The Indian economy is gearing up for the Union Budget 2024, scheduled for February 1, 2024, along with the general elections in the same year. During an election year, the government presents an interim budget or vote on account instead of a full-fledged Budget for the whole year.
As the economic pulse of a nation, the Union Budget India covers the fiscal policies and priorities that shape its financial trajectory for a designated fiscal year.
Far beyond a mere collection of numbers and figures, the Budget serves as a dynamic blueprint, capturing the essence of the government's economic vision, resource allocations, and fiscal policy India direction.
In this in-depth exploration, ViTWO will dive into the layers of the Union Budget, understanding "What is Vote of Account," its components and implications with a focus on clarity and comprehension.
The Significance of the Budget Speech
At the heart of the Union Budget 2024 lies the Finance Minister's Budget speech, a pivotal element that sets the tone for the entire financial year, the shining possibilities of development for the nation, and the indication of weightage on the pockets of the countrymen.
Part A
The speech articulates the government's expectations and reform strategies. It spans across diverse sectors, from agriculture and healthcare to startups and infrastructure.
Noteworthy are the seven overarching priorities, known as Saptarishi, which encapsulate the government's commitment:
► Inclusive Development
► Reaching the Last Mile
► Infrastructure & Investment
► Unleashing the Potential
► Green Growth
► Youth Power
► Financial Sector
Part B
On the other hand, it explores into the web of taxes, unveiling adjustments to income tax slabs, corporate taxes, and duties.
A standout feature from the previous year's fiscal plan was the restructuring of personal income tax, ushering in a new tax regime and altering the landscape for individual taxpayers.
The Need for Vote on Account
During a transitional period, such as an outgoing government or an impending election, an interim budget or a vote on account becomes imperative.
The legal constraints imposed by the Constitution stipulate that funds cannot be withdrawn from the Consolidated Fund without proper appropriation by law.
A vote on account serves as a practical solution, allowing the government to access funds seamlessly while awaiting the formal approval of the Full Budget.
In the constitutional framework, a vote on account is a strategic tool, providing an advance grant to cover short-term expenditures until the new financial year kicks in.
This ensures that the government has the necessary funds to operate seamlessly during the transitional period. The Consolidated Fund of India, a reservoir of central revenue, becomes the source for this advance grant, reinforcing the principle of fiscal prudence and responsible government spending India.
Interim vs. Full Budget
While Regular Budgets span the entire financial year, a vote on account provides a short-term financial solution, typically covering two months.
Unlike a Full Budget, a vote on account focuses solely on expenditure and does not delve into detailed debates.
It serves as an interim authorisation, acknowledging the practical need for financial operations during transitional periods.
Budget at Glance
The Budget at a Glance document serves as a Strategic Map, guiding us through the nation's financial landscape with key insights into what we earn (tax and non-tax revenues), what we spend (government expenditures), and where we want to go (fiscal objectives).
It sheds light on critical aspects such as support for basic needs: fuel, fertiliser, and food subsidies, unravelling the complex threads of who gets what and why.
Categorising schemes into the Central sector and centrally sponsored schemes, this document offers transparency in partnership, showing how financial resources are distributed and shared. The Revenue Budget intricately tells about expected income from various streams, including individual income tax, corporate tax, and non-tax sources like selling assets (disinvestment and privatisation).
On the contrary, the Expenditure Budget provides a comprehensive breakdown of the total size of our ambition, ministry-wise budgets, and sector-specific investments. From securing our borders (defence acquisitions) to caring for our people (healthcare) and building our future (infrastructure projects), this document encapsulates the breadth of the government's solemn promises and execution of India's strategic plan.
The Finance Bill: Legal Anchoring of the Budget - What to Expect from Union Budget 2024?
The Budget speech marks the beginning of a legislative process that ends with the presentation of the Finance Bill.
This bill fulfils the requirement of Article 110(1)(a) of the Constitution and provides detailed information about the taxes proposed in the Budget. The Finance Bill includes information on the imposition, abolition, remission, alteration or regulation of taxes.
This Money Bill undergoes proper inspection and approval in both houses, providing a legal structure to the Budget.
It is not just a formality but a comprehensive document that amends statutes like the RBI Act, Income Tax Act, Companies Act, and Banking Regulation Act, aligning them with the announced measures.
The following statements outline the positive growth opportunities for the economy and the strategic priorities of the government in the fiscal area for the upcoming financial year.
These include taxation, expenditure, lending, and investments, as well as administered pricing, borrowing, and guarantees. Additionally, the statements set achievable three-year rolling targets for key fiscal indicators, including GDP at market prices, Revenue Deficit, Fiscal Deficit, Tax to GDP Ratio, and Total Outstanding Debt at the end of each year.
Demands for Grants
Demands for Grants form a crucial step in the legislative approval of the Budget — presenting expenditure estimates from the Consolidated Fund.
Allocations for revenue and capital expenditures, along with grants to States and Union Territories, undergo scrutiny and approval in the Lok Sabha.
These demands encompass diverse financial aspects, from infrastructure projects to loans and advances, ensuring a comprehensive review of the government's fiscal plans and the allocations of government spending.
From the Annual Financial Statement and Fiscal Policy Statements to the Output Outcome Monitoring Framework and Key Features of the Budget, each document plays a unique role in shaping the financial landscape.
Understanding the Budget: A Step-by-Step Guide
Interpreting the Union Budget India might seem like navigating through a financial maze for a layperson.
However, a step-by-step guide simplifies this process. The Budget commences with the Finance Minister's speech, introducing the government's economic expectations:
► Part A elaborates on sector-specific schemes and priorities, while Part B covers tax announcements.
► The Budget at Glance provides a snapshot of top financial aspects, followed by detailed Revenue and Expenditure Budgets.
► The Finance Bill imparts legal validity and Demands for Grants secure legislative approval.
► Together, these components paint a comprehensive picture of India's economic roadmap for the fiscal year.
ViTWO's Take on Union Budget: A Calculated Process
The Union Budget 2024 is not a hasty affair but a meticulous process that unfolds over several months.
Initiating in August–September, six months before the Budget presentation, the planning involves multifaceted tasks that culminate in the tabling of the Budget on February 1 each year.
Finance Minister Nirmala Sitharaman takes centre stage in presenting the economic fate of the nation, summarizing strategic priorities, growth prospects, and fiscal targets.
As the country awaits for the Union Budget of India, the economic journey continues with transparency, responsibility, and strategic foresight.