The Budget is the annual financial statement that is announced in the Parliament session by the Finance Minister. The Union Budget was first announced on Nov 1947 after gaining independence. The Union Budget for the FY 2018-2019 is all set to be announced on February 1, 2018.
History of the Union Budget
The Budget was earlier announced in the last week of February up to the year 2016. The annual budget was then merged with the railway budget in the year 2016. Earlier the Railway budget was announced before the Union Budget.The Railways being a huge employer in the Asian continent had a separate budget announcement for the department. Owing to cost and time issues, the Union Budget was merged with the Railway Budget in the year 2016.
Classifications of Budget
The following are the three main divisions of Budget.
- Deficit Budget
- Surplus Budget
- Balanced Budget
The Deficit Budget is the one that is suitable for an economy like India. The budget is made sure that it is deficit-oriented.
The Surplus Budget is not generally preferred as there can be an over usage or misusage of the funds that are allocated for the budget.
The Balanced budget is the one that is not the right option as it appears more or less like a balanced sheet. A budget should always be prepared to meet the worst-case scenario too. Thus, the balanced budget does not hold good in this case.
Main types of Budget in a federal economy:
In a country like India where a federalist form of government is followed, there are two main types of budget namely
State Budget – The budget that is prepared by the State Government
Union Budget – The budget that is prepared by the Central Government
How is budget amount collected?
The budget is the amount that is collected as taxes from the citizens of the country. There are two types of taxes namely the Direct Taxes and the Indirect Taxes. In those two types itself, there were further more classifications. These taxes were equally divided amongst the state and the central government. These taxes have now taken the name of Goods and Services Tax. In that, there are two types namely the State goods and services tax and the Central Goods and services tax. The tax money is collected separately by the states and the center and they are put to use to prepare the budget.
Thus, the budget is collected and drafted a plan to put to the best of its use in an economy like India.