Union Budget: A Brief Summary
Budget is a systematic plan for the expenditure of a usually fixed resource during a financial year. It is a detailed plan of the government’s finances and it is the most important economic and financial event in India.
The budget is usually anteceded by an economic survey which gives the general course for the budget and gives an outlook for the economic performance of the country.
The budget is a detailed account of the Governments finances, in which revenues from various sources and expenses of all activities undertaken are aggregated. It consists of revenue budget and capital budget and the budget estimates, which is a financial projection for the next fiscal year.
The Union Budget of India is presented on the last working day of February by the Finance Minister of India in the parliament. The Budget has to be passed by both the houses of the Parliament before it can come to effect on April 1st.The Union Budget is also known as the general budget.
The first budget of independent India was presented by R.K Shanmukham Chetty on November 26, 1947. Morarji Desai has presented the Union Budget for the maximum number of times (8 times).
Revenue Budget consists of revenues from tax and other sources and the expenditure covered by these revenues.
Revenue receipts are divided into tax and non tax revenue. Tax revenues are made up of taxes such as income tax, corporate tax, excise, customs and other duties which the government levies. Non tax revenues are made up of interest and dividend on investments made by government, fees and other receipts for services rendered by Government.
Revenue expenditure is the payment incurred for the normal day to day running of government departments and various services that it offers to its citizens. The other expenditure for the government would be interest on its borrowings, subsidies etc.
It consists of capital receipts and payments. Under capital receipts the main subject would be loans by Government from public, which can also be termed as Market Loans, borrowing from Reserve Bank and other lenders through the sale of treasury bills, loans received from foreign governments and recovery loans granted by Central government to State and Union Territory, corporations and other parties.
Contents of the Union Budget
The Union Budget highlights the receipts and payments of the government under three accounts:-
Consolidated Fund: It is the main bank account of the government.
Contingency Fund: It is the amount kept in reserve to guard against losses.
Public Account: Accounts which have funds provided by the entities of government.
The union budget also announces policies and it tells about the government's economic thinking. It also determines activities such as exports and foreign direct investment. The Union Budget has both short and long term effect. Short term effect is due to the taxes levied and prices determined. The announcement of Income Tax has a big impact on the salaried people, who have fixed income. In the long run, the main factor is inflation. If the government goes on printing notes to pay off its debts then it will assist inflation.
Highlights of Union Budget 2008 - 2009
Recently Mr. P Chidambaram presented the union budget 2008-09. Some of the highlights of the budget were: