has been carried out for decades but it was not observed this year as the COVID-19 cases were rising.
Highlights of Budget 2022-23
The budget 2022-23 targets a fiscal deficit of 6.4% of GDP which is lower than the revised estimate of 2021-22 (6.9%).
The disinvestment target is pared down to 65000 crores. The government has also shown its aim towards privatization by selling Air India and started proceedings for privatization of India’s largest public sector undertaking, Life Insurance Corporation of India (LIC).
The union budget sought to escalate public investment by increasing capital expenditure by 35.4% to Rs 7.5 lakh crores.
To move towards carbon neutrality union minister Smt. Nirmala Sitharaman announced plans to issue ‘green bonds’ which is a global concept. Since the green bonds market is expanding rapidly it will help India to access long term funds.
Defence sector is always an important focus and this year priority is given to the domestic defence industry. This year INR 525,166 crores have been allotted to the ministry of defence.
For the health care sector, the budget allocated 86200.65 crores which is more than last year’s estimate. The National Tele Mental Health program will be launched.
Capital investment of 1,40,367.13 crore has been allocated for the ministry of railways. Finance minister also announced that 400 new generation semi-high speed Vande Bharat Express will be developed and manufactured.
In the agriculture sector, Rs 1.04 lakh crore has been allocated to five schemes which are Modified Interest Subvention Scheme, Market Intervention Scheme and Price Support Scheme, Pradhan Mantri Fasal Bima Yojana ,Pradhan Mantri Kisan Samman Nidhi ,Pradhan Mantri Kisan Mandhan Yojana. Through NABARD funds will be facilitated to finance startups for agriculture and rural enterprises. Kisan drones will be used for crop assessment, spraying of insecticides and nutrients. Along the Ganga river corridor, natural farming will be promoted.
The Finance minister allocated Rs 19,500 crore for solar modules. Energy saving measures will also be promoted.
Food subsidies have been fixed at ₹2.07 lakh crore which is lower than the Revised estimate which is 27.8%. Fertilizer subsidy at 1.05 lakh crore which is also 29.9% lower than the revised estimate. Experts profess that fertilizer subsidy is low considering its high global commodity prices.
The education sector has been allocated ₹ 1.04 lakh crore which is higher than the 2021 union budget which was ₹ 93.224 crores. More the 2 lakh anganwadis to be upgraded for improving child health.
Union budget 2022 allocated ₹12,382 crores for the textile sector, 100 crores for National Technical Textiles Mission, ₹138.83 crores for Textile Cluster Development Scheme and for PM Mega Integrated Textile scheme and the production linked incentive Scheme ₹ 15 crores each.
There is no increase in allocation for MGNREGA (Mahatma Gandhi National Rural Employment Guarantee Act) in the union budget 2022-23, with the finance ministry holding onto it at ₹ 73,000 crores.
For Atmanirbhar Bharat Rozgar Yojana which was launched before COVID -19 lockdown in 2020, there is a hike from ₹ 3,130 crores in 2021-2022 to ₹ 6,400 crores in 2022-23.
Central ministries to use an online bill system to reduce the delay in payment.
For Awas Yojana Rs 48,000 crore has been allocated. 80 lakh houses will be completed in 2022-23.
Jal Jeevan’s mission was allocated with 60,000 crore that aims to provide potable water to 3.8 crore households.
Ministry of Road Transport and Highways has been allocated with ₹ 1,99,107.71 crore. The finance minister has set a massive target for expanding the National Highways network by 25,000 km.
The government has imposed a 30% tax on income got through crypto trading. This announcement gave much more clarity to millions of investors in India. The government is also focusing on launching Digital Rupee in 2022-23. The gifting of digital assets will be taxable in the hands of the receiver. To encourage digital payments 75 digital banks will be set up by scheduled commercial banks.
All States will get ₹ 1 lakh crore as 50-year interest free loans to help fund PM Gati Shakti- related investments.
To know about the union budget 2020-22, watch the YouTube video
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