BUDGET 2021: Who prepares the budget and how

The Union Budget 2021 will be presented in the parliament today, but most people do not know how exactly the budget is tabulated. While the Budget is deliberated over the parliament for just a single day it actually takes several months to prepare it. Several government departments have to work together to formulate the Union Budget.

What is the Union Budget?

According to Article 112 of the Indian Constitution, the Union Budget of a particular year is a statement of the estimated receipts and expected expenditure of the Central Government for that particular year.

Who formulates the Union Budget?

Preparation of the Union Budget is a long process that takes months, with several government departments working together to formulate it. Union Budget is made through a consultative process which involves the Finance Ministry, government planning body- NITI Aayog and several spending ministries.

The Ministry of Finance issues guidelines for spending which are based on which ministries have presented their demands for the year. Under the Finance Ministry, the Budget Division of the Department of Economic Affairs is the nodal body which is directly responsible for the formulation of the Union Budget.

How is the Union Budget prepared?

The Budget Division of the Department of Economic Affairs issues a notice to all Union Ministries, States, UTs, autonomous bodies, government departments and the defence forces for preparing the budget estimates regarding their organisation for the next year. After they have sent in the estimates; extensive consultations between the Union Ministries, other departments and the Department of Expenditure of the finance ministry begin.

Meanwhile, the Department of Economic Affairs and the Department of Revenue meet with various stakeholders. These include - farmers, businessmen, FIIs, economists and civil society groups. The goal is to take in their opinion for preparing the Union Budget.  Once these meetings are concluded, a final call on the tax proposal for the year is undertaken by the Finance Minister. All proposals are discussed with the Prime Minister before the budget is frozen.

How is the Union Bidget presented in the Parliament?

The Finance Minister presents the Union Budget in the Lok Sabha, generally in the first week of February. They make an address outlining the key estimates and proposals. The Finance Minister briefs the Union Cabinet through a 'summary for the Cabinet' just before presenting the budget in the LS. The Union Budget is tabled in the Parliament after the FM's speech has concluded.