Here's a brief tutorial on interpreting the Union Budget

28 Dec 2023 , 12:12 PM

Union Finance Minister Nirmala Sitharaman will address the Lok Sabha on February 1 to present the Union Budget 2024–25. Since Lok Sabha elections are slated for early next year, this budget is considered interim. Following the general elections and the formation of the new administration, the complete FY25 budget will be unveiled.

The Union Budget encompasses information about the government’s expected receipts and expenditures for a specific fiscal year, earmarked for the upcoming fiscal year, commencing on April 1 and concluding on March 31 of the subsequent year. This concise guide is designed to assist you in comprehending the Budget document effortlessly. Within hours of the budget announcement, these materials are posted on www.indiabudget.gov.in.

The Union Finance Minister’s speech inaugurates the budget. Despite its brevity, the speech is the most crucial component of the budget document. It is divided into two sections: Part A, outlining the goals and reform plans for the upcoming fiscal year, and Part B, containing direct and indirect tax announcements.

Part-A of the Finance Minister’s Budget Speech unveils plans for various economic sectors, including health, education, services, banking, and other financial services, rural and urban sectors, capital markets, SMEs, MSMEs, large businesses, and infrastructure development. In addition to budgetary aims like fiscal deficit, divestment, and government borrowings, this section also details welfare initiatives targeting populations such as women, farmers, and students.

Announcements regarding direct and indirect taxes are housed in Part B of the budget paper (excluding GST, beyond the budget’s scope). This section also includes announcements about modifications to corporation tax, capital gains tax, excise and customs charges, income tax slabs, and excise taxes for the upcoming fiscal year.

Part B of the budget address covers a summary of tax announcements, general expenditure, non-planned expenditure, and plan outlay in distinct statements and annexures. This document also declares gender budgeting, budgetary provisions for ministries, programs, and welfare schemes, as well as the Central Government’s position on guarantees issued and pending as of the end of March.

This section of the budget document provides a concise overview of receipts and disbursements, including general information on tax, non-tax, and other receipts, as well as plan and non-plan expenditures. It includes the breakdown of plan outlays by sectors, ministries, and departments, along with specifics on resources transferred from the federal government to states and union territories. The Central Government’s income deficit, gross primary deficit, and gross fiscal deficit are also presented on this page.

Revenue and expenditure records detail various revenue streams and expense categories.

Revenue Document: This provides information on how revenue is generated, including anticipated funds from non-tax sources such as disinvestment, privatization, telecom, aviation, as well as income tax, corporation tax, GST, excise duty, etc.

Expenditure Document: This breaks down the budget’s expenses by ministry, revealing the government’s intended spending on initiatives like PM Kisan, education, healthcare, defense, administrative costs, MGNREGA, and specific infrastructure projects.

The Finance Bill, which outlines proposed tax measures, is presented in compliance with Article 110(1)(a) of the Constitution. A Memorandum outlining the provisions is attached, providing legal support to the Budget.

The Macro-economic Framework Statement, mandated by the Fiscal Responsibility and Budget Management Act, outlines three-year rolling targets for four specific fiscal indicators related to GDP at market prices. These statements reflect the economy’s growth prospects and the government’s strategic priorities for the upcoming fiscal year, covering taxation, expenditure, lending and investments, administered pricing, borrowing, and guarantees. Deficits at the end of the year include revenue, fiscal, tax-to-GDP ratio, and total outstanding debt.

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