How is the budget prepared?

By Ritesh|Updated : September 5th, 2022

The Ministry of Finance prepares the Annual Budget after consulting with Niti Aayog and other relevant Ministries. The finance ministry's department of economic affairs (DEA) is the nodal entity in charge of preparing the Budget.

Preparation of Union Budget in India

  • Beginning in August or September, or roughly six months before the presentation date is when the budget-making process gets underway.
  • It entails several steps, such as sending out circulars to all ministries, consulting on received ideas, allocating funds, and holding per-budget meetings.
  • Later, the finance minister and other representatives participate in the "halwa ceremony," which officially starts printing Budget materials.
  • The Finance Minister then delivers the budget to the Lok Sabha.
  • First, the finance ministry sent a circular requesting that all ministries, states, Union territories, and autonomous organizations produce estimates for the upcoming year.
  • The circular then include bare-bones forms and necessary instructions based on which ministries express their needs.
  • The ministries describe their earnings and expenses from the previous year and offer estimates.
  • After requests are submitted, they are carefully reviewed by senior government officials, and the departments of spending and ministries hold extensive discussions.
  • The information is subsequently transmitted to the finance ministry after being approved.
  • After reviewing all recommendations, the finance ministry distributes funds to several departments for their upcoming expenses.
  • The finance minister meets with various stakeholders before the budget to learn about their requests and recommendations.
  • These stakeholders include state representatives, bankers, farmers, economists, and trade unions.
  • Following pre-Budget talks, the finance minister makes the final determination regarding demands, which is then discussed with the PM before being finalized.

Summary:

How is the budget prepared?

The Ministry of Finance in India creates the Union Budget after consulting with Niti Aayog and other relevant Ministries. Additionally, the nodal entity in charge of creating the Budget is the Budget division of the department of economic affairs (DEA) in the finance ministry.

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