What is a Budget? Why Is It Important?

1. Budget 2024 , presented on 1 February, was an interim budget due to the election year.
2. A budget is a financial statement accounting for receivables and spending.
3. It allows the government to prioritise policy implementation, social welfare, and economic growth.
4. The Union budget 2024 will be presented on 23 July 2024.

The annual budget forecasts the Indian government's revenues and expenditures for a financial year. It sets the tone for the year’s economic activities and their effects on citizens. If you are looking for an answer to the question “ What do you mean by budget? ” and its purpose and importance, you are at the right place. Keep reading!

In its simplest form, a budget calculates the incoming and outgoing money. Under Article 112 of the Indian Constitution, the Indian financial situation is summarised annually through a Union Budget.A Union budget is an annual financial statement accounting for the foreseeable incomes and expenditures from 1 April to 31 March of that fiscal year. Also Read: New Income Tax Slabs FY 2023-24 (New & Old Regime Tax Rates)

A Union budget is of two kinds: Revenue budget and Capital budget.

Revenue Budget

It focuses on the taxable and non-taxable revenue side of the government’s finances, including the expected revenue receipts and proposed expenditures. It includes various sources of government revenue, such as taxes, duties, fees, and non-tax revenue.It also covers fund allocation planning for various government activities, including salaries and pensions of government employees, subsidies, social welfare schemes, interest payments on loans , defence expenses, infrastructure development, and other administrative expenses.

Capital Budget

It accounts for the predicted capital expenditures on the acquisition of assets like land, buildings, equipment, and machinery, as well as investments in shares , loans, and advances granted by the central government to state and Union Territory governments, government companies, PSUs, corporations, and other parties. Also Read: 10 Fastest Growing Economies of the World in 2024

Budget 2024 , presented on 1 February 2024, was an interim budget. In an election year, the annual Union budget is replaced by a short-term Interim budget. It covers the incumbent government’s expenses until the formation of a new government.The complete Union budget 2024 will be presented on 23 July 2024.

The Union budget is essential for improving a country’s socio-economic conditions. The government can prioritise resource allocation and policy implementation by accounting for all revenue streams and expenses.A budget allows a government to calculate its fiscal deficit and ways to counter it through debt during deflation. It also helps in planning for surplus, if any, to deal with inflation. Thus, the budget is vital for social equality, economic stability, and sustainable development.

Since this is an election year, our finance minister presented the interim budget 2024 on 1 February 2024. This gave a glimpse of the Union budget 2024 , which will be on 23 July 2024. You can expect development schemes that ensure the socio-economic and sustainable development of the country in various sectors like agriculture, healthcare, defence, banking, etc.Stay abreast of the latest financial updates that may affect your financial future with Aditya Birla Capital. Visit us now !