Union Budget 2022: What Is Union Budget | EXPLAINED

The Union Budget is presented by the Finance Minister of the country for the next fiscal year that starts from April 1 of every year

Article 112 of the Indian Constitution defines Union Budget or the Annual Financial Statement as a statement of estimated receipts and expenditures of the Government of India. Image: Getty

Union Budget 2022: The Budget Session of Parliament is scheduled to begin from January 31, with the main highlight of the session being the Annual Budget. Every section of the economy has its own set of expectations from the Union Budget as everyone remains keen to see whether their areas of interest will see a rise or fall in prices in the Budget. Let’s have a quick look at what actually is Union Budget and its components in the meanwhile. 

What is Union Budget?

Prior estimation of the amount of money to be received as revenue and the money to be spent as expenditure over a specified period of time in future is known as Budget. Article 112 of the Indian Constitution defines Union Budget or the Annual Financial Statement as a statement of estimated receipts and expenditures of the Government of India. 

The Union Budget is presented by the Finance Minister of the country for the next fiscal or financial year that starts from April 1 of every year. 

Revenue sources for the government

The taxes we pay and the penalties that we are charged for are all considered revenue for the government. Other sources through which the government recieves revenue are in the following:

1. Taxes - Corporation Tax, Income Tax, Goods and Service Tax
2. Non-Tax Revenue - Profit through public enterprises, dividends, money accrued in the form of fines and penalties. 
3. Customs
4. Union excise duties
5. Non-Debt capital receipts

Expenditure heads of the government

Pensions and subsidies that are given out to people and entities in the country comprises expenditure for the government. Following are the areas where government spends money. 

1. Centrally sponsored schemes 
2. Central sector schemes
3. Interest payments
4. Defence
5. Subsidies
6. Finance commissions and other transfers 
7. States’ share of taxes and duties 
8. Pensions 
9. Other expenditure

Components of the Union Budget 

The format of the Union Budget consists of mainly of two parts — the capital budget and the revenue budget. 

• Capital Budget: The Capital budget refers to allocation of money into fixed assets of the country which will span for more than one year of time. It further splits into capital revenue or receipts and capital expenditure. 

Capital revenue or receipts are such revenues which increase liability for the government such as 

• Loans from the Reserve Bank of India  
• Loans from the public 

Whereas capital expenditure on the other hand includes payments that creates long-term assets and infrastructure for the welfare of the public such as 

•  Health facilities
• Educational infrastructure 
• Construction of land, building etc. 

• Revenue Budget: The revenue budget is a statement of all the revenue and expenditure which are supposed to be earned or spent by the government within the year for which the budget is proposed. A situation where revenue expenditure exceeds revenue income is known as revenue deficit. 

Halwa Ceremony

A customary tradition that is followed before announcement of the Union Budget is the 'Halwa Ceremony' which is hosted by the finance minister of the country. The ceremony marks commencement of printing of Budget documents and halwa is served as a good gesture to the officials and staff involved in the printing process. All the offiicals and staff reside in the North Block for around 10 days until the Budget is presented by the finance minister in Parliament.