The Union Budget of India is a comprehensive financial document that reflects the economic vision and priorities of the government for the upcoming fiscal year. This annual ritual holds immense significance in shaping the country’s economic trends.
Behind the curtains of this annual financial event lies a rich tapestry of history, evolution, and lesser-known intricacies that contribute to the creation of the budget. Over the years, the budgeting process evolved with the establishment of the Imperial Legislative Council in 1921, allowing for more comprehensive discussions on financial matters.
What is the Union Budget?
The Union Budget of a country is a pivotal financial document that outlines the government’s revenue and expenditure for a specified fiscal year. Often referred to as the Annual Financial Statement, it is a roadmap that guides the economic policies and priorities of the government.
Historical Evolution
The roots of the Union Budget can be traced back to the colonial era when James Wilson, a British economist, presented India’s first-ever budget on April 7, 1860. The first budget of Independent India was presented on November 26, 1947, by Finance Minister RK Shanmukham Chetty. Since then, the budgetary process has undergone numerous transformations, adapting to the changing needs of an independent India.
Post-independence, the Finance Minister of India traditionally presents the Union Budget on the last working day of February. However, the presentation date was shifted to the first day of February in 2017 for better financial planning and execution. The Planning Commission, created in 1950, played a significant role in the budgetary process by formulating Five-Year Plans and aligning them with financial allocations. With the dissolution of the Planning Commission in 2014, the NITI Aayog took over the planning responsibilities, further impacting the budgetary framework.
The Budget-Making Process
The development of the Union Budget is a detailed and multi-stage process that engages various government departments. Overview of the key steps involved:
Pre-Budget Consultations
Before the budget takes shape, the Finance Minister initiates pre-budget consultations with industry leaders, economists, and representatives from diverse sectors. This ensures that the budget puts together a broad spectrum of perspectives and addresses the needs of different segments of society.
Receipt of Estimates
Government departments and ministries submit their expenditure estimates for the upcoming fiscal year. These estimates encompass planned expenditures, policy initiatives, and financial requirements.
Compilation of Data
The Ministry of Finance consolidates the estimates from various departments and ministries, considering their revenue projections and expenditure requirements. This compilation serves as the groundwork for the budget formulation.
Budget Formulation
Collaborating with Finance Ministry officials, the Finance Minister formulates the budget. This process entails balancing revenue and expenditure, tackling economic challenges, and aligning the budget with the government’s policy priorities.
Presentation and Approval
Subsequently, the Finance Minister presents the budget in the Parliament, outlining the government’s fiscal policies and proposed allocations. Following thorough examination and debate, the budget undergoes a vote for approval. Once sanctioned, it attains the status of a legal document handling government spending.
Interesting Facts on the Union Budget
The Union Budget is a momentous financial event that captures the attention of citizens, economists, and policymakers alike. While the budget’s primary function is to outline the government’s fiscal policies, revenue, and expenditures, there are several intriguing aspects and lesser-known facts that add an extra layer of fascination to this annual ritual
Budget Printing
The budget was initially printed at the Rashtrapati Bhavan until 1950, after which a leakage prompted a shift to a press at Minto Road in New Delhi. In 1980, a government press was established in the North Block, the headquarters of the Finance Ministry.
Longest Budget Speech
Under the Narasimha Rao government in 1991, Manmohan Singh delivered the lengthiest budget speech in terms of words, totaling 18,650. In 2018, then-Finance Minister Arun Jaitley followed closely with a speech containing 18,604 words. Jaitley spoke for 1 hour and 49 minutes.
Shortest Budget Speech in India
In 1977, Finance Minister Hirubhai Mulljibhai Patel delivered the shortest budget speech in India, lasting just 800 words.
Individuals with the Most Budget Presentations
Former Prime Minister Moraraji Desai holds the record for having the maximum number of budget presentations in the country’s history. He presented 10 budgets during his tenure as the Finance Minister from 1962 to 1969, followed by P Chidambaram (9), Pranab Mukherjee (8), Yashwant Sinha (8), and Manmohan Singh (6).
Halwa Ceremony Tradition
Before the budget documents are printed, a unique tradition known as the “Halwa Ceremony” is observed. Finance Ministry officials participate in the ceremony where halwa, a sweet dish, is prepared and shared. Those involved in the printing process must stay in isolation until the budget is presented in Parliament, ensuring utmost confidentiality.
First Woman to Present Budget in India
In 1971, Prime Minister Indira Gandhi, who also held the position of Finance Minister, became the first woman to present a budget in India. In 2019, Nirmala Sitharaman became the second woman to present the budget. Sitharaman broke tradition by opting for a traditional ‘bahi-khata’ with the National Emblem instead of the customary budget briefcase.
Integration of Railway Budget
Until 2016, India had a distinct Railway Budget presented independently before the Union Budget. The decision to combine the Railway Budget with the Union Budget was made with the objective of rationalizing financial procedures.
No Taxation Without Representation
The phrase ‘No taxation without representation’ is engraved on the emblem of the Finance Ministry, underscoring the democratic principle that citizens should have a voice in the formulation of taxation policies.
Pink and Green Sheets
Within the budget speech, two document categories are referred to as “pink sheets” and “green sheets.” Tax proposals are outlined in the pink sheets, while non-tax proposals are detailed in the green sheets. Traditionally, these documents are bound in covers of pink and green, respectively.
Final Thoughts
The Union Budget is not just a financial statement but a document representing tradition, innovation, and historical milestones. Each facet of the budgetary process reveals a captivating story, from unique traditions like the Halwa Ceremony to the pink and green sheets. As we eagerly await each year’s budget presentation, these interesting facts provide a behind-the-scenes glimpse into the complexities and peculiarities that make the Union Budget a remarkable event in the nation’s financial calendar.
Key takeaways
- The fascinating history of India’s Union Budget dates back to the British era, which laid the foundation for today’s financial framework.
- Government departments submit expenditure estimates detailing planned expenditures, policy initiatives, and financial requirements for the upcoming fiscal year.
- In 2021-22, the Union Budget went paperless due to the COVID-19 pandemic, showcasing adaptability in the face of challenges and marking a historic departure from traditional practices.
- The Halwa Ceremony, marking the beginning of budget printing, and using pink and green sheets for tax and non-tax proposals are intriguing traditions associated with the budget.
