Saturday, September 27, 2008

The Union Budget

Budget making is the process of projecting expenditure of public money. Individuals are free to spend their own money as and when they like, and in any manner they like. They are also not accountable to anyone regarding this expenditure, except to themselves. However in the case of public money, all expenses incurred by the authorities, to do so, has to be done in accordance with certain laid down rules and regulations, and they have to be in the best interests of the country’s public, to whom the money really belongs.
The union of India presents a budget every year in the month of February. This budget projects the collection of the revenues of the government under various head, through a variety of taxes. These taxes are collected from the individuals of the public, organizations, products manufactures and imports and exports. This money is collected by the government, and, is intended to be spent for the welfare of the people. This is done by the government in the form of providing civic services, expansion of civic services, maintenance of the public and the country. The internal security and defence of the country and several other allied works are also the responsibility of the government, for which it collects taxes.
Various ministers of the government looking after the different aspects of government functioning draw out a revenue collection and its expenditure programme for the coming financial year which is from April of current year to March of the next year. Some wings of the government collect more money than they can spend, and some public service wings, spend more than what they are able to collect.
The budget proposal submitted by the different ministries are consolidated by the Ministry of Finance, which also does some modifications, in consulations with the concerned Ministries. After doing this, the Ministry of Finance tries to strike a workable balance between the revenue collections and the expenditure. A surplus budget shows more revenue collection than the expenditure incurred and a deficit budget show more expenditure than the collection of money made in the year. All the money collected by way of different categories of revenue goes to the Consolidated Funds of India, and then the expenditure is planned out of this fund. For any expenditure that has to be made, an approval of the parliament is required. It is for this purpose the budget proposals are put before a specially convened session of the Parliament, called the Budget Session of the Parliament. This is normally done the end of February, for the approval of the budget.
The proposals are discussed in every detail in the Parliament, modified on the basis of views of the members of Parliament. When the budget is finally approved by the parliament, the government starts spending and collecting as per the approved budget. These budget proposals are kept as a closely guarded secret till the budget. These budget proposals are kept as a closely guarded secret till the budget is presented to the parliament. This is done in order to avoid individuals and industries from taking any advantage with the advance information.
In the year 1998 a special situation arose due to the change in the government just at the time of the budget session, thus, the regular budget for the year 1998-99 could not be passed in time by the Parliament. Which led to a special situation. When grants had to be sanctioned in lump sums, and the approval of the Parliament was missing, a special situation had arisen. The budget that is usually passed and approved by the Parliament by February, had to be presented only as late as june, when the new government took up the task of working. This budget was thus approved and passed later after stormy discussions and some modification.
This budget of the current year, 1998-99 lays special stress on the infrastructure growth in the industrial sector, primary education, health care and other basic civic amenities. Since massive funds are required for all the above mentioned programmes, and these, the government neither has, nor is able to collect through a variety of taxes, the government has stared private sector investments, and is also encouraging an inflow of money from outside India, for investment here. The result of this has been a liberalized and competitive economy at the global level, instead of state controlled economy, practiced earlier, and which also failed to give the desired results. It is now expected that, with a greater flow of money from the private sector from within, and from outside, the country’s economy should improve and that, it will be able to provide better basic services to the common man.
In India, the state governments also follow the same method of budget proposals and sanctions. Their budgets are approved by their respective State Legislatures. However, if the state is under the central rule then, its budget is approved by the Parliament.
The budget is thus the picture of the revenues and expenditures of the year gone by, and the proposals for the ensuing year.

No comments: