Keywords: Budget-making process, Government of India, Plan expenditure, Non-plan expenditure.
Required Approach: Primarily factual and analytical, with some elements of explanation.
Points to Remember:
- Stages of the Indian Budget-making process.
- Key actors involved (President, Parliament, Finance Ministry).
- Distinction between plan and non-plan expenditure.
- Implications of the budget process on the Indian economy.
Introduction:
The Indian budget is a crucial annual financial statement presented by the Finance Minister to the Parliament. It outlines the government’s estimated revenue and expenditure for the upcoming fiscal year (April 1st to March 31st). The budget process is a complex procedure involving various stages, checks, and balances, designed to ensure transparency and accountability. The budget also reflects the government’s economic policies and priorities. A key aspect of understanding the Indian budget is differentiating between plan and non-plan expenditure, a distinction that has recently been blurred with the introduction of the Goods and Services Tax (GST) and the merging of plan and non-plan expenditure in 2017.
Body:
1. The Budget-Making Process:
The budget-making process in India is a multi-stage process:
Pre-Budget Preparations: The process begins months before the budget presentation. Various ministries submit their expenditure proposals to the Department of Economic Affairs (DEA) in the Ministry of Finance. The DEA, along with the Finance Ministry, analyzes these proposals, considering factors like economic growth projections, inflation, and fiscal deficit targets. Consultations are held with various stakeholders, including industry bodies and experts.
Preparation of the Budget: The Finance Ministry consolidates the expenditure proposals and prepares the budget documents, including the Annual Financial Statement (AFS), the Demands for Grants, and the Finance Bill. The AFS presents the estimated receipts and expenditure of the government. The Demands for Grants detail the expenditure proposals of each ministry. The Finance Bill proposes changes in tax laws.
Presentation of the Budget: The Finance Minister presents the budget to the Parliament on the last working day of February. This presentation includes a speech outlining the government’s economic policies and priorities for the upcoming year.
Parliamentary Scrutiny: The budget is then debated and scrutinized by the Parliament’s Standing Committees on Finance and other relevant committees. Amendments can be proposed and voted upon.
Passage of the Budget: After parliamentary approval, the Finance Bill and the Appropriation Bills are passed, authorizing the government to spend the allocated funds.
2. Plan and Non-Plan Expenditure (Historical Context):
Before 2017, the Indian budget was categorized into plan and non-plan expenditure.
Plan Expenditure: This comprised expenditure on centrally sponsored schemes and programs aimed at achieving the government’s five-year plans. These plans focused on economic development and social welfare objectives, including infrastructure development, poverty reduction, and education. Examples include investments in irrigation projects, rural development programs, and education infrastructure.
Non-Plan Expenditure: This included expenditure on routine government functions, such as salaries of government employees, defense expenditure, interest payments on loans, and subsidies. These were considered essential for the smooth functioning of the government.
3. Post-2017 Scenario:
The distinction between plan and non-plan expenditure was abolished in 2017. This was done to improve budgetary management and enhance transparency. The government now presents a single budget, focusing on outcomes rather than the artificial distinction between plan and non-plan. This change simplifies the budget process and allows for a more holistic approach to resource allocation.
Conclusion:
The Indian budget-making process is a complex but crucial mechanism for allocating resources and implementing government policies. While the distinction between plan and non-plan expenditure has been removed, understanding its historical context provides valuable insight into the evolution of India’s budgetary practices. The current system, with its emphasis on outcomes and a more integrated approach, aims to improve efficiency and transparency. Moving forward, continued focus on fiscal prudence, effective monitoring of expenditure, and participatory budgeting can further strengthen the budget process and ensure that it contributes to inclusive and sustainable development, aligning with the constitutional values of justice, liberty, equality, and fraternity.
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