Harshvardhan Mishra
The Union Budget is one of the most important annual documents of India. It is not just about numbers, taxes, or government spending—it reflects the economic vision of the country, the priorities of the government, and the direction in which India aims to move in the coming year.
This guide explains the meaning, structure, history, process, and impact of the Union Budget, along with how it brings real change to citizens, businesses, and the economy.
What Is the Union Budget?
The Union Budget of India is the annual financial statement presented by the Government of India. It outlines:
- Expected revenue and expenditure
- Taxation policies
- Fiscal deficit
- Allocation of funds to different sectors
- Economic and welfare priorities for the next financial year
The Union Budget is prepared for a financial year that runs from 1 April to 31 March.
Constitutional Basis of the Union Budget
The Union Budget derives its authority from the Indian Constitution:
- Article 112: Mandates the Annual Financial Statement
- Article 114: No money can be withdrawn from the Consolidated Fund of India without parliamentary approval
- Article 265: No tax can be imposed or collected without authority of law
The budget is presented in the Parliament of India, ensuring democratic oversight of public finances.
Who Prepares and Presents the Union Budget?
The Union Budget is prepared by the Ministry of Finance after extensive consultations with:
- State governments
- Industry bodies
- Economists
- Think tanks
- Public stakeholders
It is presented by the Finance Minister—currently Nirmala Sitharaman—in the Lok Sabha.
Types of Union Budget in India
1. Annual Budget
Presented every year, detailing the full financial plan for the upcoming fiscal year.
2. Interim Budget
Presented in an election year when the government’s term is ending. It avoids major policy changes.
3. Vote on Account
Allows the government to withdraw money for essential expenses until a new budget is passed.
Structure of the Union Budget
1. Revenue Budget
Deals with:
- Revenue receipts (tax and non-tax)
- Revenue expenditure (salaries, subsidies, interest payments)
2. Capital Budget
Includes:
- Capital receipts (borrowings, disinvestment)
- Capital expenditure (infrastructure, asset creation)
Major Sources of Government Revenue
Tax Revenue
- Income Tax
- Corporate Tax
- Goods and Services Tax (GST)
- Customs and Excise Duties
Non-Tax Revenue
- Dividends from PSUs
- Interest receipts
- Fees and penalties
Key Areas of Government Expenditure
- Defense and national security
- Infrastructure (roads, railways, digital)
- Education and skill development
- Healthcare and nutrition
- Agriculture and rural development
- Social welfare schemes
Budget Deficit and Fiscal Discipline
One of the most closely watched aspects of the Union Budget is the Fiscal Deficit, which is the gap between government expenditure and revenue.
A higher deficit:
- Stimulates growth during slowdown
- Increases borrowing and inflation risk
A lower deficit:
- Ensures fiscal discipline
- Builds investor confidence
How the Union Budget Impacts Citizens
For Individuals
- Changes in income tax slabs
- Standard deductions and exemptions
- Inflation control via subsidies
For Businesses
- Corporate tax rates
- MSME incentives
- Startup and innovation support
For Farmers
- MSP announcements
- Crop insurance schemes
- Irrigation and rural credit
For Youth
- Education funding
- Employment schemes
- Digital and startup initiatives
Important Budget Reforms Over the Years
- 1924: First budget presented by James Wilson
- 1991: Liberalization-era reforms
- 2017: Merger of Railway Budget with Union Budget
- 2017: Budget presentation shifted from February end to 1 February
- 2020: Paperless digital budget introduced
Union Budget vs Economic Survey
| Aspect | Economic Survey | Union Budget |
|---|---|---|
| Nature | Analytical | Policy-driven |
| Released | Day before Budget | 1 February |
| Focus | Economic performance | Financial planning |
The Economic Survey sets the context; the Union Budget delivers the action.
Why the Union Budget Is a Tool for Change
The Union Budget is not merely an accounting exercise. It is a policy instrument that:
- Drives economic growth
- Reduces inequality
- Supports vulnerable sections
- Encourages private investment
- Strengthens national priorities
Each budget reflects the government’s response to global challenges, domestic needs, and long-term goals like inclusive growth and sustainability.
Key Facts About the Union Budget
- Presented annually on 1 February
- Applies to the entire country
- Requires parliamentary approval
- Influences markets instantly
- Affects every Indian directly or indirectly
Conclusion
The Union Budget is the financial backbone of India’s governance system. It shapes how resources are raised, allocated, and utilized, making it one of the most powerful tools for national development.
Understanding the Union Budget helps citizens become more informed, engaged, and aware of how public money shapes India’s future.
