Finance Minister Nirmala Sitharaman is set to present the Union Budget 2025 on 1st February 2025. This will be a crucial budget as the government aims to address economic growth, inflation, and fiscal challenges. In this blog, we will discuss the meaning, importance, and preparation process of the Union Budget.

What is Union Budget?

The Union Budget, as per Article 112 of the Indian Constitution, is referred to as the Annual Financial Statement. It outlines the government's financial plans for a fiscal year, which runs from 1st April to 31st March of the following year.

The word ‘budget' comes from the French term "Bougette," meaning a leather briefcase. Traditionally, finance ministers used leather bags to carry the budget documents, but since 2019, Nirmala Sitharaman replaced it with the ‘Bahi Khata' and later introduced a digital paperless budget.

The Union Budget consists of two main components:

  1. Capital Budget – Covers government capital payments and receipts.

  2. Revenue Budget – Includes all revenue-related expenditures and receipts.

Importance of the Union Budget

The Union Budget plays a crucial role in shaping the country's economic future. Here's why it matters:

  1. Optimizing Resource Allocation: Ensures optimal distribution of available resources to maximize economic benefits and public welfare.

  2. Economic Stability: Helps manage inflation, deflation, and other economic fluctuations.

  3. Income Redistribution: Influences income equality through subsidies and tax policies.

  4. Employment Generation: Creates job opportunities by focusing on various industries and development projects.

  5. Taxation Framework: Decides the country's direct and indirect tax structure, ensuring balanced taxation.

How Is The Union Budget Prepared?

The budget-making process starts nearly six months before its presentation. The Ministry of Finance, in collaboration with Niti Aayog and other key ministries, plays a vital role in preparing the budget.

Steps in Budget Preparation:

  1. Initial Estimates: Circulars are sent to all ministries, states, and union territories for budget estimates.

  2. Revenue & Expenditure Analysis: Ministries submit their estimates for the upcoming fiscal year.

  3. Scrutiny & Approval: Senior officials review and finalize proposals.

  4. Fiscal Deficit Management: The finance ministry assesses expenditure vs. revenue and determines borrowing needs.

  5. Tax Adjustments: If necessary, tax rates are modified to bridge fiscal gaps.

  6. Stakeholder Consultations: The finance minister holds discussions with industry experts, economists, and other stakeholders.

  7. Final Approval: The Prime Minister and key policymakers finalize the budget before its presentation in Parliament.

  8. Budget Presentation: The Finance Minister presents the final Union Budget in the Lok Sabha on 1st February.

Key Expectations for the Union Budget 2025

  • Economic Growth Measures: Focus on infrastructure, manufacturing, and digital economy.

  • Tax Reforms: Possible changes in income tax slabs, GST rationalization, and corporate tax adjustments.

  • Boosting Employment: Policies to promote job creation in emerging sectors like AI, green energy, and startups.

  • Social Welfare Programs: Strengthening healthcare, education, and rural development schemes.

  • Sustainable Development Initiatives: Focus on renewable energy, electric vehicles, and environmental conservation.

Interesting Facts About Indian Budgets

  • First Budget: Presented on 26th November 1947 by R. K. Shanmukham Chetty.

  • Most Budgets by a Minister: Morarji Desai holds the record with 10 Union Budgets.

  • Longest Budget Speech (By Words): Manmohan Singh in 1991 with 18,650 words.

  • Longest Budget Speech (By Time): Nirmala Sitharaman in 2020, speaking for 2 hours and 42 minutes.

  • Budget Presentation Time Change: In 1999, Yashwant Sinha shifted the budget presentation from 5 PM to 11 AM.

  • Merger of Railway & General Budget: Done in 2017 under Arun Jaitley.

  • Paperless Budget: Introduced in 2021 by Nirmala Sitharaman.

Wrapping Up

The Union Budget 2025 is expected to bring significant economic changes as India focuses on post-pandemic recovery and long-term economic growth. With global uncertainties, inflation concerns, and job creation at the forefront, all eyes will be on the announcements made on 1st February 2025.

We at Insight.market will be covering the budget, so stay tuned. Let's hope that this budget helps India move forward towards economic prosperity!

FAQ

When was the budget introduced in India?

The first budget in India was introduced on 7th April 1860 by Scottish economist James Wilson.

Why is the budget called the Union Budget?

India is a Union of States, and the budget outlines financial planning for both the Central and State governments.

In which language is the budget presented?

The budget is presented in English, with translation services available for MPs who prefer their regional languages.