What is the Union Budget?
The Union Budget is an annual financial statement that outlines a government's estimated revenue and expenditure for the upcoming financial year. Essentially, it provides a comprehensive overview of the government's financial plans. The Union Budget is divided into two main parts: Revenue Budget and Capital Budget. The Revenue Budget provides an overview of the government's revenue receipts and expenditure, including tax and non-tax collections. On the other hand, the Capital Budget details capital receipts and payments, including public loans and market borrowings. Typically, the Finance Minister presents the Union Budget in Parliament on the first day of February.
Who creates the Union Budget?
The Union Budget is crafted by the Department of Economic Affairs under the Ministry of Finance, under the supervision of the Finance Minister and in consultation with a host of stakeholders, including state administrations, industry bodies, economists, and other experts. The Finance Minister conducts a series of pre-Budget meetings and consultations with various representatives to gather inputs for the much-anticipated annual event.
Does the Budget include major tax changes?
Not every Union Budget includes major tax changes. The Finance Ministry may choose to introduce tax reforms or related changes in a Budget, if it deems fit to do so. While some Budgets may introduce significant tax reforms, others may focus on areas outside the purview of taxes, such as policy initiatives or fiscal consolidation. Generally, a Budget gives a summary of the recent measures aimed at tax simplification and ease of filing returns. Furthermore, the introduction of GST has reduced the scope for big changes related to indirect taxes in the Budget, as the GST Council determines these rates.
Does the Union Budget impact the common man?
Absolutely. The Union Budget has a direct and indirect impact on the daily lives of citizens. While tax changes—such as changes in income tax slabs or indirect taxes like GST—can essentially impact the common man's income as well as purchasing power. Budget allocations for crucial areas like education, healthcare, and infrastructure can influence public services, impacting the citizen. Budget announcements can also influence the prices of essential commodities, employment opportunities, and overall cost of living. The Union Budget plays a vital role in shaping the economic and social landscape of the nation.
What are fiscal deficit and fiscal prudence?
It is essential for a government to balance its revenue with expenditure to ensure the smooth functioning of development activities and the overall economy. Now, a fiscal deficit occurs when Government of India’s revenue falls short of its expenditure. Fiscal prudence refers to the responsible and cautious management of public finances. The careful planning and ambition to narrow the gap between revenue and expenditure through changes in fiscal policy is known as fiscal discipline or fiscal responsibility. A healthy fiscal policy is essential to curb inflation, boost employment, and protect the value of money.
Does the Union Budget impact the prices of goods or services, making them cheaper or dearer?
The Union Budget may directly or indirectly impact the prices of goods and services in the economy. This is by way of changes in direct or indirect taxes, or in allocations to crucial sectors such as healthcare, education and infrastructure—which can influence production costs, supply chains or other market dynamics.
