Union Finance Minister Nirmala Sitharaman will rise in the Lok Sabha on February 1 to present the Union Budget 2024-25. It will be an interim Budget as the elections for the Lok Sabha are due early next year. The full Budget for FY25 will be presented after the formation of the new government following the general elections.
The Union Budget contains details about the estimated receipts and the expenditure of the government for a particular fiscal year. The Budget is allotted for the upcoming fiscal year, which runs from 1st April to 31st March of the next year. Here is a quick guide on how the Union Budget is prepared.
As we all know the fiscal year runs from April 1 to March 31, requiring parliamentary approval of the budget before April 1. As the budget-making is a long process, it takes months of planning, consulting and compiling to create the final draft of the budget. Hence the process begins almost six months before the financial statement is presented in Parliament, commencing deliberations in August-September of the previous year.
As a first step towards the budget-making process, the union finance ministry issues circulars to all ministries, states, union territories, and autonomous entities asking them to prepare estimates for the upcoming financial year. These circulars include skeletal forms along with necessary guidelines for helping the ministries to present their demands. All ministries, UTs, and autonomous bodies are supposed to disclose their earnings and expenses for the previous year in addition to offering estimates.
The proposals sent by all the ministries, UTs are received by the revenue secretary. The proposals are thoroughly reviewed by top government officials. The Department of Expenditures and Niti Aayog conduct extensive consultations to examine these proposals. After the date is verified and approved, it is sent to the finance ministry.
After examining the data sent by the Department of Expenditures, the finance ministry compares the estimates of revenue and expenditure to find out the overall budget deficit. The overall budget deficit is calculated. The government now consults the Chief Economic Advisor to determine the borrowings required by the government to meet the Budget deficit.
After considering all recommendations, the Finance Ministry allocates revenue to various ministries, and departments for their future expenditure. In the event of any disagreements over the allocation of funds, the finance ministry deliberates with the Union Cabinet or the prime minister before proceeding.
After the allocation of the budget, the Finance Ministry holds pre-budget consultations with various stakeholders to gain a clear idea of their demands and recommendations. These stakeholders include of state representatives, bankers, agriculturists, economists and trade unions.
After considering all the requests raised during the pre-budget consultations, the Finance Minister makes the final decision after extensive discussion with the Prime Minister.
As per the tradition, every year the Finance Ministry hosts a 'Halwa Ceremony', a few days before the Union Budget is presented, marking the official kick-off of events. The popular Indian sweet dessert is prepared in a massive kadhai and served to the Finance Ministry staff. The Finance Minister gives the go-ahead by stirring the kadhai and serving the sweet to officials. What makes the ceremony significant is that it initiates the ‘lock-in’ for the ministry staff to prevent leaks, lasting until the financial statement is tabled. Budget Press, situated inside North Block, houses all officials in the period leading up to the presentation of the Union Budget.
Finally, the Union Budget is presented in the Lok Sabha by the Finance Minister on February 1 following approval from the President for presenting the same. The Finance Minister summarizes the document's key points and explains the thinking behind the proposals during the presentation.
Following the presentation, the Union Budget is laid before both houses of Parliament for discussion. After approved by both houses of the parliament, the Budget is forwarded to the President for final approval.