How Indian Budget is Prepared: Factors that Government Focuses on

The Indian budget is an annual financial statement that outlines the fiscal roadmap for the country for the next one year. It is prepared by the Ministry of Finance in consultation with Niti Aayog and other concerned ministries. The Budget division of the Department of Economic Affairs (DEA) in the finance ministry is the nodal body responsible for producing the Budget. The budget-making process starts in August-September, that is, about six months prior to its date of presentation. It needs to be passed by both houses of Parliament before the beginning of the financial year, that is, April .

Factors that Government Focuses on

The government focuses on several factors while preparing the budget. Here are some of the key factors:

1. Issuance of Circulars to All Ministries

A circular is issued to all ministries, states, Union territories, autonomous bodies by the finance ministry asking them to prepare estimates for the coming year. The circular comprises skeleton forms along with requisite guidelines based on which ministries present their demands. Apart from providing their estimates, the ministries also give a detail of their revenues and expenditures in the past year.

2. Consultations on Proposals Received

After requests are received, it is then scrutinized by the top officials of the government. Extensive consultations are undertaken between the ministries and the department of expenditure. Upon approval, the data is then sent to the finance ministry.

3. Allocation of Revenues

The finance ministry, after going through all recommendations, allocates revenues to various departments for their future expenditures. In case a dispute arises over the allocation of funds, the finance ministry consults the Union Cabinet or the Prime Minister. Other stakeholders like farmers, small business owners, foreign institutional investors are also consulted by the DEA and department of revenue to gain more insights.

4. Pre-Budget Meetings

The finance minister holds pre-budget meetings with various stakeholders to know about their proposals and demands These stakeholders include state representatives, bankers, agriculturists, economists, and trade unions. Once the pre-budget consultations are done, the finance minister takes the final call on all demands. It is also discussed with the Prime Minister before finalization.

5. Budget Printing

Every year, the government follows an annual tradition of hosting a halwa ceremony, a few days before the Budget is presented. The ceremony marks the beginning of printing of Budget documents. As part of the ritual, ‘halwa’ is prepared in a big ‘kadhai’ (large frying pot) and served to the entire staff in the finance ministry. The significance of the event is that after the sweet dish is served, a large number of officials and support staff, who are directly associated with the Budget making are required to stay in the ministry and remain cut off from their families till the presentation of the Budget.

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