THE FOUNDATION OF A GOOD FINANCIAL PLAN

Posted: November 18, 2011 in Political Terminology, The NamoLeague Times
Tags: , , , , ,
UNDERSTANDING THE UNION BUDGET OF INDIA

‘Budget 2011-12 to focus on inflation and growth’
‘Budget 2011: The bullish view stays’
‘Budget 2011: India’s subsidy bill up by over 100% in 4 years’
‘Budget 2011: Concerns of power sector’

Budget is something that has dominated the headlines of all the newspapers and other media channels in India, since a couple of months. But, unfortunately, many of us do not know the actual meaning of budget and how did it start.

MEANING

In simple terms, budget is the systematic plan for the inflows and outflows of money during a given period. And the one that ruled the headlines is the Union Budget of India which is the annual budget of the Republic of India.

The term is derived from the French word ‘Bougette’ meaning ‘Sack or Pouch’. It was a bag used by the British Chancellor to keep his papers to be presented to the Parliament. The present sense of the term was used for the first time in 1873.

The Union Budget is preceded by an Economic Survey which outlines the broad direction of the budget and the economic performance of the country. The budget is the most extensive account of the Government`s finances, in which revenues from all sources and expenses of all activities undertaken are aggregated.

The Union Budget is presented each year on the last working day of February by the Finance Minister in the Parliament. The budget has to be passed by the Lower House before it can come into effect on April 1, the start of India’s financial year. It is the most important economical and financial event of the country.

OVER THE YEARS

The first budget of Independent India was presented on 26th November, 1947 by the then Finance Minister, Sir RK Shanmukham Chetty. Also, the former Finance Minister Morarji Desai presented the budget eight times, the most by any. On February 29 in 1964 and 1968, he became the only Finance Minister to present the Union Budget on his birthday.

After Desai’s resignation, the then Prime Minister, Indira Gandhi became the only woman to hold the post of the Finance Minister.

The current budget was presented by the Finance Minister of India, Pranab Mukherjee on 28th February, 2011 and the budgetary proposals would be applicable from 1st April, 2011 to 31st March, 2012.

TIME OF ANNOUNCEMENT

The British Parliament would pass the budget in the noon followed by India in the evening of the day – This was the practice of the Colonial Era, that continued until the year 2000. It was then, in 2001, that the then Finance Minister of India, Yashwant Sinha changed the announcement time from 5 pm to 11 am.

The Ministry of Finance, Planning Commission, Administrative Ministries and the Comptroller & Auditor General are the main players in the declaration of the Union Budget.

THE PROCESS OF APPROVAL

– The Finance Minister introduces the budget in the Lower House of the Parliament or the Lok Sabha and makes a short speech, giving an overall view of the budget.
– After the presentation of the budget, Parliament allots some time for a general discussion on the budget.
– After the Finance Minister’s reply, Lok Sabha takes up a discussion for each ministry’s expenditure proposals, that are known as demand for grants.
– After the prescribed period is done with, the Speaker puts all the demands to vote and only the Lok Sabha is entitled to vote for the same.
– Appropriation Bill is introduced in the Lok Sabha after it has passed all demands for grants related to all ministries. This bill authorizes the Government to withdraw funds and eventually transforms to a Money Bill.
– After this bill, the Finance Bill is introduced and it incorporates all taxation proposals. After the passing of this bill, it enters the statute as the Finance Act. Thus, the final budget gets approved.

Read original article at: http://epaper.namoleague.com/EpaperArticle.aspx?title=The%20Foundation%20Of%20a%20Good%20Financial%20Plan_572

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