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The Union Budget is the blueprint of the Government’s revenue and expenditure for a fiscal year, starting from 1st April of one year to 31st March of the following year. It is presented during the month of February so that it can be materialized before the start of a new financial year. According to Article 112 of the Indian Constitution, it is an extensive financial statement that presents the Government’s estimation of revenue sources and estimated expenses for the year. It is classified into two parts – revenue budget and capital budget. Revenue budget contains the government's revenue receipts and expenditure, while the Capital Budget comprises of the government's capital receipts and payments.
The Union Budget for 2017-18 presented a noticeable shift in more ways than one. The date of its presentation was moved to the first working day of February from the last working day of the month. In addition to this, the Railway Budget also became a fundamental part of the Union Budget, a break from the 92-year old tradition of treating the Railway Budget as a separate entity.
The first Union Budget of India, a concept introduced when the country was still under the British colonial rule, was presented on 7th April, 1860, by the then Finance Minister of India, James Wilson. The first Union Budget of Independent India was presented on November 26, 1947, by Sir R.K. Shanmugham Chetty (the first Finance Minister of Independent India).
The first Union Budget was presented amidst widespread riots that followed the partition. This budget was planned for seven and a half months, after which the next budget was expected to be implemented from 1st April, 1948. It was also decided that India and Pakistan would both share the same currency till September 1948.
Following the resignation of Sir R.K. Shanmugham Chetty, the baton was passed on to his successor, John Mathai, who presented the 1949-50 and 1950-51 Union Budgets. The Union Budget of 1949-50 holds the record of being the first budget for a United India, which included all the princely states.
As mentioned above, the Union Budget can be classified into two parts – revenue budget and capital budget. Here is a look at what they mean:
Revenue Budget: Revenue budget comprises of the government's revenue receipts and revenue expenditure. Revenue receipts can be further classified into tax revenue (income tax, excise duty, corporate tax, etc.) and non-tax revenue (interest, profit, fees, fines, etc.). Revenue expenditure refers to the regular expenses incurred from the daily functioning of the government as well as for the range of services offered to the public. In the event that the revenue expenditure is greater than the revenue receipts, the government is said to incur a revenue deficit.
Capital Budget: Capital budget, whose components are of a long-term nature, consists of capital expenditure and capital receipts. Some of the primary sources of government receipts include loans from citizens, Reserve Bank of India (RBI) and foreign governments. Capital expenditure, on the other hand, comprises of costs incurred on development and maintenance of equipment, machinery, health facilities, building, education, etc. When the government's expenditure is greater than the total revenue collected, a state of fiscal deficit occurs.
The below are the highlights of the Union Budget 2018-19 across sectors.
Double the income of farmers than its current value and also raise the minimum support price (MSP) for Kharif crops by 1.5 times. In case farmers receive lower market prices than the MSP, they will be offered the right prices by the government.
Rs.11 lakh crore will be offered as credit to the farming sector.
A budget of Rs. 500 crores has been allocated for Operation Green.
Emphasise on organic farming, bamboo farming, cluster development model for agriculture, as well as fisheries and animal husbandry.
Under Pradhan Mantri Krishi Sinchai Yojana, Rs. 2600 crore will be allotted for providing assured irrigation in ninety-six districts.
Install gas connections in 6 crore rural households.
Allocate 16 crores for providing free electricity to 4 crore rural households for the Pradhan Mantri Saubhagya Yojana.
Extend Swachh Bharat initiative to 2 crore toilets in rural households.
Construct 51 lakh houses in rural areas under the Pradhan Mantri Awas Yojana
Allocation of Rs.75,000 crore as loans for women’s self-help groups.
Allocation of Rs.14.34 lakh crore for livelihood, housing and infrastructure projects in the rural areas.
Launch of Galvanizing Organic Bio-Agro Resources Dhan Scheme.
Emphasise on integrating technology into education.
Eklavya schools in villages with over 20,000 inhabitants and over 50% scheduled tribes by the year 2022.
Offer universal health coverage to be made available to every citizen.
Implement two new models of schools in terms of infrastructure and planning.
Control brain drain by offering top performers from leading engineering schools to study at IIScs and IITs.
Open 60 crore bank accounts under the Jan Dhan Yojana.
Allocate Rs. 1 lakh for improving the overall infrastructure of the education sector.
Construct at least one medical college per every three parliamentary constituencies.
Allocate Rs. 52,719 crores for the welfare of the scheduled castes.
Twenty-four government medical colleges and hospitals to be established.
Allocate Rs. 3,794 crores as capital support and subsidy for the Micro, Small, and Medium Enterprises (MSME) sector.
Implement Excise cut on fuel.
No changes to the income tax rates for individuals in the salaried class.
Reintroduction of standard deduction of Rs. 40,000 from salary income of employees.
Discontinuation of transport allowance and medical reimbursement from salary income.
Proposal to introduce a Dividend Distribution Tax (DDT) on equity-oriented mutual funds at 10%.
Long-term capital gains will be taxed at 10% for investments that are above Rs. 1 lakh. Short-term capital gains tax will remain at 15%, while long-term capital gains will be taxed at 10% for investments that are above Rs. 1 lakh.
Tax exemption limit has been increased to Rs. 50,000 on interest income for bank deposits of senior citizens.
Income from post office schemes and bank FDs has been limited to 10%.
The overall budgeted expenditure is set at Rs. 2,442,213 crores.
Pradhan Mantri Vaya Vandana Yojana shall be extended till 2020.
A 10% tax is proposed on distributed income from equity-oriented MFs.
Utilise Rs.1,48,528 crore that has been allocated towards the capital expenditure for the Indian Railways.
Revamp the infrastructure of some railway stations through the installation of escalators at all stations that receive a footfall of 25,000 passengers.
Install CCTV cameras and Wi-Fi connectivity in trains.
Utilise Rs.17,000 crore allocated for Bengaluru Metro and Rs.11,000 crore for revamp and maintenance of the entire Mumbai rail network.
About 700 locomotives, 12000 wagons and 5160 coaches to be procured in 2018-19.
Encourage venture capital financing and angel investors.
Allow large enterprises meet one-fourth of their debt requirements from bond markets.
Initiate a merger of National Insurance Co., Oriental Insurance Co. and United India Assurance Co.
Target a fiscal deficit of 3.3% of the GDP.
Increase in customs duty of electronic products like televisions and mobile phones to boost the Make in India initiative.
Imposition of 10% social welfare surcharge on imports
Develop and beautify ten key tourist places to make them reach an iconic status.
Utilise Rs.5.35 lakh crore for Phase 1 of the Bharatmala project.
Allocation of Rs.3,073 crore for Digital India.
Allocate Rs.10,000 crore for the installation of up to 5 lakh Wi-Fi connections in the rural parts of the country.
Prevent the circulation of cryptocurrencies.
Airport capacities will be increased to 5 times its existing value.
Enforce the UDAN scheme to connect 64 airports across the country to encourage low-cost flying.
What is Fiscal Policy?
Fiscal policy is an amendment in government taxing or spending designed to boost economic activity. It is a step towards controlling the aggregate demand in the economy by keeping a watch on the size of the budget deficit or surplus, and volume of spending. Governments introduce and implement changes in taxation, volume of spending, and size of the budget deficit or surplus to affect public expenditure.
What is Monetary Policy?
The decision to amend the supply of money and the interest rate, introduced by the Reserve Bank of India (RBI), which initiates a change in the economic activity is called the Monetary Policy. By regulating the level of money or liquidity in the economy, the Government aims to meet the desired policy objectives like improving the balance of payments, controlling inflation, price stability, etc.
What is Balance of Payments?
The gap between the demand and supply of the currency of a country in the foreign exchange market is called the Balance of Payments.
What is Fiscal Consolidation?
It is the policy that focuses on controlling government deficits and debt accumulation.
What is the Finance Bill?
A Finance Bill is a roadmap for new taxes, amendments in the existing tax structure or continuation of the current tax structure beyond the approved timeline, introduced by the Government. These financial proposals are laid down before the Parliament in the form of a bill. Once the Finance Bill is approved by the Parliament for a period of 1 year, it becomes a Finance Act.
What is the Central Plan Outlay?
It refers to the division of monetary resources across different sectors in the economy and the government ministries.
What are direct and indirect taxes?
Taxes levied directly on the income of business organisations and individuals. For example, Corporate Tax, Income Tax, Inheritance Tax, etc. Corporate Tax refers to the tax that enterprises pay on their earned income, while Income Tax is the tax that individuals pay on their income from sources like salary, investments, interest, etc. are called as direct taxes.
Indirect taxes are those taxes that customers pay while purchasing goods and services. Goods and Services Tax (GST), Excise and customs duties are examples of Indirect Taxes. A Customs Duty is the fee levied on imported goods, which is paid either by the importer or the exporter. GST, Excise duty, on the other hand, is a fee paid by customers on the purchase of goods that are manufactured within the country.
What is Gross Domestic Product (GDP)?
It is the market value of all goods and services, produced in a country within a certain period of time, that have been officially recognised as the final product. GDP per capita is usually considered as the measurement of the standard of living of a country.
What is an economic survey?
The Economic Survey, which is presented just before the Union Budget, provides policy perspective for the Budget.
How much is the budget of India?
The 2017 Union Budget of India has a budget size of Rs. 21.47 lakh crore rupees.
What do you mean by Union budget?
The Union Budget is a yearly report containing the government’s revenue and expenditure for a fiscal year, which starts from 1st April of one year to 31st March of the following year.
What is central budget?
Central Budget is another term for the Union Budget. It is an annual report that lists down the government’s revenue and expenditure for a fiscal year.
What is consolidated fund in India?
The consolidated fund comprises of revenues that the government has received, receipts from loan recoveries given by the government and the whole sum of new loans that have been raised by the government.
What is meant by government budget?
A government budget is a yearly financial statement that mentions the revenues and spending for a financial year.
What is the budget for?
The Union Budget maintains the account of the government's finances for the fiscal year, starting from 1st April to 31st March.
What is the meaning of fiscal deficit?
A fiscal deficit takes place when a government's total expenditures is greater than the revenue generated. A state of high fiscal deficit would mean that government has been unable to earn as much as it is spending.
Who prepares Union budget?
The Union Budget is prepared by the Budget Division of Department of Economic Affairs (DEA).
Who presented the first budget in India 1860?
The first Budget was presented by James Wilson of the East India Company.
Who presents the general budget in the parliament?
The Finance Minister presents the budget in the parliament.
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