Previous Year Question

The coordination, compilation and preparation of the Union Budget are undertaken by the Budget Division of the Department of Economic Affairs—DEA, Ministry of Finance.

The Budget Division consolidates estimates of receipts and expenditure received from Central Government ministries, departments and other institutions.

General Budget-preparation process

1. Issue of Budget Circular

The Budget Division issues a Budget Circular to ministries and departments seeking estimates for the coming financial year, including:

• Budget Estimates—BE

• Revised Estimates—RE for the current year

• Revenue Receipts

• Capital Receipts

• Revenue Expenditure

• Capital Expenditure

2. Submission of estimates

Each ministry prepares expenditure estimates for its programmes, schemes, establishments and projects.

Revenue-related departments provide estimates of Tax and Non-tax Revenue.

3. Pre-Budget discussions

The Budget Division and Department of Expenditure hold discussions with the ministries to assess expenditure requirements.

These discussions consider:

• Available financial resources

• Past expenditure

• Performance of schemes

• Fiscal Deficit targets

• Government policy priorities

4. Compilation of Budget documents

The Budget Division plays a coordinating role in preparing major documents such as:

• Annual Financial Statement

• Demands for Grants

• Finance Bill

• Fiscal Policy Statements

• Receipt Budget

• Expenditure Profile

• Budget at a Glance

5. Presentation to Parliament

Article 112 of the Constitution requires the President to cause a statement of the estimated receipts and expenditure of the Government of India for each financial year to be laid before both Houses of Parliament. This is called the Annual Financial Statement.

In practice, the Finance Minister presents the Union Budget in the Lok Sabha together with the Budget Speech.

Role of the other departments

Option (a): Department of Revenue

It principally deals with:

• Direct Taxes through CBDT

• Indirect Taxes and Customs through CBIC

• Tax administration

• Revenue intelligence and enforcement

It provides inputs relating to Tax Revenue but does not prepare the entire Union Budget.

Option (c): Department of Financial Services

It principally handles:

• Public Sector Banks

• Financial Institutions

• Insurance

• Pension reforms

• Financial Inclusion

It is not responsible for preparing the Union Budget.

Option (d): Department of Expenditure

It deals with Government expenditure, expenditure management and financial rules. It plays an important role in scrutinising ministerial expenditure estimates, but central coordination and compilation of the Budget are undertaken by the Budget Division of DEA.