Thanks for contacting us.
Will get in touch soon.
Table of Content
Article 112 of the Constitution of India states that every year a statement detailing the estimated expenditure and receipts of the Government of India for that financial year will be laid before the parliament. This statement is known as the Union Budget or the annual financial statement. Currently, the budget is presented on the first day of February so that it can be materialized before the new financial year begins
Since the pre-liberalization days, a few traditions have been associated with the union budget. Some of these have evolved over the years, let us take a look at these:
Article 112 of the Indian Constitution stipulates that the budget would distinguish the expenditure on revenue account from other expenses. This results in the budget being made of two primary components:
Further, the budget also contains the actuals vs estimates for the previous period. For example, union budget 2020 will consist of:
The federal structure of India is such that the center has most of the taxation power whereas the states have to undertake most of the expenses. This requires that the center transfer some of its resources to the states. For this purpose, Article 280 of the constitution requires that a finance commission be set up every five years. The commission is tasked with making recommendations on how the tax collected by the center should be shared with the states. Further, it also lays down rules governing grants-in-aid to states from the Consolidated Fund of India. It also suggests ways to supplement the resources available to local government bodies i.e. panchayats and municipalities. It is important to note that the suggestions made by the commission are not binding on the central government. The government can also request the commission to look into specific fiscal issues that it considers of import. For example, the 14th financial commission was requested to deliberate on the level of subsidies provided by the government of India. It was also asked to explore how public utilities like drinking water and public transport can be better priced.
ARN: ED/01/20/17586
We help you to make informed insurance decisions for a lifetime.