What is the country’s budget? how is it done? – Natural Self Esteem

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A budget is an essential part of finances. It documents expenses or expenses while saving for future goals. This also applies to a country’s budget planning. A country’s budget or financial plan is called the union budget and contains a government’s receipts (revenues) and expenditures. The plan is drawn up annually. The year considered for budget planning is called the fiscal year, which usually runs from April 1st to March 21st. This is the first month of a financial year and let’s take a look at what the Indian budget entails and how it affects people.

Who decides the country’s budget?

A country’s budget is decided by the Budget Department of the Department of Economy (DEA). It falls under the Ministry of Finance. The budget department is the node body responsible for preparing the budget. Once all the experts have finalized the budget, it will be approved by both chambers of Parliament. Writing the budget document starts months in advance. The central government is asking all states, ministries and UTs to prepare their estate for the coming year. After going through all the conditions and consultations, the Ministry of Finance then allocates funds to ministries, state governments, departments, etc.

The Union Finance Minister then presents the budget to the whole country in the Parliament’s Budget Session. Recently, Finance Minister Nirmala Sitharaman presented the budget on February 1st. She is responsible for presenting India’s first paperless household. India used to write its budget in bahi khata (a ledger wrapped in red cloth). India’s first union budget was presented by RK Shanmukham Chetty on November 26, 1947.

What’s in the budget?

The budget document contains the government’s revenue and expenditure for a given fiscal year. Not only does it have the plan for next year, but it also looks at the key financial conditions over the past year. There are two accounts in a budget – those relating only to the current fiscal year are included in the revenue account (also called the revenue account), and items relating to government assets and liabilities are included as part of the capital account (also called the revenue account). ) mentioned called capital budget).

Budget documents classify total expenses into planned and unplanned expenses. The budget is not just a statement of income and expenditure. Since independence, with the introduction of the Five Year Plans, it has also become a major national policy statement.

The household must distinguish expenses on the income account from other expenses. Therefore, the budget includes the (a) revenue budget and

the (b) capital budget. According to NCERT, The Revenue Budget shows the government’s current revenue and the expenditure that can be covered by that revenue. Revenue expenditure refers to expenses incurred in the normal operation of government agencies and various services, interest payments on debt incurred by the government, and grants made to state governments and other parties (although some of the grants may be for founding purposes are of property).

What are government revenue and expenditure sources?

The Government of India gets its revenue from – Income Tax, Corporate Tax, Goods and Services Tax, Customs Duties, Borrowing and other means. The state spends on defense spending, administrative spending, social benefits, subsidies, pensions, etc.

The government can spend an amount equal to the revenue it collects. This is called a balanced budget. When tax collection exceeds required spending, it is said to have a budget surplus. But the Indian budget is currently in deficit.

What is a budget deficit?

The situation where a government’s spending exceeds its revenue or revenue is known as a deficit. To finance the additional costs, governments are now opting for various forms, including taxation, borrowing or printing money. Governments have relied primarily on borrowing, creating what is known as the national debt. “By borrowing, the government is passing the burden of reduced consumption onto future generations. That’s because it borrows by issuing bonds to those currently alive, but may choose to repay the bonds through tax increases some twenty years later,” says Grade 12 economics textbook.

Test your knowledge

A government deficit can be reduced by raising taxes or cutting spending. In India, the government is attempting to increase tax revenues by relying more on direct taxes (indirect taxes are regressive in nature – they affect all income groups equally). It has also attempted to generate revenue by selling shares in PSUs.

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