What is budget? What is its significance in Indian constitution?

The word ‘Budget’ is derived from the root word ‘Bougett’ which means a sack or a pouch in which papers for the presentation in Parliament were carried by the British Chancellor of the Exchequer. These papers would have the details for the government’s financial program for the upcoming year. Article 112 refers to the term ‘Annual Financial Statement’ of expenditure and receipts of the government. In other words, the term ‘Budget’ is the popular name used for Annual Financial Statement mentioned in the Constitution.

Here are some of the points that highlight the features of Budget in alignment with Article 112 of the Constitution of India:

• Formulation of the Budget − There is various agencies involved in formulating the entire Budget like Finance Ministry, Comptroller and Auditor General and the various administrative ministries. The formulation of Budget is an 8-9 month long process where it goes through different stages and is scrutinized by various departments and the Finance Ministry. It is the Finance Ministry which consolidates the Budget both on income and expenditure side.

• Presentation of the Budget − The Constitution of India highlights that the President shall with effect cause to be laid down the Annual Financial Statement in both the houses of Parliament. The Lok Sabha enjoys more power with respect to Budget than Rajya Sabha as it is the Lower House of representatives directly elected by the people. Rule 213 of Lok Sabha gives the provision for the presentation of Annual Financial Statement in the Lower House in two or more parts.

• Parts of the Annual Financial Statement − The Budget shall include all the aspects related expenditure of Consolidated Fund of India i.e. the items involved in the expenditure of the Consolidated Fund of India, the taxation proposals, details of the actual receipts and expenditure.

• Execution of the Budget − At the end, the execution of the Budget is conducted by the various ministries and departments in the direction and guidelines given by the Ministry of Finance. One can understand that the Ministry of Finance as the central agency for Govt of India form the backbone in the budgetary process.