The budget is an annual financial statement of the government’s revenues and expenditures for a financial year. It is a crucial document that reflects the government’s priorities, policies and programmes. The budget also serves as a tool for accountability, transparency and fiscal discipline.

Process of Budgeting

The process of budgeting in India involves several stages, from the preparation to the execution of the budget. The main steps are as follows:

• Budget preparation: The Ministry of Finance issues a budget circular in September/October every year, inviting estimates of receipts and expenditure from various ministries and departments. The estimates are scrutinized by the Budget Division and consolidated into the annual financial statement (AFS), also known as the budget.
• Budget finalization: The AFS is finalized by the Finance Minister in consultation with the Prime Minister and the Cabinet. The AFS is then submitted to the President, who causes it to be laid before both Houses of Parliament on February 1st every year.
• Budget presentation: The Finance Minister presents the budget speech in the Lok Sabha, highlighting the key features, proposals and targets of the budget. Along with the AFS, other budget documents such as demands for grants, appropriation bill, finance bill, economic survey, etc. are also tabled in Parliament.
• Budget discussion: The general discussion on the budget takes place in both Houses of Parliament, where members debate on the broad aspects of the budget. After the general discussion, the Lok Sabha takes up detailed discussion on each demand for grant presented by various ministries and departments. The Rajya Sabha can only discuss the budget but cannot vote on it.
• Budget voting: The Lok Sabha has the power to approve, reduce or reject any demand for grant. However, it cannot increase any demand for grant due to constitutional limitations. After voting on all demands for grants, the Lok Sabha passes the appropriation bill, which authorizes the government to withdraw funds from the Consolidated Fund of India. The Lok Sabha also passes the finance bill, which contains the taxation proposals of the government. Both bills are then sent to the Rajya Sabha for consideration and returned to the Lok Sabha within 14 days.
• Budget assent: The appropriation bill and the finance bill become acts after receiving the assent of the President. The assent is usually given before March 31st, which is the end of the financial year.
• Budget execution: The government implements the budget according to the approved estimates of receipts and expenditure. The government also releases quarterly reviews of receipts and expenditure to monitor the progress of budget implementation. The government may also seek supplementary or additional grants from Parliament during the year if required.

Legal Mandates of Budgeting

The budgeting process in India is governed by various constitutional provisions and statutory rules. Some of them are:

• Article 112: It requires the President to cause to be laid before Parliament an annual financial statement for every financial year.
• Article 113: It provides for the presentation of demands for grants by various ministries and departments to Parliament along with AFS.
• Article 114: It provides for the enactment of an appropriation bill by Parliament to authorize withdrawal of funds from Consolidated Fund of India.
• Article 115: It provides for supplementary, additional or excess grants by Parliament in case of any unforeseen expenditure.
• Article 266: It provides that no expenditure can be incurred except with authorization of Parliament.
• Article 267: It provides for a Contingency Fund of India at disposal of President to meet unforeseen expenditure.
• Article 268 to 281: They deal with distribution of revenues between Union and States.
• FRBM Act 2003: It aims to ensure fiscal responsibility and prudence by setting targets for fiscal deficit, revenue deficit and debt-GDP ratio for Union Government.

Data on Budget 2022-23

According to India Budget, some key data on budget 2022-23 are:

• Total expenditure: Rs 39,44,909 crore (4.6% increase over revised estimate of 2021-22)
• Revenue expenditure: Rs 31,94,663 crore (0.9% increase)
• Capital expenditure: Rs 7,50,246 crore (24.5% increase)
• Receipts (other than borrowings): Rs 22,83,713 crore (4.8% increase)
• Fiscal deficit: 6.4% of GDP (lower than 6.9% in 2021-22)
• Revenue deficit: 3.8% of GDP (lower than 4.7% in 2021-22)
• Nominal GDP growth rate: 11.1%

According to PRS Legislative Research, some of the largest expenditure items in the budget are:

• Interest payments: Rs 9,40,651 crore (23.8% of total expenditure)
• Defence: Rs 4,78,195 crore (12.1% of total expenditure)
• Subsidies: Rs 4,19,740 crore (10.6% of total expenditure)
• Central sector schemes: Rs 3,97,135 crore (10.1% of total expenditure)
• Finance Commission grants: Rs 2,94,849 crore (7.5% of total expenditure)