Process of Budget Preparation

Process of Budget Preparation

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The government's annual financial report, or the Annual Budget, lays out the country's fiscal course for the following year. The Niti Aayog and other relevant ministries are consulted throughout its preparation by the ministry of finance. The nodal entity in charge of preparing the Budget is the department of economic affairs (DEA) in the finance ministry. The budget-making process begins in August or September, or about six months before the presentation date.

1. Circulars are sent to all ministries - The finance ministry sends out a circular to all ministries, states, Union territories, and autonomous organisations requesting that they create estimates for the upcoming fiscal year. The circular includes the necessary recommendations as well as skeletal forms, depending on which ministries make their expectations. The ministries describe their earnings and expenses from the previous year in addition to offering their estimates.

2. Proposal consultations were received - The highest ranking government authorities review requests after they are submitted. The departments of expenditure and the ministries hold extensive consultations. The information is then transmitted to the finance ministry after being approved.

3. Distribution of income - The finance ministry distributes funds to several departments for their upcoming expenses after reviewing all recommendations. The finance ministry consults the Union Cabinet or the Prime Minister if there is a disagreement over the distribution of funds. The DEA and department of revenue also consult with other stakeholders, such as farmers, small business owners, and foreign institutional investors, to acquire further insights.

4. Pre-Budget discussions - The finance minister meets with numerous stakeholders ahead of the budget to learn about their requests and recommendations. State representatives, bankers, agriculturalists, economists, and labour unions are a few of these stakeholders. The finance minister makes the final decision on all demands after the pre-Budget discussions are complete. Prior to finalisation, it is also discussed with the Prime Minister.

5. Printing the budget - A few days before the Budget is announced, the government has a yearly custom of conducting a halwa (Sweet dish) ceremony. The ceremony heralds the start of Budget document printing. A giant "kadhai" (large frying pot) is used to produce "halwa," which is then fed to the entire personnel of the finance ministry as part of the ritual. The ceremony is significant because after the sweet dish is served, many officials and support staff who are actively involved in the budget-making process are forced to remain in the ministry and remain cut off from their families until the presentation of the budget. The extensive budget documents, however, won't be printed this year as they have in the past as per the Covid-19 norm; instead, they will be delivered electronically to the Members of Parliament (MPs).

Budget Presentation

The budget is presented to Lok Sabha by the finance minister. It was presented on the last day of February up to 2016. However, starting in 2017, every year on February 1 the budget is revealed.