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Remember my last post How Budget is prepared:

How India’s Budget is prepared..

Here goes the second part that is: 2) Expenditure side

Parallel to all this, the Planning Commission goes into stock-taking mode. It starts meeting with individual ministries in the month of September-October and reviews ongoing schemes of the ministries, considers allocation for them, etc.

It may decide to stop some ongoing scheme or merge two similar schemes.
Thus, an estimate of Plan Budget is prepared.

The Planning Commission conveys to the ministry of finance that it requires so and so amount to run planned schemes for the next financial year(lst April to 31st March).

Budget 2008

The finance minister and the Deputy Chairman of Planning Commission discuss the demand in detail. This way Plan Expenditure is ready. Different ministries are also asked to tell about their fund requirement, which forms a part of budget estimate.

Side by side, Department of Economic Affairs meets representatives of trade unions, industry chambers, economists and other groups. In the Budget-making exercise, suggestions of different stakeholders(a party who affects, or can be affected by, an organization’s actions) are kept in mind.

Finance Minister has to decide with his team

By this time, the finance minister is in a position to estimate as to how much it will get through taxes and how much it has to spend in coming financial year.
The finance minister has other constraints also. He has to abide by FRBM Act and cut fiscal deficit [the difference between the government’s total expenditure and its total receipts (excluding borrowing)].

Keeping in mind all these, the finance minister - with his team - decides whether some new taxes should be changed to collect more tax, how to widen tax net in order to earn more revenue. While doing so the suggestions from various interest groups are duly taken into account.

GDP assessment

GDP is gross domestic product and it is one of the ways of measuring the size of its economy. The GDP of a country is defined as the total market value of all final goods and services produced within a country in a given period of time (usually a calendar year)

The Department of Expenditure and the Department of Economic Affairs sit to decide GDP assessment for next year. Generally, a nominal growth in GDP is projected. Actual growth in GDP is - nominal growth of GDP reduced by inflation figure.

Budget 2008

The Budget Speech of the Financial Minister

Now comes the Budget Speech. It is fine-tuned to the last minute. Around February 15, some of the Budget documents are almost ready and goes for printing to a press located in North Block (Secretariat Building, a set of two buildings on the opposite side of Raj path: the North Block and the South Block) itself.

Security agencies ring off the press and entry is almost prohibited.

The D-Day

The finance minister delivers the Budget Speech in Parliament. Normally, on February 28, the finance minister delivers the Budget Speech in Lok Sabha. After which Budget documents are made available.

These are also put on the Web site Click Here to visit the site.
However, 2008 being a leap year, this time the Budget would be presented to Parliament on February 29.

Mr.Lalu Prasad Yadav(Railway Minister)

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