The budget is a statement of governmental policy that details revenue sources and expenditure to be undertaken by the Centre, thereby laying a roadmap for fund collection and allocation. Fiscal steps spelt out in the budget impact demand and output. Mint explains.
How does the budget impact our economy?
The annual financial statement is a blueprint for the government’s spending and revenue collection. It aims to reduce economic inequality by increasing balanced development and controlling prices. It involves proper allocation of resources through effective governance and maximises welfare via well designed policies. The budget identifies revenue sources—taxes, etc.—for expenditure on productive activities and welfare measures. It not only provides a direction to industries to help strategize and be a part of India’s growth journey, but also to citizens in terms of disposable income and real purchasing power.
Why is the timing of budget important?
Until 1998, the finance minister would present the budget at 5pm on last working day of February. This practice was inherited from the British regime. It used to be presented in the evening to assess the impact on equity markets of Britain, where it was time for the markets to open. However, this pattern changed in 1999 under the National Democratic Alliance (NDA) government and the timing was changed to 11am.
In February 2016, the NDA administration subsequently changed the date of the budget presentation to 1 February and merged the railway budget with the general budget.
What is the importance of the “halwa” ceremony?
The “halwa” event is a pre-budget custom that flags off the printing of budget-related documents. Over the next 10 days, officials involved are under round-the-clock surveillance, locked away in North Block. Any information leak may lead to volatility in the markets and the FM can be held accountable. Number of days and persons have been minimized this year.
Why is the Economic Survey significant?
The Economic Survey, which will be unveiled today, is released a day prior to the budget. It is an annual document that reviews the state of economy and the country’s development over the past fiscal year and projects India’s gross domestic product growth. It offers a trend analysis across various sectors. The survey reflects the state of economy and recommends steps to be taken with economic rationality, while the budget spells out the practical aspects within a political context, leading to a variation between the two.