Title Chapter 7 ( Unit 3 ).pdf ✅

UNIT – 3: THE PROCESS OF BUDGET MAKING: SOURCES OF REVENUE, EXPENDITURE MANAGEMENT AND MANAGEMENT OF PUBLIC DEBT
Introduction ▪ The need for budgeting arises from the need to efficiently allocate limited resources to ensure maximum social welfare. The government also needs to reallocate resources in accordance with its declared priorities. By proper budgeting, the government is able to ensure redistribution of income and wealth. The other objectives of budgets are: � reduction/elimination of economic fluctuations to bring in stability, sustainable increase in real GDP and reduction in regional disparities. ▪ Budget is a statement that presents the details of ‘where the money comes from’ and ‘where the money goes to’. ▪ A government budget is a schedule of the entire revenues and expenditures that the government expects to receive and plans to spend during the following year. The budget includes projections for the economy and its various sectors such as agriculture, industry, and services. The budget also contains estimates of the government’s accounts for the next fiscal year called budgeted estimates. Being the document which consolidates revenues from all sources and outlays for all activities, the budget is the most comprehensive report of the government's finances. Apart from the union budget, state and the local bodies have their own budgetary processes for the next financial year - -exp.
The Process of Budget Making ▪ The finances of the government of India have traditionally been controlled by the Ministry of Finance. The budget is prepared by the Ministry of Finance in consultation with NITI Aayog and other relevant ministries. ▪ The budget must be presented and approved by both houses of parliament before the beginning of the fiscal year (April 1 to March 31). Despite the fact that the term ‘budget’ has not been used in the Indian Constitution, the process of making it is generally referred to as budgeting. Article 112 of the constitution provides that in respect of every financial year the ‘president shall cause to be laid before both the houses of parliament a statement of the estimated receipts and expenditure of the government of India for that year, referred to as the “Annual Financial Statement’’. Budgetary Procedures Preparation of Budget Presentation and enactment of the budget Execution of Budget -
The budget process mainly consists of two types of activities: 1. The administrative process, wherein the budget along with the accompanying documents are prepared in consultation with various stakeholders; 2. The legislative process wherein the budget is passed by the parliament after discussions. ⛳ Despite the fact that the union budget is presented on 1st February (or any other suitable date as decided by the government), the process of budget preparation commences in August-September of the previous year. ⛳ The Budget Division of the Ministry of Finance prepares a comprehensive schedule for carrying out the budget preparation activities. The process of budget making ⛳ Set off with the Budget Division issuing the budget circular containing detailed instructions and formats for preparing the estimates to all ministries, states, union territories and autonomous bodies. ▪ The detailed estimates of expenditure are prepared by ministries and departments according to their assessment of requirements for the subsequent year. Every department prepares estimates for receipts and expenditure separately. ⛳ A series of pre-budget consultations are done by the union finance minister with the finance ministers and chief ministers of states, various stakeholders and interest groups including industry associations, representatives from agriculture and social and welfare sectors, labour organisations, experts from NITI Aayog, economists etc. to obtain their suggestions on the proposed budget.