The budget is the basic financial statement of India. It is comparable to a household budget, but in a larger sense. Like we decide how much we will spend for food, how much on eating out, how much will we need to pay the servants and how we will manage all this with our existing income? This is budget.
Under article 112 of the Constitution, a statement of estimated receipts and expenditure of the Government of India has to be laid before Parliament in respect of every financial year which runs from 1st April to 31st March. This Statement titled “Annual Financial Statement” is the main Budget document.
The Annual Financial Statement shows the receipts and payments of Government Under the three parts in which Government accounts are kept: (i) Consolidated Fund, (ii) Contingency Fund and (iii) Public Account.
There are two kinds of budget. One is the railway budget and the other is the general budget. The railway budget precedes the general budget. All the departments have to give in their reports of their financial needs and keeping this in mind the budget is decided.
Once India attained its independence, the first budget was presented on November 26th 1947 by India’s first finance minister Sir R.K. Shanmugham Chetty. Since then, 28 Union Finance Ministers have been presenting the budget every year. Initially, much attention was given to the agricultural sector but as later on, the focus shifted to the other sectors including the industrial, financial and other sectors.
There was a change in the approach which was led by Manmohan singh who was the Finance Minister under Mr. P.V. Narsimha Rao. He started the new phase of economic liberalization. The control of the Government over public sector units was reduced through disinvestment. The liberalization process which he had started still continues.
The Union budget of India is the general budget. The general budget is an Annual Financial Statement which is presented each year on the last day of February by the Finance Minister of India in Parliament. The budget comes into effect after it is passed by the House.
The rail budget which precedes the general budget brings about reforms in the railways. The Rail Budget highlights on the improvement in trains and routes. As per convention, the railway budget is presented by the Union Railway Minister in Parliament. The discussion is held on the policies and allocations are made in the budget, which is passed with a simple majority in the Lok Sabha. Since the railway budget is a part and parcel of the total receipts and expenditure of the Government of India hence it is also shown in the General Budget.