Budget 2025

The Union Budget is the Government of India's yearly financial plan, showing how much money it expects to earn and spend in the coming year. It outlines economic policies, tax plans, and fund allocation to different sectors. The Budget aims to manage the economy, promote growth, control inflation, and achieve social and economic goals. It reflects the government's priorities and impacts both the economy and daily lives of citizens.

The Union Budget is presented annually on February 1. This timing allows for the legislative process to be completed and the Budget to be implemented from the start of the financial year on April 1. The Budget session in Parliament starts with the presentation, followed by discussions and approvals. This schedule, adopted in 2017, aims to improve financial planning and execution.

The Budget is presented by the Union finance minister of India. The finance minister delivers a detailed speech in the Lok Sabha, outlining the government's financial plans, policies, and proposals for the upcoming financial year. The speech covers key economic indicators, fiscal measures, and sector-specific initiatives. The finance minister plays a crucial role in formulating the Budget, in consultation with various ministries and stakeholders, and steering the legislative process for its approval in Parliament.

The Union Budget includes the Revenue Budget, Capital Budget, Fiscal Deficit, Revenue Deficit, and Primary Deficit. The Revenue Budget covers the government's revenue receipts and expenditure. The Capital Budget includes capital receipts and payments, like loans and investments. The Fiscal Deficit indicates the shortfall between total revenue and expenditure. The Budget also details allocations for sectors like agriculture, education, health care, infrastructure, and defence, reflecting the government's priorities.

The Indian Union Budget impacts common citizens through changes in tax policies, subsidies, and welfare schemes. Income tax rates and slabs affect disposable income, while indirect taxes like goods and services tax (GST) influence the cost of goods and services. Allocations for social welfare programmes, health care, and education impact public services. Infrastructure spending creates jobs and improves living standards. Subsidies on essential commodities and agricultural support affect household expenses and rural incomes. Overall, the Budget shapes economic opportunities and living conditions for citizens.

The Union Budget is the financial statement presented by the central government, detailing its revenue and expenditure plans for the entire country. It addresses national priorities and allocates funds to central ministries and sectors. The state Budget is prepared by individual state governments, focusing on financial needs and priorities within their states. State Budgets allocate funds for state-specific projects and services. While the Union Budget impacts national policies, state Budgets address local issues and development goals within the framework set by the central government.

Direct taxes are levied on individuals and corporations, like income tax and corporate tax. These taxes are paid directly to the government by the entity on whom they are imposed. Indirect taxes are levied on goods and services, such as goods and services tax (GST) and Customs duties. These taxes are collected by intermediaries (like retailers) from consumers, who ultimately bear the tax burden. The Union Budget outlines the rates, policies, and changes related to both direct and indirect taxes, impacting overall taxation and revenue generation.

The fiscal deficit is the difference between the government's total expenditure and total revenue (excluding borrowing). It indicates how much government spending exceeds its revenue, necessitating borrowing to bridge the gap. A high fiscal deficit can lead to increased borrowing, higher interest rates, and inflation, potentially impacting economic stability. Conversely, a controlled fiscal deficit suggests sound fiscal management. The fiscal deficit is a critical measure of a government’s financial health and its ability to manage public finances responsibly.

Major economic reforms in the Union Budget often include changes in tax policies, measures to boost investment, initiatives for financial inclusion, and policies to enhance infrastructure development. Reforms may target sectors like agriculture, manufacturing, and services to promote growth and employment. The Budget may also introduce policies for ease of doing business, digitisation, and sustainable development. These reforms aim to address economic challenges, improve the business environment, and achieve long-term economic goals, reflecting the government's strategic vision for the country's development.

Citizens can access the Union Budget documents on the official government website www.indiabudget.gov.in in a digital format. The Budget speech, highlights, and detailed financial statements provide comprehensive information. Detailed reports, analyses and views by financial analysts and commentators are published on the Business Standard website and in the newspaper to help you understand the various aspects of the Union Budget. Additionally, you can also access simplified explanations and infographics on Business Standard for better understanding of the Budget.

The Budget speech is delivered by the Union finance minister in the Lok Sabha, outlining the government's financial plans and economic policies for the upcoming financial year. It includes an overview of the current economic situation, key initiatives, tax proposals, and allocations for various sectors. The speech highlights major policy changes and reforms, addressing priorities such as infrastructure development, social welfare, and fiscal management. It provides a road map for achieving the government’s economic goals and sets the tone for parliamentary discussions and public discourse on the Budget.

The Budget impacts various sectors by allocating funds and introducing policies tailored to their needs. For agriculture, it may include subsidies, support prices, and schemes for irrigation and crop insurance. In education, the Budget can provide funding for schools, scholarships, and digital learning initiatives. Health care allocations often focus on public health infrastructure, insurance schemes, and disease-control programmes. These sector-specific allocations aim to promote growth, improve services, and address challenges within each sector.

The Budget approval process involves several steps: The finance minister presents the Budget in the Lok Sabha. This is followed by a general discussion where members debate its merits and implications. Detailed scrutiny is conducted by Parliamentary Standing Committees. Demands for grants are reviewed, discussed, and voted on by the Lok Sabha. The Appropriation Bill and Finance Bill are introduced, debated, and passed to authorise government spending and tax changes. Finally, the Budget is approved by both Houses of Parliament and receives the President's assent.

The Budget addresses inflation by implementing fiscal policies that control government spending and manage public debt. It may include measures to regulate supply and demand, such as subsidies for essential goods or adjustments in tax rates. To stimulate economic growth, the Budget allocates funds for infrastructure development, incentivises investment, and supports key industries. It may introduce reforms to enhance productivity, improve ease of doing business, and promote exports. By balancing expenditure and revenue, the Budget aims to create a stable economic environment conducive to growth.

Budget estimates are the initial projections of revenue and expenditure for the upcoming financial year, based on current policies and economic conditions. Revised estimates are updated projections made mid-year, reflecting changes in economic circumstances and government policies since the original Budget was presented. Actuals refer to the final revenue and expenditure figures at the end of the financial year, showing the real financial performance. These three components help track financial planning accuracy and the effectiveness of fiscal management throughout the year.

The Public Accounts Committee (PAC) scrutinises government expenditure to ensure it adheres to the sanctioned Budget and is spent efficiently and effectively. The PAC examines audit reports submitted by the Comptroller and Auditor General (CAG) of India, highlighting instances of financial irregularities, wasteful expenditure, and non-compliance with financial regulations. The committee’s findings and recommendations help promote transparency, accountability, and financial discipline in government operations, ensuring that public funds are used appropriately and in accordance with legislative intent.

The Budget promotes infrastructure development by allocating funds for projects in sectors such as transportation, energy, telecommunications, and urban development. It may introduce policies to attract private investment through public-private partnerships (PPPs) and provide incentives for infrastructure financing. Initiatives for smart cities, rural development, and connectivity improvements are often highlighted. These efforts aim to create a robust infrastructure network that supports economic growth, enhances quality of life, and boosts India’s competitiveness on a global scale.

The Union Budget typically includes a range of new schemes and programmes aimed at addressing current economic and social challenges. These may cover areas such as health care, education, agriculture, manufacturing, rural development, digitalisation, and skill development. The announcements are designed to stimulate economic activity, provide social security, and promote inclusive growth. Specific details of new schemes vary each year, reflecting the government’s priorities and responding to emerging needs and opportunities within the economy.

Fiscal policies in the Budget can influence foreign investment by creating a favourable or unfavourable business environment. Policies that reduce corporate tax rates, offer tax incentives, and streamline regulatory processes can attract foreign investors. Infrastructure development and reforms aimed at ease of doing business also play a crucial role. Conversely, policies that increase taxes or impose restrictive regulations may deter investment. The Budget's approach to fiscal discipline, economic stability, and growth prospects significantly impacts investor confidence and foreign direct investment (FDI) inflows into India.

Capital expenditure refers to funds used by the government for acquiring, maintaining, or upgrading physical assets such as infrastructure, buildings, and machinery. These expenditures create future benefits and contribute to economic growth. Revenue expenditure, on the other hand, is the spending on the day-to-day functioning of the government, including salaries, subsidies, interest payments, and maintenance costs. Unlike capital expenditure, revenue expenditure does not result in the creation of assets but ensures the smooth operation of government services. Both types of expenditures are essential for balanced fiscal management and economic stability.