Adrika singh

6011/20

BA pol science hons – 4th sem

Legislative practices and procedures (SEC)

Q) It is widely accepted that budget is the essentiality of every economy in contemporary times. How
budget can be further evaluated to bring the egalitarian principles in the society?

Ans- What is a budget?

“Budget is an Annual Financial Statement of yearly estimated receipts and expenditures

of the government in respect of every financial year. Budgeting is the process of
estimating the availability of resources and then allocating them to various activities
according to a predetermined priority. Budgets act as instruments of control and act as
a benchmark to evaluate the progress of various departments. In simple words, “budget
is the yearly financial description and the estimate for the expenditure and revenue of
coming years”. The budget of a government is a summary of the item wise
intended/expected revenues and anticipated expenditures of the government during a
fiscal year/ financial year. In India the financial year spans from 1st April to 31st March
over two calendar years. Government at all levels, whether central, state or a local level,
prepare the budget. Budget is prepared, keeping in view the general policy of
government towards the welfare of people. Government incurs various expenditures to
provide basic facilities such as education, health, etc. It also spends money to increase
production, to reduce unemployment, poverty and inequalities in income and wealth
etc. Such expenditure of government promotes welfare of the people. To finance this
expenditure, government raises revenue from sources such as taxes, public debt, etc.
These financial resources that fund government expenditure are raised from people.
The items of expenditure and the sources of financing them are planned by government
in accordance with the objective of public welfare. Thus, government takes decisions on
behalf of people with respect to how public money is to be spent under different heads
of expenditures and how it is to be raised from various sources. This makes government
accountable to people. Through legislatures, parliament and various other civic bodies,
people exercise their right to know as to how government is spending public money and
how it is raising it from them. This accountability of government to the people of the
country is manifested in the government budget.
Some thinkers have defined the budget as the statement of income and expenditure for
certain period-
 Leonoy Beanlieu- “budget as a statement of the estimated Receipts and
expenses during a fixed period. While some other have defined it as an
appropriation of revenue and planning.
  Rene Stourm – “a document contain a preliminary approved plan of public
revenue and expenditure.”
 Joseph Pois “Budgeting generally denotes that process by which the financial
policy of a public agency is formulated, enacted and carried out.”
 G. Jeze - “budget as an forecast and an esticnate of all public receipts and
expenses and for certain expenses and receipts and authorization to incur them
and to collect them”.
 Prof. Dalton’s – ” The normal thought of balanced budget is that there is a gain
in the income in a time period or it is not less in comparison of expenditure.”
 Prof. Taylor - ” Budget is the most important financial plan of the government.
Budget, presents combine the sured income and proposed expenditure’s
estimate for budget year.”

On the basis of above definitions it can be concluded that Budget is:

(i) a work plan;
(ii) it reflects and clarifies the various executive functions of coming financial year; (iii) it
is not just a statement about revenue and expenses but it is also a mechanism of
planning, control and management.

Budget and constitutional provisions -

According to Article 112 of the Indian Constitution, the Union Budget of a year is
referred to as the Annual Financial Statement (AFS). It is a statement of the estimated
receipts and expenditure of the Government in a financial year (which begins on 01 April
of the current year and ends on 31 March of the following year). In addition to it, the
Budget contains:
 Estimates of revenue and capital receipts,
 Ways and means to raise the revenue,
 Estimates of expenditure,
 Details of the actual receipts and expenditure of the closing financial year and
the reasons for any deficit or surplus in that year, and
 The economic and financial policy of the coming year, i.e., taxation proposals,
prospects of revenue, spending programme and introduction of new
schemes/projects.

According to Article 77 (3), the President has delegated to the Union Finance Minister
the responsibility of preparing the budget, also known as the yearly financial statement,
and shepherding it through parliament.

There were changes Introduced in 2017-

 advancement of Budget presentation to February 1 (earlier presented on the
last working day of February)
 Merger of Railway Budget with the General Budget, and
  Doing away with plan and non-plan expenditure.

Parliament and budget-

The budget is presented by the Finance Ministry to Parliament each year during the
Budget Session in February. Some important documents that are tabled at the time of
presentation of the Union Budget include the following:
 Annual Financial Statement: Summarises the expenditure and receipts of the
government
 Budget at a Glance: Brief overview of the budget
 Expenditure Budget: Details of the expenditure of various ministries and
departments including the Demands for Grants for each ministry
 Receipts Budget: Details the tax and non-tax funding plan for the government
 Finance Bill: Details any changes to the existing tax laws in the country
 Medium Term Fiscal Strategy Document: Sets three-year rolling targets for
select fiscal indicators as per the Fiscal Responsibility and Budget Management
Act.

The budgetary procedure in India involves four different operations -

 Preparation of the budget-

Every year, the ministry of finance begins the process of preparing the
budget, usually in September. For this aim, the Ministry of Finance's
Department of Economic Affairs has a budget Division. The ministry of
finance compiles and coordinates the estimates of various ministers and
departments' expenditures in order to generate an estimate or plan outlay.
The budget proposals of finance ministers are examined by the finance
ministry who has the power of making changes in them with the
consultation of the prime minister.

 Enactment of the budget-

Once the budget is prepared, it goes to the parliament for enactment and
legislation.
The budget has to pass through the following stages:
1) In the Lok Sabha, the finance minister presents the budget. In the Lok
Sabha, he presents his budget. At the same time, a copy of the budget is
placed on the Rajya Sabha's table. Members of the parliament are given
printed copies of the budget to go over the intricacies of the budgetary
measures.
2) Following the presentation of the budget, the finance bill is presented
to parliament. The Finance Bill refers to proposals for new taxes,
changes to current taxes, or the repeal of previous taxes.
3) The revenue and expenditure proposals are debated in Parliament.
Members of Parliament actively participate in the debate.
 4) Grant requests are presented to Parliament at the same time as the
budget. These grant requests demonstrate that the estimates of
expenditure for several ministries must be voted on by Parliament.
5) The members who propose a reduction of grant bring three kinds of cut
motions which are either withdrawn or dropped because their passing
will be tantamount to a vote of no confidence in the government. Still,
to attract the attention of the government, the cut motions are moved
to bring moral pressure on the executive.

 Execution of the budget-

The budget's execution begins when the finance and appropriation bill is
passed. The executive department is given permission to begin collecting
funds and spending it on approved projects. This is the duty of the ministry
of finance's Revenue Department. Various ministries have been given
authority to draw and spend the necessary funds. The Secretary of the
Ministry serves as the principal accounting authority in this regard. The
accounts of the various ministries are compiled in accordance with the
established procedures. The Comptroller and Auditor General of India audits
these accounts.

 Parliamentary control over finance-

The Finance Bill and the Appropriation Bill are presented, debated, and
passed according to a set of rules.
The executive, which makes requests, receives grants from the Parliament,
which is sovereign. These demands can include requests for grants,
supplementary grants, additional grants, and so forth. Other than those for
the Consolidated Fund of India, expenditure estimates are provided to the
Lok Sabha in the form of grant demands. The Lok Sabha has the authority to
accept or reject any demand, or to accept a demand with a reduction in the
sum demanded. Following the completion of the general debate on the
budget, the Lok Sabha receives requests for grants from various ministries.
Previously, the finance minister introduced all demands; however, they are
now formally introduced by the ministers of the relevant departments.
These demands are not forwarded to the Rajya Sabha, despite the fact that
a general budget debate takes place there as well. The Constitution states
that the Parliament may issue a grant to cover an unanticipated demand on
the nation's resources where the demand cannot be articulated with the
specifics normally provided in the yearly financial statement due to the
scale or indefinite nature of the service. Passing such a grant again
necessitates the passage of an Appropriation Act. It's designed to serve a
specific purpose, such as addressing wartime requirements.

Objectives of a budget-
 Reallocation of Resources– It helps to distribute resources keeping in view the social and
economic conditions of the country.
 Reducing Inequalities in Income and Wealth– Government aims to bring economic equality by
imposing taxes on the elite class and spending the collected money on the welfare of the poor.
 Contributing to Economic Growth– A country’s economic growth is based on the rate of
investment and savings. Therefore, the budgetary plan focuses on preparing adequate resources
for investing in the public sector and raise the overall rate of investments and savings.
 Bringing Economic Stability– The Budget focuses on avoiding business fluctuations so as to
accomplish the aim of financial stability. Policies such as Deficit Budget (during deflation) and
Surplus Budget (during inflation) assist in balancing the prices in the economy.
 Managing Public Enterprises– Many public sector industries are built for the social welfare of
the people. The Budget is planned to deliver different provisions for operating such business and
imparting financial help.
 Reducing Regional Differences– It aims to reduce regional inequalities by promoting the
installation of production units in the underdeveloped regions.
 Allowance or Tax concessions – The government gives allowance and tax concessions to
manufacturers to encourage investment.
 Direct production of goods and services – The government can take the production process
directly if the private sector does not show interest.

How budget is essential for our economy-

 Though budgets do not assure 100% success in economic stability, they help to bypass failure.
 A budget is a tool that transfers a general idea into a productive, action-oriented, and
aspirational goal.
 It acts as a device that identifies and focuses on the development of an underprivileged person.
 It provides a benchmark to evaluate success or failure in achieving goals and provides suitable
improving measures.
 It improves the aggregate financial policy by controlling expenditure.
 It allocates resources of a nation on a foundation of social priorities.
 It comprises efficient and productive programmes to deliver goods and services and achieve
targeted goals.

Weaknesses in the Budgetary System and Implementation-

 Unrealistic budget estimates- The amounts budgeted are often not realistic. Weakness in
preparing proper estimates leads to frequent revisions and supplementaries. On the other hand,
there are major unspent provisions at the end of the year.
 Delay in implementation of projects- Resources are being spread thinly with only token
provisions in some cases, often leading to inordinate delays in execution of projects.
  Skewed expenditure pattern- The expenditure pattern is skewed, with a major portion getting
spent in the last quarter of the financial year, especially in the last month.
 Inadequate adherence to the multi-year perspective and missing ‘line of sight’ between plan
and budget - Though the Five year Plan provides the basis for multi-year perspective, often ad
hoc deviations from it distort the long-term plan objectives. The Plan schemes get dispersed into
line-items in the budget estimates and there is no consolidation afterwards – both in the
estimates and the final accounts. There is need for alignment between the plan, budgets and
accounts.
 No correlation between expenditure and actual implementation- The expenditure figures do
not reflect actual expenditure made towards receipt of goods and services.
 Mis-stating of financial position- Parking of funds by implementing agencies, outside the
government accounts portrays an incorrect picture of the financial position of government. This
also means that the Government’s financial position is not known with reasonable accuracy at
any given point of time.
 Ad hoc project announcements- Indiscriminate announcement of projects/schemes not
included in the plan/budget is regularly made, often without proper consideration and detailing.

Measures required to address the issues in Budgetary System and Implementation-

 The assumptions made while formulating estimates must be realistic. At the end of each year
the reasons for the gap between the ‘estimates’ and ‘actuals’ must be ascertained and efforts
made to minimize them. These assumptions should also be subject to audit.
 The method of formulation of the annual budget by getting details from different
organizations/units/ agencies and fitting them into a predetermined aggregate amount leads to
unrealistic budget estimates. This method should be given up along with the method of
budgeting on the basis of ‘analysis of trends’. This should be replaced by a ‘top-down’ method
by indicating aggregate limits to expenditure to each organization/agency.
 Projects and schemes should be included in the budget only after detailed consideration. The
norms for formulating the budget should be strictly adhered to in order to avoid making token
provisions and spreading resources thinly over a large number of projects/schemes.
 The practice of announcing projects and schemes on an ad-hoc basis in budgets and on
important National Days, and during visits of dignitaries functionaries to States needs to be
stopped. Projects/schemes which are considered absolutely essential may be considered in the
annual plans or at the time of mid-term appraisal.

Some budgetary reforms done in OECD member countries from which India can learn :

 Medium-term budget frameworks- They form the basis for achieving fiscal consolidation. They
need to clearly state the government’s medium term fiscal objectives in terms of high-level
targets such as the level of aggregate revenue, expenditure, deficit/surplus, and debt. They then
need to operationalise these high-level targets by establishing hard budget constraints for
individual ministries and programmes over a number of years. This lends stability and credibility
to the government’s fiscal objectives.
 By their very nature, high-level fiscal targets are set in a medium-term context. They aim to
achieve a certain fiscal outcome over a number of years. Medium-term budget frameworks aim
to bridge this gap.
 Great care must be taken in making them and all key economic assumptions should be disclosed
explicitly. Sensitivity analysis should be made of what impact changes in the key economic
assumptions would have on the budget. Furthermore, a comparison should be made between
the economic assumptions used in the budget and what private sector forecasters are applying
for the same time period where practicable. The establishment of an independent body to
recommend the economic assumptions to be used in the budget may be considered as well. All
this serves to place safeguards against the use of unrealistic, or “optimistic,” economic
assumptions.
 Top-down budgeting techniques- Budgeting has traditionally operated on a bottom-up
principle. This means that all agencies and all ministries send requests for funding to the finance
ministry. These requests greatly exceed what they realistically believe they will get. Budgeting
then consists of the Finance Ministry negotiating with these ministries and agencies until some
common point is found.

Budget can be further evaluated to strengthen the egalitarian principles of the society-

With the help of Gender Budgeting, government can further try to strengthen egalitarian principles
of the society. Gender Responsive Budgeting (GRB) is a globally followed practice that acknowledges
the fiscal expenditure with a gender perspective and prorates funds for the gender-specific outcome
to address the persistent gender inequality that hinders the overall growth and development of a
nation.

This concept is not foreign to Indian budgeting exercises as it was introduced for the first time in the
2001 Union Budget with a vision to address the massive gender inequality in India. Since 2005, the
union government releases the Gender Budgeting Statement consisting of two parts. The first part
reflects the women-specific schemes in which 100 percent allocation is only for women. The second
part reflects pro-women schemes in which 30% of the allocation is earmarked for women. In recent
years, the schemes like MNREGA, Beti Bachao Beti Padhao, Sukanya Samridhi Yojna, and Ujjawala
Yojna with their focus on women have made significant improvements in socio-economic conditions
of women. For instance, MNREGA has gender-sensitive components, incorporating clauses that
specify definitive quotas of beneficiaries as women, a similar pay scale for men and women as well
as builds in the provision of childcare facilities within worksites. The outcome of these provision has
been reflected in the improvement of female labour force participation, as about 44% of the
beneficiaries are women. Further, Schemes like Janani Suraksha Yojana, Ujjawala Yojana have made
significant improvements in the health of women by promoting institutional delivery and providing
clean fuel, respectively.

It is imperative to consider that benefits of gender-responsive budgeting extend beyond the

improvement in the condition of women and also contribute significantly to national growth and
development. As education and health outcomes of women improve, their barriers to entry in
joining the workforce would reduce. This would reverse the worrying trend of dipping female labour
force participation in India and contribute to the country’s economic growth. It would also make
women more financially independent and reduce the crimes against women that begin in the
household. Further, many researchers suggest the health of the mother is directly correlated to the
health and cognitive abilities of the children. Hence, working on the well-being of mothers through
GRB ensures improvement in not just present but coming generations as well. In India, the Ministry
of Women and Child Development (MWCD) is the primary agency for strategic coordination and the
effective implementation of Gender Responsive Budgeting (GRB). The funds allocated for GRB are
still confined to 5 per cent of the public expenditure and shrink to less than one per cent of GDP.
Apart from the inadequate allocation for GRB, the gap between the allocation and the utilization of
funds remains a daunting challenge. According to the government, 89 per cent of the Nirbhaya Fund
(a fund allocated for women's safety) have remained unutilized by the States. In addition to this, in
the last decade, approximately 90% of the GRB expenditure has been limited to only four major
ministries - Rural Development, Education, Health and MWCD. The impediments in women's
empowerment extend beyond the scope of these ministries. Thus, a holistic approach leading to the
convergence of all policies from the perspective of gender is imperative to avoid some ministries
working in silos.

Further, for the successful implementation of GRB, the mere allocation of funds will not suffice
unless the desired outcomes are attained. Policies should be charted out both for the short and long
span. However, data deficiency of implementing agencies from ground zero makes the whole
process a zero-sum game. Hence, it imperative to implement agencies to not only lay the foundation
for policies, but to be vigilant till the final execution.

What can our country do to improve Gender Budgeting efforts?

 Aim to improve reporting and transparency- Gender budgeting statements can help ensure
transparency. Australia, Bangladesh, India, Korea, Morocco, and Nepal have issued various
forms of these statements.
 Monitor and evaluate gender budgeting efforts or collect gender disaggregated data-
Korea requires the government to examine the gender impacts of the budget and whether
men and women are equally receiving benefits. Uganda introduced a Certificate on Gender
and Equity Compliance to ensure that the budget process meets women’s needs.
 Build skills- UN Women and national aid agencies have provided technical assistance and
training over the years, but technical level staff in many countries would benefit from
additional training. The IMF, through training courses for country officials and through
technical assistance for Austria, Bahrain, Cambodia, and Ukraine, is increasingly engaging
with member countries on many aspects of gender budgeting.
 Collaborate- The IMF is collaborating with UN Women to push forward this work. In
February 2018, two joint workshops were organized—one for sub-Saharan countries and
another for countries in South Eastern Europe. A joint TED-styletalk was held at the IMF
Spring Meetings last year, offering participants an overview of gender budgeting principles.

Conclusion-
The budget is the principal policy document of government, where the government’s policy objectives
are reconciled and implemented in concrete terms. Budget transparency – openness about policy
intentions, formulation and implementation – is therefore at the core of good governance agenda.

In countries with deep cultural, religious and economic diversity such as India, it is extremely important
for the government to allocate resources wisely. Various factors such as uplifting underprivileged
sections of the society, facilitating financial inclusion, mitigating regional disparity, upgrading defence
capabilities, providing proper educational facilities, and much more need to be focused on. Therefore, a
well-planned budget is of utmost importance for any government to ensure economic stability and
growth.”

References-

 https://www.google.com/url?sa=t&source=web&rct=j&url=https://www.oecd.org/gov/
budgeting/Parliament-role-in-budgeting.pdf&ved=2ahUKEwialo-
J2Iz3AhX9RWwGHcfnDdgQFnoECAUQAQ&usg=AOvVaw37115_r7NKZP8HtQhoeFSY
 https://www.google.com/url?sa=t&source=web&rct=j&url=https://www.weforum.org/
agenda/2019/03/do-the-math-include-women-in-government-
budgets&ved=2ahUKEwiclpfq5Iz3AhW6RmwGHeQ6CWsQFnoECAQQAQ&usg=AOvVaw1akuJkqX
f4JE8lF1mKQfuy
 https://www.google.com/url?sa=t&source=web&rct=j&url=https://eige.europa.eu/gender-
mainstreaming/toolkits/gender-budgeting/gender-budgeting-way-advancing-gender-
equality&ved=2ahUKEwiclpfq5Iz3AhW6RmwGHeQ6CWsQFnoECC8QAQ&usg=AOvVaw1J-
7cyiNR9uPsmsmUASAaY
 New Horizons Of Public Administration by Mohit Bhattacharya
 Legislative Practices and Procedures in India by Nivedita Giri
 IGNOU notes
 SOL notes
 12th Indian Economics book
 The Politics of the Budgetary Process by Aaron Wildavsky
 Budgeting: A Comparative Theory of Budgetary Process by Wildavsky