It all starts with a Budget plan
A Budget plan is essentially a statement with the estimates of the expenditure to be incurred and the revenue to be generated during a certain period of time. Generally, a government Budget entails the government’s estimate of expenditures and receipts for the ensuing fiscal year which starts from April 1 and ends on March 31.
It's purpose
In a gigantic economy, such as India, the Union Budget or Annual Budget involves prudent utilisation of a large amount of money as it affects the lives of billions of people from various cultures, castes and creeds. Therefore, the government Budget is prepared by carefully introspecting the past and determining the future needs of the public.
The process
Every year the Finance Ministry goes through a painstakingly meticulous process — which starts six months prior to the actual presentation of the Budget in the Parliament — to prepare the Union Budget. It involves gathering financial data from various administrative bodies, analyzing that data to determine financial requirements, devising pertinent public welfare schemes and then allocating appropriate resources to various ministries.
Expenditure and revenue
A government Budget is primarily about its expenditure and revenue. Government’s expenditures include spendings on public welfare programs, imports, military funding, salaries and pensions, interest on debts, etc. On the other hand, the government generates revenue by collecting taxes, running public sector businesses, borrowing from the public (by issuing government bonds) and other sources.
Salient features of an effective Budget
Conservative forecasting: Overestimating costs incurred due to expenditure and underestimating revenues to be generated.
Adaptability: An effective Budget plan should be capable of accommodating financial losses and realizing financial gains.
Continuous Implementation: Continuously monitoring the performance of the implemented schemes or programs and revising them, as is appropriate.
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Disclaimer: As Reported by Economic Times
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