The annual financial plan issued by the Indian government describing its revenue and expenses for the following fiscal year is referred to as the “yearly budget” in India.
The budget outlines the government’s plans for raising and spending money, as well as its goals for economic and fiscal policy, and is typically submitted to Parliament by the Finance Minister in the month of February.
The budget is a crucial document that determines the economic and financial landscape of the nation for the upcoming year and has broad repercussions for numerous sectors and stakeholders.
The Union Budget 2023 was presented by Finance Minister Nirmala Sitharaman on February 1st, 2023. The budget’s populist initiatives as well as those that would help India reach its objective of a $5 trillion GDP were anticipated by the public.
The budget’s populist initiatives as well as those supporting India’s $5 trillion economic target were anticipated by the public. It serves as a blueprint for the government’s financial and economic priorities for the upcoming fiscal year.
It helps the government allocate resources to various sectors, programs, and initiatives, and provides a clear direction for economic growth and development.
By presenting a transparent and accountable plan for revenue and expenditure, the budget helps to foster investor confidence and promote financial stability.
Additionally, the budget process allows the government to engage with stakeholders, including citizens, businesses, and civil society organizations, to gather feedback and input on its economic plans and policies.
Ultimately, the yearly budget plays a critical role in shaping the country’s economic trajectory and helping to ensure that resources are utilized to support the well-being of the nation and its people.
How Budget Is Prepared
The Ministry of Finance in India creates the budget with input from numerous other departments and agencies of the government.
Several months before the budget presentation, the process usually kicks off with a series of meetings and consultations with stakeholders, experts, and government representatives.
The general procedures involved in creating a budget in India are outlined below:
Data and information gathering: To evaluate the state of the economy and determine the government’s revenue and expenditure projections for the upcoming fiscal year, the Ministry of Finance gathers data and information from a variety of sources, including government departments, agencies, and stakeholders.
Preparation of draft budget: The Ministry of Finance creates a draught budget proposal based on the statistics and information gathered, outlining the government’s revenue and expenditure predictions as well as its policy priorities and initiatives for the upcoming fiscal year.
Consultations and feedback: In order to get feedback and input, the draught budget proposal is then put through a series of consultations and discussions with different stakeholders, including government departments, business organizations, and civil society organizations.
Budget finalization: Taking into account the government’s policy priorities and initiatives, the state of the economy, and the country’s budgetary position, the Ministry of Finance finalizes the budget proposal based on the feedback it has received.
Presentation to Parliament: The final budget proposal is then made to Parliament, where elected officials and government officials debate and discuss it.
Parliamentary approval: If the budget is given the green light, it becomes the official financial and economic blueprint for the nation, and the government may start putting it into practice.
Throughout the budget process, the government is accountable to Parliament and to the public and is required to provide regular reports and updates on its budget implementation and performance.
Why Yearly Budget Is Important?
The yearly budget is important for several reasons:
Financial planning: The budget provides a comprehensive plan for the government’s revenue and expenditure for the upcoming fiscal year, allowing for effective financial planning and management.
Policy formulation: The budget serves as a tool for the government to set its policy priorities and initiatives, and to allocate resources toward achieving its goals and objectives.
Allocation of resources: The budget helps to determine the allocation of resources across various sectors and programs, and to ensure that they are being used effectively and efficiently.
Economic stability: By providing a clear plan for revenue and expenditure, the budget helps to ensure stability in the economy and to maintain a healthy balance between government spending and revenue generation.
Transparency and accountability: The budget provides transparency and accountability in government spending, and helps to ensure that public resources are being used for the benefit of the people and the country.
Investment climate: The budget also serves as a signal to investors and the business community about the government’s economic policies and priorities, and can have an impact on investment decisions and the overall investment climate in the country.
Overall, the yearly budget is an important tool for the government to achieve its goals and to promote economic growth and development while ensuring stability and accountability in its financial and economic policies.
Major changes in Budget 2023
- New Tax slab
|TAX SLAB IN BUDGET 2023-24|
|Less than ₹3 Lakhs||Nil|
|₹3 Lakhs-₹6 Lakhs||5%|
|₹6 Lakhs-₹9 Lakhs||10%|
|₹9 Lakhs-₹12 Lakhs||15%|
|₹12 Lakhs-₹15 Lakhs||20%|
|More than ₹5 Lakhs||30%|
- What is cheaper and costlier?
- The new tax system will benefit taxpayers on both ends of the income distribution spectrum because, on the one hand, there will be no tax liability up to an annual income of Rs. 7 lakh.
- The surcharge on annual incomes above Rs. 5 crore has been reduced from 37% to 25% at the high-income end.
According to partner Sudhakar Sethuraman of Deloitte India, “This budget looks promising for middle-class taxpayers with enhanced slab limits. Revisiting the leave encashment exemption in line with prevalent salary levels is much appreciated. One has to be prepared for how the new tax regime will be focused going forward.”