It is a primary tool used by the government to control inflation and manage the economy.
Main Instrument: The Budget.
FRBM Act
Full Name: Fiscal Responsibility & Budget Management Act, 2003.
According to this act, a fiscal deficit of 3% is considered acceptable.
Origin and Constitutional Status
The word "Budget" originates from the French word "Bouget". However, this word does not appear anywhere in our constitution. Instead, the constitution refers to it as the Annual Financial Statement under Article 112.
Presentation
- The budget is presented by the Finance Minister.
- It is traditionally presented in a red-coloured leather bag with the logo of the National Emblem (Satyamev Jayate).
- The budget is prepared with the help of the Chief Economic Advisor.
Traditions
- Halwa Ceremony: Marks the final stage of the budget-making process, involving the distribution of Halwa in the Lok Sabha.
- Economic Survey: A report of the country's economic performance over the last year, presented one day before the budget.
Date of Presentation
Before 2017: Last day of February
After 2017: 1st day of February
Time of Presentation
Before 1999: 5:00 PM
After 1999: 11:00 AM
First Budget in India
7 April, 1860 by James Wilson
First Budget After Independence
26 Nov, 1947 by R.K. Shanmukhan Chitty
Most Budgets Presented
Morarji Desai (10 times, non-consecutively; twice on his birthday in 1964 & 1968)
Second Most Budgets
P. Chidambaram (9 times, non-consecutively)
Most Consecutive Budgets
Nirmala Sitharaman (9 times, consecutively)
First Lady to Present Budget
Indira Gandhi
Longest Budget Speech
Nirmala Sitharaman (2 hours 42 minutes)
Shortest Budget Speech
Hirubhai Mujlibhai Patel (800 words only)
Black Budget (1973-74): Named so due to a high Fiscal Deficit of ₹550 Crore.
Dream Budget (1997-98): Taxes were significantly reduced by 30-40%.
Millennium Budget (2000-2001): Laid out a roadmap for India's IT sector.
Rollback Budget (2002-2003): Several proposals in it were withdrawn.
First Digital Budget (2021): Presented by Nirmala Sitharaman.
Balanced Budget
Government Income = Government Expenditure
Surplus Budget (Imaginary Budget)
Government Income > Government Expenditure
Deficit Budget
Government Income < Government expenditure
Interim / Temporary Budget
Presented when the government doesn't have time to present a full budget or when general elections are near. The first was presented by R.K. Shanmukham Chitty (Aug 1948 - Mar 1949).
1. What is the primary tool used by the government to control inflation and manage the economy?
2. What is the main instrument of Fiscal Policy?
3. From which language does the word "Budget" originate?
4. Under which Article is the Budget referred to as the "Annual Financial Statement" in the Indian Constitution?
5. Who was the first lady to present the Union Budget in India?
6. Which budget is known as the "Dream Budget" because taxes were significantly reduced by 30-40%?
7. What is the acceptable limit for Fiscal Deficit as per the FRBM Act 2003?