Sir Robert Walpole of Great Britain, while acting as The Chancellor of the Exchequer, initiated the practice of presenting budgets and fiscal policy to parliament way back in the year 1720. This practice has stood against the test of time, and has expanded to various countries. The presentation of the Union Budget, which happens on the first day of February is a highly anticipated event. A budget is necessary as it dictates how our hard-earned money is going to be utilized by the government for the following year. It becomes essential for the proper allocation of resources and it enables the government to identify weak or underdeveloped areas and gives it the opportunity to provide it with funds for adequate growth.
Since India follows a federal system of governance. The three tiers, namely the Central, The State and the Local bodies of governance each create budgets of their own. The Union Budget of a year is a statement of the estimated receipts and expenditure of the central government for that particular year.
The budget is prepared through a process that involves and consults various institutions, such as the Ministry of Finance, the Niti Aayog and other spending Ministries. It takes into consideration all the demands made by various ministries along with the views of various stakeholders such as farmers, businessmen, economists and civil society groups. After this, a final call on tax proposals is taken by the finance minister. These proposals are discussed with the prime minister, following which the budget is frozen.
Following a well-planned and structured debate helps ensure planned economic growth along with the growth of business and investment within the country. It also provides funds to Public Sector Units (PSUs) and aims to reduce poverty and unemployment. It aids in the imposition of taxes and subsidies, to strategically decrease wealth and income disparities within the country.