Explained: What’s Union Budget?
Every year, you must be listening to your parents talking about something called budget. Even TV and newspapers are filled with programmes and articles discussing yearly budget. But what is budget and why is it so important? Finance minister Nirmala Sitharaman would present Union Budget on February 1, and the country awaits what is in store for us.
Let’s simplify budget for you…
In easier words, budget means planning for the year ahead in monetary terms. Households too make budgets. Ask your parents how they make budget when you are planning to take a vacation. It means keeping a tab on your income and expenses.
There may be one or more sources of income but we all know that expenses are numerous! But a smart householder keeps in mind to always save something even after spending on everything you need.
For a country’s Budget, savings are not so important but the government does plan to not spend more than it earns. However, mostly this plan never materialises. The governments all over the world mostly spend more (in India a LOT more) than they earn.
Now let’s talk about Indian Budget, also known as Union Budget as it is made by the Centre government. The finance minister of the country presents Union Budget every year in the month of February.
Earlier, the Budget was presented on the last day of February but the Modi government changed it to the first day of the month.
Earlier, the Ministry of Railways used to present the Budget for their department separately. But this too changed in the Modi era. Now, the Rail Budget is a part of the Union Budget.
The Budget is presented in the Lok Sabha, and then it is discussed by the Members of the Parliament. After the Parliament okays the Budget, is becomes an Act or a law.
The government earns its revenue from taxes. Tax is a charge to be paid by the citizens. Now, there are many types of taxes but in wider terms there are Direct and Indirect Taxes mainly.
The income earned through these taxes is spent on different sectors of the country. The government spends money on defence, infrastructure, education, health, transport etc, mostly for citizen welfare.
Even big corporates, and smaller businesses have to pay taxes. But the government also gives them subsidies sometimes, which means a little bit of relief in taxes.
It takes many weeks to form a Budget proposal. The officials and ministers in the Finance Ministry are responsible for making of Budget.
In short, the government decides how much expenditure it plans to do in the coming year and how it plans to earn for those expenses in the Union Budget.
Hope this helped. If you have any more questions regarding Budget, do write to us.