THE BUDGETARY PROCESS IN INDIA

 BUDGET 

As the budget day February 1st is approaching it may be appropriate to briefly discuss about  the budgetary process in followed in India.Budget is  a statement of  anticipated receipts(revenue) and expenditure of the Government or public authority ranging from Central Government, State Governments and Local governments for every forthcoming financial year. While in many countries financial year and calendar year are the same, in India it commence from 1st April and ends on March 31st.Accordingly the forthcoming Central Budget 2025-26  will have three sets of estimates of receipt or income and expenditures They are 1. Budget Estimates (BE) for 2025-26,2.Revised estimates (RE) for the current financial year 2024-25 and 3.Provisional actual estimates (AE) for the  previous fiscal year 2023-24. Budget passes  through following stages in the parliament namely- as a prerequisite  pre budget Economic Survey depicting the status of the macro economy will be presented  before the presentation of budget.Other stages are General discussion on the budget, Scrutiny by Department al Committees, Voting on Demands for Grants, Passing of Appropriation Bill and  Passing of Finance Bill are the stages involved in the budgetary process. In  case a regular budget is not feasible during the particular period due to prevailing  special circumstances like announcement of elections or disruption of budget cycle an interim budget can be presented and by  Passing  a Vote on Account Provisional arrangements to meet Government expenditure for the required part of that period can be met.

BUDGETARY PROCESS 

The budgetary process is the fundamental aspect of public administration and governance serving  important tools of economic management, social development, and policy implementation which are based on Government's priorities and commitments. Prior to  formulating the Budget suggestions are taken from various stakeholders, Departments and groups from industry, trade,farmers,economists technocrats and other professionals etc. They are collected before the final preparation of estimates for expenditures and reiciepts for the forthcoming financial year. At least one day prior to the budget the detailed status report of the economy known as"Economic Survey "prepared by Ministry of Finance is presented in the Parliament.While presenting the budget (presently on 1st February) Finance Minister will make detailed budget speech covering public revenue, public expenditure. Public debt and  financial administration Following discussions are utilised by the  members to make detailed analysis and assessment of various policies and projects  proposed in the budget .Discussions will take place in both houses of Parliament (Loksabha and Rajya Sabha) where members will be at liberty to discuss either individually or collectively At the end of  the discussion the Finance Minister has  the right  to reply clarifying members doubts.Afteŕwards 24 Developmental Standing Committees (DSCs) in Parliament will examine and discuss in detail the demand for Grants of the concerned Ministries, and based on  DSC reports Loksabha takes up demand for Grants and vote for it.Each demand is voted separately in the Loksabha whereas  Rajya Sabha can discuss the budget without power to vote .According to the budgetary process after the demand for Grants are voted and passed by the Loksabha, the Appropriation Bill is introduced to provide for Appropriation. Appropriation bill After the demands for Grants are approved the  passing of Appropriation Bill is introduced debated  and voted upon. Significantly once the demand for Grants are approved after  thee Presidential assent. Appropriation bill becomes the Appropriation Act and it  authorises withdrawal of funds from the Consolidated Fund of India to meet Governmen⁶t expenditure. Union Government  cannont withdraw from the Consolidated Fund of India 

PUBLIC REVENUE AND EXPENDITURE 

Major items of revenue recieved by Government can be classified as tax revenue and non tax revenue .Tax revenue  include personal income tax,Goods and services Tax (GST) Corporate tax( tax on the net income of companies),Excise duty, Sales tax and customs duty ( tariff imposed  on imports and very rarely on export of goods)Non tax revenue on the otherhand consists of interest income and dividends recieved from public sector banks, Railways, public sector undertakings, and Reserve Bank of India. Main items of expenditure  include, Transfer of resources to states and Union Territories, contributions tto international bodies, Grants and loans to foreign Governments Railways expenditure ,defense, education ,health, MNREGS,social security measures, interest payments and debt service payments. 

AUDITING AND ACCOUNTABILITY 

The most important agency for financial  evaluation and scruitiny of reciepts is the Comptroller and Auditor General of India(CAGI) which is the supreme audit institution of India established under Article 148 of the constitution to audit all receipts and expenditure of the Government of India ,state Governments and the autonomous bodies financed by Government. Apart from most important CAGI other agencies responsible for financial Scrutiny and evaluation are 1.The Public Accounts Committee (PAC) which is elected among the members of Parliament for purpose of auditing the revenue and expenditure of Government  of India. Public Accounts Committee along with the 2.Estimates Committee EC)  EC is a committee from selected members of Parliament for the purpose of scrutinizing the functioning of Ministries and departments in terms of expenditures or utilisation of funds.WhilePAC members are constituted both from Loksabha and RajyaSabha, Estimates Committee members are solely from Loksabha. Committee on Public Undertakings (COPU) are the third  financial standing Committee of the Parliament which particularly focus on expenditure bill and examine the audit report of CAGI after it is laid in the Parliament. The PAC consists of not more than 22 members 15 elected from Loksabha and not more than seven from Rajya Sabha .Even though CAGI and PAC are involved in financial administration in India their roles are different-CAG submits  three Annual Audit reports to the President and then to both houses of  Parliament .PAC examines the Audit report  and scrutinises by checking Government finances ,priorities, technical irregularities,corruption losses,and inefficiencies.

FINANCE COMMISSION, FRBM Act  

As per article 280  of the constitution it is mandatory to set up Finance Commission every five years for evolving the resource sharing based constitutional division of functions and finances between Centre and states as a part of federallsystem. Currently the sixteenth Finance commission headed by Arvind Panagaria will devise criteria for devolution of ffunds  from Consolidated Fund of India, Grants in aid to ,local bodies,Centrally sponsored Schemes  and to Gross State Domestic product with recommendations effective from April1st 2026.Many  states and UTs believe  that 16th Finance Commission's award will be more balanced towards promoting Cooperative federalism(Without penalising states with good performance in social indicators and also providing required help for distressed states with low social indicators). The Fiscal Responsibility and Budget Management Act 2003  imposes central Government to ensure intergenerational equity in fiscal management and long-term  mcro economic stability by removing fiscal impediment in the effective conduct of monetary policy, prudential debt management and fiscal stability through  limit to  borrowing etc. This Act has institutionalized financial discipline reduced India's fiscal deficit, improved macro economic management and strengthened fiscal prudence .In short if the budgetary process if strictly adhered to and effectively followed with required constitutional and financial scruitiny it should pave  the way for the all round development of the nation.