The union budget of india also referred to as the annual financial statement in article 112 of the constitution of india. is the annual budget of the republic of india. the government presents it on the first day of february so that it could be materialised before the beginning of new financial year in april. until 2016 it was presented on the last working day of the febraury by the finance minister in parliament. the budget which is presented by means of the finance bill and the appropriation bill has to be passed by loksabha before it can come into effect on 1 st april. union budget keeps the account of the government’s finances for the fiscal year that runs from 1st april to 31st march. union budget is classified into revenue budget and capital budget. revenue budget includes the governament’s revenue receipts and expenditure. there are two kinds of revenue receipts tax and non tax revenue. revenue expenditure incurred on day to day functioning of the government and on various services offered to citizens. if revenue expenditure exceeds revenue receipts, the government incures a revenue deficit.
TYPES OF UNION BUDGETS
The union budget is classified into 2 parts. revenue budget and capital budget. here is a look of those 2 budgets.
REVENUE BUDGET: Revenue budget comprises of the government’s revenue receipts and revenue expenditure. revenue receipts can be further classified into tax revenue and non tax revenue. revenue expenditure refers to the regular expenses incurred from the daily functioning of the government as well as for the range of services offered to public. in the event that the revenue expenditure is greater than the revenue receipts the government is said to incur a revenue deficit.
CAPITAL BUDGET: Capital budget whose components are of a long term nature consists of capital expenditure and capital receipts. some of the primary sources of government receipts include loans from citizens, reserve bank of india loans from citizens, and the foreign governments. capital expenditure, on the other hand, comprises of costs incurred on development and maintenance of equipment, machinery, health facilities, building, education, e.t.c. when the government’s expenditure is greater than the total revenue collected, a state of fiscal deficit occurs.
IMPORTANCE OF UNION BUDGET
The general objective of the union budget is to bring about a rapid and balanced economic growth of our country coupled with social justice and equality.
CHANGE TAX STRUCTURE: The union budget also dictates the possible changes in the direct and indirect taxes of the country. it brings about changes to income tax rates and tax brackets.
REDUCE WEALTH AND INCOME DISPARTIES: The budget Aids in influencing the distribution of income through subsidies and taxes. it helps to ensure that a high rate of tax is levied on the rich class, thereby reducing their disposable income. on the other hand a lower rate of tax is charged on the lower income group to ensure they have sufficient income in hand.
KEEP A CHECK ON PRICES: The union budget aids in controlling the economic fluctuations as well. it ensures proper handling of inflation and deflation, thus bringing about economic stability. during inflation, surplus budget policies are implemented which deficit budget policies are devised during deflation. this aids in maintaining a price stability in the economy.