A budget serves as a crucial roadmap for any government, projecting anticipated revenues and expenditures for the upcoming fiscal year. In the Indian context, the Union Budget is a comprehensive financial report submitted annually by the Finance Minister of the Union Government. This vital document provides a detailed overview of the government’s financial performance in the previous fiscal year, outlines new tax proposals for the upcoming year, and estimates both revenues and expenditures. The Union Budget covers the financial year from April 1 to March 31, offering a comprehensive snapshot of the nation’s economic priorities and plans. Union Budget 2024
Historical Perspective: The roots of the Union Budget trace back to pre-independence India, with James Wilson of the Government of British India presenting the inaugural budget in 1860. Post-independence, Finance Minister RK Shanmukham Chetty presented India’s first budget in 1947. Since then, the Union Budget has evolved as a critical instrument for fiscal planning and governance.
Budget Preparation: The Department of Economic Affairs within the Ministry of Finance takes center stage in the preparation of budget documents. These documents are classified into two main categories: the Revenue Budget and the Capital Budget.
- Revenue Budget: This segment focuses on funds the government expects to receive and spend within a year, encompassing regular income sources such as taxes.
- Capital Budget: Dealing with the government’s assets and liabilities, the Capital Budget involves significant costs related to infrastructure development and equipment acquisition. Union Budget 2024
Budget Components: The Union Budget is structured into two distinct parts, each serving a specific purpose.
- Part A: This macroeconomic section announces the government’s plans and priorities, allocating resources to various sectors based on strategic objectives.
- Part B: This section addresses the Finance Bill, incorporating tax proposals like income tax reforms and indirect taxes. According to Article 110 of the Constitution, the Speaker holds the final authority to determine whether a bill qualifies as a money bill.
Constitutional Provisions: Article 112 of the Indian Constitution designates the Union Budget as the estimated revenue and expenditure of the government. While the term “budget” is not explicitly mentioned, the constitutional framework underscores its importance as the government’s annual financial report. Union Budget 2024
Key Budget Documents: In addition to the budget speech, several crucial documents accompany the Union Budget, providing a comprehensive understanding of the government’s financial strategy:
- Annual accounts (Article 112)
- Application for subsidy (Article 113)
- Fiscal Law (Article 110)
Additional Documentation: Supplementary explanatory documentation includes details on expenditures and receipts, an overview of expenditures, a memorandum explaining fiscal law provisions, a framework for monitoring expenditure outcomes, and key features of the budget for the upcoming fiscal year, along with an assessment of the previous year’s budget implementation. Union Budget 2024
Conclusion: The Union Budget stands as a cornerstone of India’s fiscal management, offering transparency and insight into the government’s financial priorities and plans. As a comprehensive annual financial report, it plays a pivotal role in shaping the nation’s economic trajectory and fostering informed decision-making. Union Budget 2024 for UPSC IAS
Budget 2024 Highlights
The Finance Minister presented the Interim Budget for 2024-25 on February 1, 2024. This will provide funding for the government for a part of the financial year until the main budget is passed after the general elections.
| GDP growth rate | – The government has estimated a nominal GDP growth rate of 10.5% in 2024-25 (i.e., real growth plus inflation). |
| Expenditure | – The BE of Receipts (other than borrowings) for 2024-25 is Rs 30,80,274 crore, 11.8% higher than the RE of 2023-24. Revenue ReceiptsGross Tax revenue to grow by 11.5% over RE of 2023-24.Corporation tax and income tax to grow at about 13%.GST to increase by 11.6%.The direct tax collection has trebled since 2014. Devolution to States to grow by 10.4%.Net Tax revenue (Gross Tax minus State’s share and NCCD/NDRF funds) to grow by 11.9%Non-tax revenue (loans given by the centre, dividends, license fees, tolls, and charges for government services) to grow by 6.4%.Capital Receipts to grow by 41%.The disinvestment target for 2024-25 is Rs 50,000 crore, lower than last financial year. Union Budget 2024 for UPSC IAS |
| Receipts | – Interest payments account for 25% of the total expenditure and 40% of revenue receipts. |
| Interest payments | – The BE for the fiscal deficit is 5.1%, Revenue deficit is 2.0% and Primary deficit is 1.5%. |
| Deficits | – Direct and indirect tax rates have remained unchanged.- Tax benefits to certain entities extended by another year:– Certain direct tax benefits to the following entities have been extended until March 2025:StartupsSovereign wealth funds and pension funds IFSC units- These benefits would have expired in March 2024. |
| New Schemes | – Rs 70,449 crore has been allocated to the Department of Economic Affairs for New Schemes. |
| Main tax proposals in the Finance Bill | – Direct and indirect tax rates have remained unchanged.- Tax benefits to certain entities extended by another year:– Certain direct tax benefits to the following entities have been extended until March 2025:StartupsSovereign wealth funds and pension fundsSome IFSC units- These benefits would have expired in March 2024. |
Budget at a Glance
Budget at a Glance shows receipts and expenditures as well as the deficits of the Government of India.
| S.No. | Parameters | 2022-2023Actuals (In crore) | 2023-2024Budget Estimates | 2023-2024Revised Estimates | 2024-2025Budget Estimates |
| 1. | Revenue Receipts | 2383206 | 2632281 | 2699713 | 3001275 |
| Tax Revenue (Net to Centre) | 2097786 | 2330631 | 2323918 | 2601574 | |
| Non Tax Revenue | 285421 | 301650 | 375795 | 399701 | |
| 2. | Capital Receipts | 1809951 | 1870816 | 1790773 | 1764494 |
| Recovery of Loans | 26161 | 23000 | 26000 | 29000 | |
| Other Receipts | 46035 | 61000 | 30000 | 50000 | |
| Borrowings and Liabilities | 1737755 | 1786816 | 1734773 | 1685494 | |
| Total Receipts | 4193157 | 4503097 | 4490486 | 4765768 | |
| 3. | Total Revenue Expenditure | 3453132 | 3502136 | 3540239 | 3654657 |
| Interest Payments | 928517 | 1079971 | 1055427 | 1190440 | |
| 4. | Total Capital Expenditure | 740025 | 1000961 | 950246 | 1111111 |
| Grants in Aid for creation of Capital Account | 306264 | 369988 | 321190 | 385582 | |
| Grants in Aid for the creation of Capital Account | 1046289 | 1370949 | 1271436 | 1496693 | |
| Total Expenditure | 4193157 | 4503097 | 4490486 | 4765768 | |
| 5. | Revenue Deficit | 1069926 (3.9%) | 869855 (2.9%) | 840527 (2.8%) | 653383 (2.0%) |
| Effective Revenue Deficit (Rev Def-Grants in Aid for Capital creation) | 763662 (2.8%) | 499867 (1.7%) | 519337 (1.8%) | 267801 (0.8%) | |
| 6. | Fiscal Deficit | 1737755 (6.4%) | 1786816 (5.9%) | 1734773 (5.8%) | 1685494 (5.1%) |
| 7. | Primary Deficit | 809238 (3.0%) | 706845 (2.3%) | 679346 (2.3%) | 495054 (1.5%) |
Strategy for Amrit Kaal in Budget 2024 (Viksit Bharat by 2047)
To make India a developed country by 2047, the government intends to take up next-generation economic reforms and inclusive development with combined efforts from all sections of the country. The strategies for this Amrit Kaal are as follows.
| Sustainable development | – Net Zero by 2070: Viability gap funding for wind energy.Setting up of coal gasification and liquefaction capacity of 100 MT by 2020.Phased mandatory blending of CNG, PNG, and compressed biogas.Financial assistance for procurement of biomass aggregation machinery.– Rooftop solarisation of one crore households will be taken up.- Adoption of e-buses for public transport networks. – Strengthening the e-vehicle ecosystem by supporting manufacturing and charging. – New scheme of biomanufacturing (biopolymers, bio-plastics, and bio-pharmaceuticals) and bio-foundry to be launched. – Performance so far:>10 crore LPG connections released under PMUY.36.9 crore LED bulbs, 72.2 lakh LED Tube lights, and 23.6 lakh Energy efficient fans distributed under UJALA.1.3 crore LED Street Lights installed under SNLP 5. |
| Infrastructure Development | – Forty thousand normal rail bogies will be upgraded to Vande Bharat standards to ensure passenger safety and comfort.- Three major economic railway corridor programs will be implemented. These are Energy, mineral, and cement corridors, Port connectivity corridors, and High-traffic density corridors. – The projects have been identified under the PM Gati Shakti for enabling multi-modal connectivity.- Expansion of Metro and NaMO Bharat will be supported in large cities focusing on transit-oriented development. – Expansion of existing airports and comprehensive development of new airports under the UDAN scheme.– Promotion of foreign investment via bilateral investment treaties to be negotiated. |
| Housing | – States will be encouraged to take up comprehensive development of iconic tourist centres, branding and marketing them globally.- A framework for rating the centers based on quality of facilities and services will be established.- Long-term interest-free loans will be provided to States for financing such development on a matching basis.- Projects for port connectivity, tourism infrastructure, and amenities will be taken up on our islands, including Lakshadweep. |
| Health | – Vaccination for girls in the age group of 9 to 14 years for prevention of cervical cancer.- Set up more medical colleges using the existing hospital infrastructure under various departments.- Upgradation of Anganwadi centers under “Saksham Anganwadi and Poshan 2.0”.– U-WIN platform for managing immunization and intensified efforts of Mission Indradhanush.– Extension of healthcare coverage under the Ayushman Bharat scheme to all ASHA workers, Anganwadi Workers and Helpers. Union Budget 2024 for UPSC IAS |
| Tourism | – The government will promote private and public investment in post-harvest activities.- Application of Nano DAP on various crops will be expanded in all agro-climatic zones.- Strategy to achieve ‘atmanirbharta’ for oil seeds especially focused on mustard, groundnut, sesame, soybean, and sunflower.- Comprehensive program for dairy development to be formulated.- PM Matsya Sampada Yojana will be expanded to:Enhance aquaculture productivity from existing 3 to 5 tons per hectare,Double exports to 1 lakh crore andGenerate 55 lakh employment opportunities in the near future.- A programme for supporting dairy farmers will be formulated.- Five integrated aqua parks will be set up.- Blue Economy 2.0: For promoting climate resilient activities for Blue Economy 2.0, a scheme for restoration and adaptation measures, and coastal aquaculture and mariculture with an integrated and multi-sectoral approach will be launched. |
| Agriculture and related sectors | – The Government will form a high-powered committee to extensively consider the challenges. Union Budget 2024 for UPSC IAS |
| Population Growth and Demographic changes | Population Growth and Demographic Changes |
| Reforms in the States for ‘Viksit Bharat’ | – A provision of seventy-five thousand crore rupees as a fifty-year interest-free loan is proposed this year to support reforms by the State Governments. Union Budget 2024 for UPSC IAS |
Focus Areas (GYAN) under the Amrit Kaal
| Garib Kalyan, Desh ka Kalyan | – 25 crore people out of multi-dimensional poverty in the last 10 years.- DBT of Rs. 34 lakh crore using PM-Jan Dhan accounts led to savings of Rs. 2.7 lakh crore for the Government.- Credit assistance to 78 lakh street vendors under PM-SVANidhi.- PM-JANMAN Yojana to aid the development of Particularly Vulnerable Tribal Groups (PVTG). |
| Empowering the Youth | – 30 crore Mudra Yojana loans disbursed to women entrepreneurs.- Increased female enrolment in higher education by 28 percent in 10 years.- 43 per cent of female enrolment in STEM courses.– Eighty-three lakh SHGs with nine crore women are transforming the rural socio-economic landscape with empowerment and self-reliance.- Aim to enhance the target for Lakhpati Didi from 2 crore to 3 crore. |
| Welfare of Farmers-Annadata | – Direct financial assistance to 11.8 crore farmers under PM-KISAN.– Crop Insurance to 4 crore farmers under PM Fasal Bima Yojana.– Integration of 1,361 mandis under eNAM, supporting a trading volume of ₹ 3 lakh crore. |
| Nari Shakti | – 30 crore Mudra Yojana loans disbursed to women entrepreneurs.- Increased female enrolment in higher education by 28 percent in 10 years.- 43 percent of female enrolment in STEM courses.– Eighty-three lakh SHGs with nine crore women are transforming the rural socio-economic landscape with empowerment and self-reliance.- Aim to enhance the target for Lakhpati Didi from 2 crore to 3 crore. Union Budget 2024 for UPSC IAS |
Important Terms Mentioned in Budget 2024
This year’s interim budget has also enlisted key terms that should be considered. These are as follows.
| GYAN | – Sabka Prayas is a phrase describing how the whole nation overcame the challenge of the COVID pandemic and came out of it to lay the solid foundations for the ‘Amrit Kaal’.- The realization of the Amrit Kaal dream cannot be fulfilled without the efforts of all the stakeholders in our country. |
| Sabka Prayas (Effort of All) | – It is the set of 5 resolutions as suggested by the Prime Minister in his Independence Day speech. These are: A resolve to develop India; Removing any trace of the colonial mindset;Taking pride in our legacy;Our strength of unity; and Fulfilling the duties of citizens with honesty. Union Budget 2024 for UPSC IAS |
| PM-JANMAN Yojana | – PM-JANMAN is aimed at improving the socio-economic conditions of PVTGs by saturating PVTG households and habitations with basic facilities. |
| Panch Pran | – Drawing on the ‘Amrit Kaal’ analogy, the Finance Minister referred to the youth of India as ‘Amrit Peedhi’.- The budget this year aims to empower our youth and “help the ‘Amrit Peedhi’ realize their dreams”. |
| Governance, Development and Performance (GDP) | – A more comprehensive and inclusive model of growth and development. |
| First Develop India | – “First Develop India” (FDI) is the spirit by which the government is negotiating bilateral investment treaties with its foreign partners. |
| PM ScHools for Rising India (PM SHRI) | – A centrally sponsored scheme to establish over 14,500 PM SHRI Schools, overseen by the Central Government, State/UT Governments, local bodies, as well as Kendriya Vidyalaya Sangathan and Navodaya Vidyalaya Samiti.- Its objective is to create an inclusive and welcoming atmosphere for every student, ensuring their well-being and providing a secure and enriching learning environment. |
| Rozgardata | – Indian youth entrepreneurial aspirations are being considered as rozgardata in the Amrit Kaal of India.– PM Mudra Yojana, Fund of Funds, Startup India, and Start-Up Credit Guarantee schemes are assisting our ‘rozgardata’. |
| Trinity of demography, democracy, and diversity | – The trinity of demography, democracy, and diversity backed by ‘Sabka Prayas’ has the potential to fulfil the aspirations of every Indian. |
| Nano DAP | – Nano DAP is a nanotechnology-based revolutionary fertiliser that provides nitrogen and phosphorus to plants. – It is a sustainable option for farmers towards smart agriculture and to combat climate change. – DAP, or di-ammonium phosphate, is the second most extensively used fertiliser in India, behind urea. |
| Lakhpati Didi | – A central government scheme that provides skill development training to 20 million women in villages across the country.- The Scheme encourages them to start micro-enterprises and provides training in various skills such as plumbing, tailoring, weaving, etc. |
| NaMo Bharat | – NaMo Bharat Trains are the Regional Rapid Transit System (RRTS). The RRTS is a new rail-based, semi-high-speed, high-frequency commuter transit system with a design speed of 180 kmph. |
| Sarvangin, Sarvasparshi, Sarvasamaweshi’ (all-around, all-pervasive and all-inclusive) | – Government is working with an approach to development that is all-round, all-pervasive and all-inclusive”. – It will aim to cover all castes and people at all levels. – To make India a developed nation, it is crucial to empower the capability of all kinds of people in the country. |
| Viksit Bharat’ (Developed India) | – The government aims to make India ‘Viksit Bharat’ or Developed India by 2047. – The next 25 years from the 75th to the 100th years of independence have been declared as Amrit Kaal or Kartavya Kaal. |
| Amrit Peedhi’ (Golden Generation) | – Drawing on the ‘Amrit Kaal’ analogy, the Finance Minister referred to the youth of India as ‘Amrit Peedhi’.- The budget this year aims to empower our youth and “help the ‘Amrit Peedhi’ realise their dreams”. |
Objectives of Union Budget
The Union Budget lies at the foundation of India’s economic system and is extremely crucial for the economy’s functioning. The Union Budget aims to achieve several key objectives:
- Economic growth: The budget aims to stimulate rapid and balanced economic growth in the country.
- Social Justice and Equality: It seeks to promote social justice and equality, ensuring benefits are distributed across all sections of society.
- Resource allocation: The budget ensures the effective allocation of resources to minimize unemployment and poverty.
- Fiscal stability: It aims to maintain fiscal stability by controlling prices, reducing wealth and income disparities, and reforming the tax system.
How is the Union Budget Prepared?
The Union Budget preparation is a meticulous process that begins about six months before the presentation. It involves several stages,
- The budget-making process involves the preparation of expenditure estimates by ministries/departments and revenue estimates by the Finance Ministry.
- These are consolidated, scrutinized, and finalised by December.
- Halwa ceremony: A few days before the Budget presentation, the government holds a halwa ceremony, marking the beginning of Budget document printing.
- Budget presentation: The budget is then presented to Parliament on the last working day of February, followed by a general discussion on the government’s broad economic and fiscal policies
- Approval: This involves a detailed discussion of the demands for grants for specific ministries or departments.
- Members of Parliament can move various cut motions, including policy cuts, economy cuts, and token cuts.
- If it’s impossible to discuss each demand separately, the remaining demands are clubbed together and voted on at the end of the allotted discussion period and sent to the President for approval once passed.
- After Lok Sabha discussions and approval, an Appropriation Bill was introduced and passed to enable spending from the Consolidated Fund of India. Union Budget 2024 for UPSC IAS
Different Stages of the Budget Session in Parliament
The Union Budget is not just a single-day event. It is presented during the Budget Session of the Parliament every year. The Budget Session consists of multiple stages:
| Stage | Description |
| President’s Address | – The Budget Session starts with a joint address by the President of India to both Houses of Parliament.- It outlines the government’s policy priorities, achievements, and legislative agenda for the upcoming session. |
| Economic Survey Presentation | – It is prepared by the Economics Division of the Department of Economic Affairs under the Chief Economic Advisor’s guidance and is tabled in the Lok Sabha by the FM a day before the Union Budget presentation.- The survey, reviews the previous year’s economic developments and provides an economic outlook for the next fiscal year |
| Railway Budget (Till 2016) | – Until 2016, the Railway Budget was presented separately a few days before the main Union Budget. However, since 2017 it has merged with the General Budget. |
| Union Budget Presentation | – The main Union Budget is presented by the FM on February 1st. |
| General Budget Discussion | – After the Budget presentation, it is discussed in both Houses of Parliament.- This allows parliamentarians to critique the Budget and debate its merits. |
| Voting on Demands for Grants | – Parliament approves the Demand for Grants for different ministries and departments.- This authorises the government to incur the proposed expenditures. |
| The passing of Finance Bill | – The Finance Bill, which contains the taxation proposals, is passed by both Houses of Parliament and enacted.- The Budget comes into effect after the Finance Bill receives Presidential assent. |
Types of Budgets
Governments have three main types of budgets – balanced, surplus and deficit. A few other types of budgets exist, as explained below:
| Type of Budget | Description |
| Balanced Budget | – A budget where the government’s expected revenue for the financial year equals its expended expenditure. |
| Deficit Budget | – A budget where the government’s expected spending exceeds expected revenue for the financial year.- The deficit is usually covered by borrowing or using a reserve surplus. |
| Surplus Budget | – A budget where the government’s predicted income or revenue exceeds planned expenditures.- It can be used to lower aggregate demand and reduce inflation. |
| Interim Budget | – An interim budget, also known as a ‘vote-on-account’, is a temporary budget presented by a government when it does not have time to present a full budget, or if general elections are around the corner. |
| Zero-Based Budget | – An approach to planning and preparing the budget from scratch, or ‘zero bases’.- It is a systematic cost management process that considers the efficient allocation of income to fixed expenditures, variable expenses, and savings. |
| Gender Budget | – A process of examining the budget of a government or other organisation to assess the extent to which it promotes gender equality.- It is used to identify and track the allocation of resources for women, men, and gender-related issues. |
Iconic Budgets
Over the years, budgets have been crucial in catalysing structural reforms and shaping India’s economic progress. Some iconic budgets that significantly impacted India are:
- Black Budget (1973-74): Presented by Y B Chavan, it was called the ‘Black Budget’ due to a fiscal deficit of Rs 550 crore during a period of financial distress.
- Carrot & Stick Budget (1986): VP Singh’s budget was a step towards ending the licence raj in India.
- It introduced the Modified Value Added Tax (MODVAT) to reduce tax cascading and launched a drive against economic offenders.
- Epochal Budget (1991): Manmohan Singh’s budget marked the beginning of economic liberalisation in India, reducing customs duty and promoting exports.
- Dream Budget (1997-98): P Chidambaram used the Laffer Curve principle to lower tax rates and increase collections.
- It also introduced major tax reforms and simplified the excise duty structure.
- Millennium Budget (2000): Yashwant Sinha’s budget laid the roadmap for the growth of India’s IT industry by phasing out software export incentives and reducing customs duty on computer-related items.
- Rollback Budget (2002-03): Also presented by Yashwant Sinha, this budget is remembered for the withdrawal or rollback of several proposals.
- Once-in-a-Century Budget (2021): Nirmala Sitharaman’s budget aimed to revive the economy through infrastructure and healthcare investments, privatization, and robust tax collections. Union Budget 2024 for UPSC IAS
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