Budget 2023: The Ministry of Finance prepares the Annual Union Budget. In preparation for the Annual Union Budget takes months of planning and execution. The making of the budget starts six months prior to the date of presentation. The budget should be passed in both the houses of the Parliament before the Financial Year that will going to be start from April 1, 2023. The Indian Union Budget is prepared by the Ministry of Finance with the consultation of the Niti Ayog and other ministries.
Budget 2023: Process of Union Budget Preparation
1.Circulation of Skeleton Forms: The Finance Ministry issues the skeleton forms to all the ministries, states, union territories, and autonomous bodies, questioning them to prepare estimates for the coming year.
After receiving the circular, various ministries start preparing the estimated expenditures for the next year.
The process starts when all the ministries provide initial estimates of planned and non-planned expenditures. After that, the ministries talk about the plan expenditures, which include expenditures on electricity generation, infrastructure, education, as well as other productive areas of our economy, with the planning commission.
The financial advisors of the ministries prepare the non planned expenditure, which is estimated expenditure provided in the budget for spending during the year on the routine functioning of the government.
The expenditure secretary consolidates them, and after an intensive talk with the financial advisors, budget estimates are set for the ensuing fiscal year.
An evaluation of expected revenues likely to flow into the government’s treasury.
An estimation of the amount received by the way of tax revenues on the basis of existing rates of taxation and taking into consideration the likely growth and inflation rate over the ensuing fiscal year.
On the capital receipts side, target amounts to be realised through divestment of public sector equity and amounts to be realised by way of loan repayments are made.
All these estimates are given to the revenue secretary.
4.Critical Observation of Revenues and Expenditures
After getting the requests, they are scrutinized by the top official of the government, and then an extensive consultation or advisory is undertaken between the ministries and the department of expenditures. Upon approval, the data is then sent to the Finance Ministry.
5. Deficit Estimate
The Finance Ministry does the estimation for revenue as well as expenditure.
This gives the first estimation of the expected lack of revenue to meet the projected expenditure.
The government then, with the advice of the Chief Economic Advisor, determines the optimum level of borrowing to meet this deficit.
6.Reducing the Deficit
After the targets for the fiscal deficit and the overall budget deficit are decided, any remaining shortage is filled through a revision in tax rates if feasible, keeping in mind the fiscal incentive structure the government wishes to put in place to stimulate the growth of different sectors.
Following the initial plans, if any changes need to be made, adjustments are made to the expenditure; usually, the plan expenditure has to be modified.
Due to the political sensitivities involved in reducing subsidies, non-planned expenditures of the government are inflexible about changing, and it is the planned expenditures that are adjusted.
The Finance Ministry, allocates the revenues for all the ministries by scrutinizing all the recommendations to various departments for their future expenditures.
The Finance Minister holds pre-budget meetings with various stakeholders to learn about their demands and proposals. These stakeholders include state representatives, bankers, agriculturalists, economists, and trade unions.
9.Final Call on Demand
Once the pre-budget consultations are done, the Finance Minister takes the final call on demands and it is also discussed with the Prime Minister before finalization.
10.Final Budget Presentation
Finally, the final Union Budget is presented in the Lok Sabha by the Finance Minister
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