‘It is raining heavily outside. You will get wet. Why don’t you take leave from office today?’ Grandma said this to Vivek who was sitting at the breakfast table. Vivek is a journalist. Vivek replied while taking a bite of paratha- ‘I can’t take leave grandma. The budget is going to come today.’
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Grandma said- ‘There is always something or the other going on in your job. By the way, what will you report in the budget?’
Vivek replied- ‘I have been given the responsibility to explain the government’s budget in simple language. Now I don’t know whether I will be able to explain it to people or not.’
Grandma said- ‘If you can make me and your younger sister Riya understand everything, then consider the job done. You have only 10 minutes. After that my serial will start on TV.’
Discretion- Look grandma. Just like most of our families calculate the income and expenditure of the next month, Finance Minister Nirmala Sitharaman and her team also do the same math. However, this calculation is of the income and expenditure of the whole country. This exercise, which happens every year, is called the budget.
The country’s budget means the accounts of the country’s entire financial year. Financial year means the 12-month period from 1 April to 31 March of the next year. This means that the Finance Minister prepares the accounts of where the government will get money from and where the government will spend it. In government documents, this is called the Annual Financial Statement.
Then Riya, a little confused, said- But Bhaiya, just like my mother and father named me. Who would have named such a budget as budget?
Discretion- This tradition started in the British Parliament. At that time, the finance minister used to bring all the accounts in a leather bag. The leather bag was called budget in French. In English, it came to be called budget. Because of this, all over the world, be it a country or a house, the accounts of expenses and income came to be called budget.
Grandma- You are saying that the budget is the accounting of the whole year. The budget was presented just 4-5 months ago, and it is being presented again on 23rd July. Twice a year, is there anything special?
Discretion- 5 months ago, on 1 February, not the full year budget but a working calculation was presented. This is called the interim budget. Now the general budget is being presented on 23 July.
Riya- Bhaiya, what is the difference between the interim budget and the general budget?
Discretion- Suppose that Papa has to join another job after 3 months. During this time, the current company can stop his salary. In this situation, he will make a budget for only 2-3 months. In that too, he will try to include only essential expenses. Big decisions like investing in property, buying a car etc. will be postponed. When he joins a new company after 3 months, then he will make a proper budget.
Similarly, elections were to be held in the country this year. That means the current government was to be in power for a few months. In such a situation, the Finance Minister could not prepare the budget for the entire year in February itself, because after the elections a new government is formed, which prepares the budget according to its own needs. Therefore, a makeshift budget for a few months was presented on 1 February this year. This is called the interim budget. After the formation of the new government, the full budget is being presented on 23 July.
Riya- I feel a bit awkward in saying interim budget. How did this name come into existence?
Discretion- There is a story behind this too. Actually, when India became independent, the first budget was presented by Finance Minister RK Shanmugam Chetty on 26 November 1947. No new rules and taxes were implemented in it. 95 days later, the full budget for 1948-49 was presented.
While presenting that budget, Shanmugam said that the budget presented before this was interim. This is when the name ‘interim budget’ came into use. Since then, the budget presented for a short period of time is called interim budget. There is no separate mention of this in the Constitution of India.
Grandma: Okay, tell me why don’t you take any major decision in the interim budget?
Discretion- There is no restriction on what the government can do in the interim budget, but generally the government does not make any big announcement. The Election Commission ensures that any announcement of the government does not have a negative impact on the voters. Therefore, some restrictions have also been imposed on the interim budget.
It is a tradition that the government does not make any major announcement in the interim budget. However, in 2019 itself, the government had increased the tax exemption limit from Rs 2.5 lakh to Rs 5 lakh.
Riya- Bhaiya, it is getting a bit boring for me. Tell me something interesting about the budget.
Discretion- Let me tell you about some major changes in the budget. Look at this graphic…
Grandma- Why is it necessary to present the budget in Parliament? Why doesn’t the government just tell journalists like you?
Discretion- This is a good question. Look, in our house, my father and I work. Your pension comes. That means we have three sources of income in our house. We deposit our earnings in a joint bank account.
Similarly, the government earns income from various sources including tax, revenue, loan etc. All these earnings are deposited in a common fund. This is called the country’s ‘accumulated fund’ or ‘consolidated fund’. This is mentioned in Article 266 (1) of the Constitution.
Now let’s talk about expenses. There is a rule in our house that if we have to withdraw even one rupee from the joint account for expenses, then permission will be taken from me, dad and you three. We three are the owners of the joint account.
Similarly, the Lok Sabha is the owner of the country’s accumulated funds. The approval of the Lok Sabha is necessary to withdraw even a single penny from it. Do you understand…
Grandma: Yes, I understand this, but why is the Lok Sabha the owner of the country’s money?
Discretion- We, the public, directly elect the MPs in the Lok Sabha by giving our votes. The money deposited in the Consolidated Fund belongs to the public. Therefore, an arrangement has been made in the Constitution of India that the Lok Sabha should decide on the money deposited in the Consolidated Fund. That is, the permission of the public is taken indirectly.
Rajya Sabha MPs are not directly elected by the people. Therefore, only discussions take place on the budget in Rajya Sabha. Rajya Sabha does not have the right to change the budget or vote on it.
Well Riya, do you know which Finance Minister has presented the budget the most number of times so far?
Riya- No
Discretion- Well look at this graphic…
Riya- Brother, what will happen if the government does not present the budget?
Discretion- It is the government’s compulsion to present the budget. It is mentioned in two places in the Constitution. It is a bit technical, but I will tell you nevertheless…
First: Under Article 112 of the Constitution, the government will have to give full details of its income and expenditure to the Lok Sabha every year.
Second: There is a provision of Appropriation Bill under Article 114 of the Constitution. Through this bill, the government seeks permission from the Lok Sabha. So that it can withdraw money from the Consolidated Fund. The government cannot withdraw money from the Consolidated Fund of India until the Appropriation Bill is passed and implemented.
Grandma- Me, you, mummy and your papa make our household budget together. How is the country’s budget made?
Discretion- Preparations for making the budget start about 6 months in advance, i.e. usually in September. This happens broadly in 6 stages…
- In September, a circular is issued to ministries, departments, states and union territories asking them to provide data on the funds required for the coming year. Funds are later provided to different ministries based on these data.
- After the budget making process begins, there is a daily meeting of the Finance Minister, Finance Secretary, Revenue Secretary and Expenditure Secretary.
- By October-November, the Finance Ministry holds meetings with officials of other ministries and departments to decide how much funds should be given to which ministry or department.
- The budget making team continuously receives inputs from the Prime Minister, Finance Minister and Niti Aayog during the entire process. The budget team includes experts from different fields.
- Before preparing and presenting the budget, the Finance Minister also discusses with the heads of various industries and organizations.
- After all things related to the budget are finalized, a blue print is prepared. After everything is finalized regarding the budget, the budget document is printed.
Riya- I was reading somewhere that people who make the budget are kept locked in a room. Is that true?
Discretion- Yes, it is true to some extent. The budget document is secret because no information about it should come out. The budget document is prepared by selected officers of the Finance Ministry. To ensure that the budget document is not leaked, all the computers used in it are de-linked from other networks.
The officers and employees working on the budget have to stay in the offices of North Block for two to three weeks. During this time they are not allowed to go out. When the budget is prepared, the Finance Minister also feeds Halwa to the employees. Below is a picture of 16 July 2024. In which the Finance Minister is feeding Halwa to the employees after the budget is prepared.
Grandmother- My brilliant child can explain the budget to anyone. It is time for my serial now. The rain has also stopped. Now you go to the office without any worry and explain the budget to everyone in simple language.
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Sketch: Sandeep Pal
Graphics: Kunal Sharma
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