Budgetary procedure includes three stages :
I. Preparation of the budget.
II. Presentation & Enactment of the budget
Ill. Execution of the budget.
I. Preparation of the Budget :
The budget in India is the annual financial statement Of accounts for preceding and current year as well as the estimates Of the revenue expenditure for the coming year. The budget is prepared by Ministry of Finance in which it seeks help from all the Ministries. In July, August the Finance Ministry sends demand form to all heads of various departments, and estimates for the next year are collected.
Preliminary estimates are prepared by the disbursing offices as per the guidelines given to them. Administrative Ministries and heads of the respective Departments are supplied with skeleton forms on which they are asked to prepare the estimates. prescribed form has four different columns : (i) actuals of the previous year, (ii) sanctioned estimates for the current year, (iii) the revised estimates for the current year and the budget estimates for the next year.•lhese estimates are prepared on the prescribed form and in the prescribed manner. These estimates are then consolidated by the head of each department. Further, these estimates are then consolidated by the Ministries concerned and passed on to the Finance Ministry for scrutiny. Finally, the Finance Ministry consolidates all these estimates and prepares the budget for the presentation before the.’ Parliament.
II. Presentations end Enactment of the Budget :
(I) Presentation: After the preparation of the budget, it is placed before the parliament for approval. Generally budget is presented to the parliament on the last day of February. Finance Minister reads the budget in Lok Sabha and any other Minister presents the budget in Rajya Sabha simultaneously.
(2) General Discussion: General discussion on the budget takes place in the house on the day fixed by the Speaker in consultation with the leader of the house. Members have full rights to criticize proposals and estimates as shown in the budget. As soon as the general discussions are over, the Finance Minister replies to all the objections raised by members.
(3) Voting: The next stage after general discussions is voting on budget proposals. From a voting point of view, votable items and non-votable items are shown as below :
(a) non-votable items,
(b) votable items.
(a) Non-votable Items Expenses: Non-votable items are those which are not to be discussed, reduced, or revised by the parliament. Non-votable items include : (i) the salary and allowances of the President of India and other expenditure related to his office, (ii) salaries and allowances of the Chairman of Rajya Sabha and Speaker and Deputy Speaker of the Lok Sabha, (iii) the debt charges of the Government of India, (iv) salaries and pensions of the Judges of the Supreme Court, (v) salaries, allowances and pensions of the Comptroller and Auditor General of India, etc. There is no need of voting in the parliament for the approval of these non-votable expenses items.
(b) Votable Item Expenses: Votable item expenses are those which are subject to the approval .0f the parliament. It refers to the demands of various ministries for grants. The demand of each ministry is introduced by the Minister in charge of the respective ministry or by somebody else on his behalf. A demand becomes a grant when it is voted. Parliament is empowered to accept the demands in total, to reject the demands, or to reduce the demands. However, the parliament cannot increase the demands. Further, it should be noted that the demands for grants are voted only in Lok Sabha in Centre and Vidhan Sabha in a state respectively.
(4) Passing of Appropriate Bill: Appropriation bill has to be passed by the parliament. Illis bi!l includes all the grants for the year whether votable or non-votable. It is moved when the demands for grants have been voted in the house. After passing this bill the government is empowered to withdraw from the consolidated fund the amounts voted by the Parliament so as to meet both votable and nonvotable expenditure.
(5) Passing of the Finance Bill: After passing of the Appropriation Bill, Finance Bill is presented before the Parliament. The Finance Bill when passed becomes the Act, which authorizes the government to collect the required money through taxation or the provisions that have been made in the budget. Bill embodies the proposals ofgovemment to collect money, levy new taxes, effect modifications in the existing tax structure or continue the existing tax structure beyond the period approved by the parliament.
lll. Execution of the Budget :
It is the responsibility of the government to execute the budget. Execution includes three aspects.
(i) Collection of revenue
(ii) Proper custody Of collected funds
(iii) Distribution of grants to various departments
Importance of Budget
Budget is an important tool and pivot of financial administration as well as an effective means of enforcing fiscal policies.
According to Findley Shirras, “The budget is undoubtedly the pivot Of the administration and without a budget based on sound principles, financial disorder with all its attendant consequences takes place as surely as night follows day.“
According to Dalton, “We now think of the budget as a powerful instrument for achieving certain aims : (i) full employment, (ii) high level of investment,-and (iii) a better distribution. ‘ importance of budget can be studied under the following heads:
(I) Barometer of Administrative Machinery: Budget is a tool Of administrative efficiency. Administrative efficiency becomes efficient if the expenditure is incurred in accordance with the sanctioned budget. The budget serves as a powerful tool of co-ordination and an effective device of eliminating duplication & wastage.
(2) Fulfilment of the Objective Of Accountability: Government is accountable for public funds. Public money should be utilized in accordance with the rules and for the welfare of the society. Illis objective can be achieved through Budget.
(3) Instrument or Fiscal Policy: Budget is an effective instrument of fiscal policy. Public expenditure, the structure of taxation, public debt, and deficit financing—all heads of fiscal policy find place in the budget.
(4) Basis of Public Welfare: A well-planned budget is the basis Of public welfare. It can reduce inequalities in the distribution Of income and wealth. lhe imposition of progressive taxation and death duties would secure funds for the state which can be utilised for providing social and cultural amenities for the poor. Housing, health, education, unemployment, social security schemes, development of backward areas, other welfare activities can be undertaken through budget.
(5) Legislative Control on Public Funds: Budget is means through
which parliament in case of central government and Vidhar Sabha in case Ofa
State government exercise control over receipt and use of public funds.
(6) Tool of Bringing Economic Stability: Budget can be used as an effective tool for bringing economic stability in a country. The economy of a country may be stabilized through a surplus budget in the boom period and deficit budget in the depression period. (7) Evaluation of Economic Activities: Budgeting presents an opportunity for evaluating the economic activities and policies of the government, both state and central, such as, rate of increase in national income, capital formation, economic development, etc. Budgeting is helpful in identifying obsolete or unnecessary economic activities and policies and also in giving a call for their discontinuance.
(8) Determines the area of operation: Budget is a tool of determining and controlling the area of operation of the government executives. It is an effective device of controlling the activities of the executives of the government.