Union Budget can be assumed as the financial overview of the country, presented every year in the parliament by the finance minister of the nation. The word union derives its origin from the Union or Central Government. To get a thorough understanding, let's take the example of “Banking”, something you exercise in your day to day life.
When you make any transaction,you get a bank statement to keep a check on your transactions. Similarly, to have an overview of the financial status of the nation, a financial statement is prepared and presented annually in the Parliament which is known as the Union Budget.
Basis Of Preparation
A Budget is prepared on how the government is going to spend the money in the entire year, i.e “A Budget is a pre-planned Financial Statement of the year prepared and presented by the Finance Minister of the Country on the floor of the Parliament”.
A Financial year starts on 1st of April and ends on 31st of March every year.
Since 2017, the Budget has been presented on 1st of February every year.
A Budget Basically Marks 2 Important Events:
Expenditure and Revenue gained by the government in the last financial year.
Expenditure plans of the government in the following financial year.
Components Of Budget
Budget consists of two parts: Revenue & Capital, where Revenue is a short term concept & Capital is a Long term concept. Revenue comprises of both income and expenditure. For example, paying salary to employees can be counted as expenditure and profit generated from government owned companies & collection of various taxes and cess can be called as income of the government. Capital is development of Infrastructure, creation of jobs, granting scholarships, launching schemes for the welfare of citizens and BPLs. All these can be counted as expenses of the government.
Government borrows money in the form of Electoral Bonds, Soft loans, line of credit loans from friendly countries, World Bank, AIIB etc. to meet the expenses planned for the financial year.
How Is It Evaluated?
A Budget is evaluated in terms of Balanced Budget, Surplus Budget, Deficit Budget. A Balanced Budget is when the Expenditure & Revenue of the government is balanced which is very rare. A Surplus Budget is when the Revenue generated is greater than Expenditure of the government which is again a rare scenario. A Deficit Budget is when the Expenditure is greater than Revenue and almost every budget is in deficit which is also called as Fiscal Deficit.
For a developing nation like INDIA, which always demands for higher expenditure in order to develop the Infrastructure in the country, it is a big challenge to keep the deficit in control as higher deficit can lead to high debt on government and finally damaging the entire economy of the country.
Conclusion
The Finance Minister of the Country presents the budget on the floor of the Parliament, and in his/her Budget speech, the Finance Minister discusses the overview of the expenditure and the various sectors which the government is targeting for investment in the following financial year. For example Agriculture, Real estate, Service sector, Automobiles, Telecommunication etc. The budget, which is presented by means of the Finance bill and the Appropriation bill has to be passed by Lok Sabha before it can come into effect on 1 April, the start of India's financial year.
Written by - Atul Bihari Chakrawarti
Edited by - Prachi Raheja
Basis Of Preparation
A Budget is prepared on how the government is going to spend the money in the entire year, i.e “A Budget is a pre-planned Financial Statement of the year prepared and presented by the Finance Minister of the Country on the floor of the Parliament”.
A Financial year starts on 1st of April and ends on 31st of March every year.
Since 2017, the Budget has been presented on 1st of February every year.
A Budget Basically Marks 2 Important Events:
Expenditure and Revenue gained by the government in the last financial year.
Expenditure plans of the government in the following financial year.
Components Of Budget
Budget consists of two parts: Revenue & Capital, where Revenue is a short term concept & Capital is a Long term concept. Revenue comprises of both income and expenditure. For example, paying salary to employees can be counted as expenditure and profit generated from government owned companies & collection of various taxes and cess can be called as income of the government. Capital is development of Infrastructure, creation of jobs, granting scholarships, launching schemes for the welfare of citizens and BPLs. All these can be counted as expenses of the government.
Government borrows money in the form of Electoral Bonds, Soft loans, line of credit loans from friendly countries, World Bank, AIIB etc. to meet the expenses planned for the financial year.
How Is It Evaluated?
A Budget is evaluated in terms of Balanced Budget, Surplus Budget, Deficit Budget. A Balanced Budget is when the Expenditure & Revenue of the government is balanced which is very rare. A Surplus Budget is when the Revenue generated is greater than Expenditure of the government which is again a rare scenario. A Deficit Budget is when the Expenditure is greater than Revenue and almost every budget is in deficit which is also called as Fiscal Deficit.
For a developing nation like INDIA, which always demands for higher expenditure in order to develop the Infrastructure in the country, it is a big challenge to keep the deficit in control as higher deficit can lead to high debt on government and finally damaging the entire economy of the country.
Conclusion
The Finance Minister of the Country presents the budget on the floor of the Parliament, and in his/her Budget speech, the Finance Minister discusses the overview of the expenditure and the various sectors which the government is targeting for investment in the following financial year. For example Agriculture, Real estate, Service sector, Automobiles, Telecommunication etc. The budget, which is presented by means of the Finance bill and the Appropriation bill has to be passed by Lok Sabha before it can come into effect on 1 April, the start of India's financial year.
Written by - Atul Bihari Chakrawarti
Edited by - Prachi Raheja
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