Budget: The definition of budget: The word "budget" is derived from the popular French word "boutette," which means a leather bag, in which we used to keep cash and assets in earlier times.
Budget: Like any household or organisation, a country also has a budget. Simple estimates of expenses and income for the upcoming year and actual expenses and income in the previous financial year
Types of Income:
- Recurring Income:
- GST
- INCOME TAX
Recurring income is simply the regular income of the government. which primarily comes from various taxes people pay.
- One-Time Income:
- Sale of Assets
- sale of internet spectrum
- sale or long lease of land banks.
One-time income is simply income that occasionally happens.
Similarly, expenses also have two types.
- Recurring Expense:
- Salaries and pensions for all government employees
- One-Time Expense:
This is a rare expense, like building an airport or port.
INDIA’S FIRST BUDGET was presented in the year 1860 by James Wilson (of the British East India Company) before its independence.
James Wilson is the founder of the world-famous Standard Chartered Bank and The Economist magazine.
In the Constitution of India, Section 112 A, it is a mandatory duty to present the budget on a yearly basis in both the parliamentary houses (Lok Sabha and Rajya Sabha). And to get it passed all the accounts in parliament to become a law.
Finance Minister presents budget in House every year.
Process of the Budget:
Process goes through 4 phases.
- Formulation of the Budget
- Presentation of the Budget
- Converting a draught into a law
- Execution of the Budget
- Formulation of the Budget:
The person who presents does not start its preparation 1 month before the day of presentation like many university students do preparation for their exams.
Yes, it is an extensive process, which starts at least 5–6 months before by the committee, which is comprised of experienced economists. They analyse sector-wise, i.e., if a particular sector needs a push in the budget. For example, if building metros or roads requires certain funds to be set aside, they do it. They increase or decrease taxes sector-wise. Figure out the areas for tax rebates for industries to come in to tackle unemployment.
- Presentation of the Budget:
Budget has two aspect i) Previous year's actual income and expense ii) Current year estimated income and expense It has a prepared draught of actual numbers. which has to move forward to the third step.
- Converting a draught into a law:
The draught has to be presented before both houses to get majority approval.
Majority of it has to get approval for
- Finance Bill: A Proposed Bill for Financial Provision on Various Aspects
- Appropriation bill: a permitted bill for withdrawing funds from government reserves.
Only after getting this done can the budget move forward to the fourth stage.
- Execution of the Budget:
Budget is being presented on 1st February at 11.A.M IST, every year, and it gets Implemented by 1st April of every year, gives cushion of two months implement new budget.
Major Areas of Concern:
This budget is very important after the global pandemic, which ransomed the entire global economic scenario along with other aspects of the russia-Ukraine war and, after the effect of the pandemic, economic slowdown and relative unemployment.
If this budget gives a balanced boost to the required economic driver, it will revive economic growth which will help narrow down unemployment rate.
Read More: http://financial-planet.blogspot.com/2023/01/save-money-for-safe-future.html
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