Context:

The Union Finance Ministry presented the Union Budget 2021-22 in Parliament.

Background:

• The genesis of the central Budget in India goes back to 1860 when it was first introduced by then finance minister James Wilson, two years after the transfer of Indian administration from the East India Company to the British Crown.
• Union Budget is an annual financial statement of estimated receipts and expenditures of the Government of India in respect of each financial year.
• According to Article 112 of the Constitution of India, the Union Budget of a year is a statement of the estimated receipts and expenditure of the government for that particular year.

Who Makes the Budget?

The Budget Division of the Department of Economic Affairs in the finance ministry is the nodal body responsible for producing the Budget.

Comprises the Budget

• Annual Financial Statement:
  • Constitution does not specifically use the word Budget.
  • Article 112 of the Constitution provides for laying before Parliament an ‘Annual Financial Statement’ providing a statement of the estimated receipts and expenditure for the financial year. This statement evidences the receipts and expenditure of the government in three separate parts under which accounts are maintained. These are:
  • Consolidated Fund of India
  • Contingency Fund of India
  • Public Account
• According to constitutional provisions, the Annual Financial Statement has to distinguish expenditure on revenue account from other expenditures. It comprises:
  • Revenue budget: Proceeds of taxes and interest and dividends on investments made by the government, fees, and other receipts for services rendered by the government.
  • Capital budget: Capital receipts and payments, including loans, raised by the government from the public, borrowings from Reserve Bank, etc.
• Demand for Grants:
  • The estimates of expenditure from the Consolidated Fund of India included in the Annual Financial Statement are required to be voted by the Lok Sabha and submitted in the form of Demand for Grants as mandated by Article 113.
• Appropriation Bill:
  • Pursuant to the Demand for Grants, the Appropriation Bill is introduced for appropriating monies out of the Consolidated Fund of India to meet the said grants as provided under Article 114.
  • The Appropriation Bill is intended to give authority to the government to incur expenditure from and out of the Consolidated Fund of India.
  • The procedure for passing this Bill is the same as in the case of other Money Bills.
• Finance Bill:
  • At the time of introduction of the Annual Financial Statement, a Finance Bill is also presented before Parliament – the Finance Bill satisfies the criteria of a ‘Money Bill’ as it provides for the imposition, abolition, remission, alteration, or regulation of taxes proposed in the Budget.
• Vote-on-account, the vote of credit, and exceptional grant:
  • Pending the completion of the parliamentary procedure relating to the voting on the Demand for Grants and passing of the Appropriation Bill, the Constitution under Article 116 grants power to the Lok Sabha to make a grant in advance for authorizing the withdrawal of money from the Consolidated Fund of India in respect of the estimated expenditure for a part of any financial year, referred to as vote-on-account.