📚 Introduction to the Budget
A Budget is an annual financial statement of actual and anticipated revenue and expenditure of
a government.
• Origin of the Term: The word "Budget" originates from the French word "Bougette," meaning "a
small leather bag or a wallet."
• This is because the Seal of the Treasury of England used to be kept in a leather bag.
• The budget is also a quantitative expression of a plan for a defined period of time.
Union Budget and Financial Year
• The Union Budget, popularly known as the Annual Financial Statement (AFS) as per Article
112 of the Constitution of India, is presented by the Union Finance Minister.
• It is presented on 1st February every year for the coming financial year.
• The Financial Year (or Fiscal Year) in India runs from 1st April to 31st March.
• The Budget involves four sets of figures for three years.
• Example (for the 2025-26 budget):
1. Budget Estimate (BE) of the coming year (2025-26)
2. Budget Estimate (BE) of the current year (2024-25)
3. Revised Estimates of the current year (2024-25)
4. Actual Figures of the previous year (2023-24)
• The Union Budget is prepared by the Budget Division of the Department of Economic Affairs,
Ministry of Finance.
• State governments also have to present their budget to the State Legislature as per Article 202
of the Indian Constitution.
• The budget document, officially called the Annual Financial Statement (AFS) in the Indian
Constitution, has certain other elements that are collectively referred to as Budget Documents.
Fiscal Policy and Public Finance
• Fiscal Policy is the use of government revenue collection (taxation) and expenditure
(spending) to influence the economy.
, • Key Instruments:
1. Taxes
2. Public Spending
3. Nation's Budget
4. Borrowing
• Public Finance is the branch of economics that deals with the income and expenditure of the
public authority.
🔑 Key Budgetary Reforms in India/ key developments of budget process in India
1.Budget in India as annual financial statement (AFS)
● A budget is called an ‘annual financial statement’ in the Indian constitution and it has
certain other elements that are commonly referred to as budget documents.
2.Merging the Railway Budget with the General Budget
This was one of the landmark budgetary reforms in India.
• Pre-2017: Until 2017, the Indian government had two separate budgets:
1. General Budget – covering receipts and expenditure except for Railways.
2. Railway Budget – presented by the Ministry of Railways, detailing its receipts and
expenditure.
• The separate presentation of the Railway Budget began in 1924 and continued after
Independence.
• The two budgets were officially merged in September 2016 (to be presented as the General
Budget starting in 2017-18).
Changes and Benefits of the Merger:
1. It helped bring the affairs of the Railways to the center of financial planning and presented a
holistic picture of the government's financial position.
2. It reduced the procedural requirements, allowing for greater focus on delivery and good
governance.
3. Appropriations for Railways became part of the main Appropriation Bill.
A Budget is an annual financial statement of actual and anticipated revenue and expenditure of
a government.
• Origin of the Term: The word "Budget" originates from the French word "Bougette," meaning "a
small leather bag or a wallet."
• This is because the Seal of the Treasury of England used to be kept in a leather bag.
• The budget is also a quantitative expression of a plan for a defined period of time.
Union Budget and Financial Year
• The Union Budget, popularly known as the Annual Financial Statement (AFS) as per Article
112 of the Constitution of India, is presented by the Union Finance Minister.
• It is presented on 1st February every year for the coming financial year.
• The Financial Year (or Fiscal Year) in India runs from 1st April to 31st March.
• The Budget involves four sets of figures for three years.
• Example (for the 2025-26 budget):
1. Budget Estimate (BE) of the coming year (2025-26)
2. Budget Estimate (BE) of the current year (2024-25)
3. Revised Estimates of the current year (2024-25)
4. Actual Figures of the previous year (2023-24)
• The Union Budget is prepared by the Budget Division of the Department of Economic Affairs,
Ministry of Finance.
• State governments also have to present their budget to the State Legislature as per Article 202
of the Indian Constitution.
• The budget document, officially called the Annual Financial Statement (AFS) in the Indian
Constitution, has certain other elements that are collectively referred to as Budget Documents.
Fiscal Policy and Public Finance
• Fiscal Policy is the use of government revenue collection (taxation) and expenditure
(spending) to influence the economy.
, • Key Instruments:
1. Taxes
2. Public Spending
3. Nation's Budget
4. Borrowing
• Public Finance is the branch of economics that deals with the income and expenditure of the
public authority.
🔑 Key Budgetary Reforms in India/ key developments of budget process in India
1.Budget in India as annual financial statement (AFS)
● A budget is called an ‘annual financial statement’ in the Indian constitution and it has
certain other elements that are commonly referred to as budget documents.
2.Merging the Railway Budget with the General Budget
This was one of the landmark budgetary reforms in India.
• Pre-2017: Until 2017, the Indian government had two separate budgets:
1. General Budget – covering receipts and expenditure except for Railways.
2. Railway Budget – presented by the Ministry of Railways, detailing its receipts and
expenditure.
• The separate presentation of the Railway Budget began in 1924 and continued after
Independence.
• The two budgets were officially merged in September 2016 (to be presented as the General
Budget starting in 2017-18).
Changes and Benefits of the Merger:
1. It helped bring the affairs of the Railways to the center of financial planning and presented a
holistic picture of the government's financial position.
2. It reduced the procedural requirements, allowing for greater focus on delivery and good
governance.
3. Appropriations for Railways became part of the main Appropriation Bill.
