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The Union Budget 2025 is set to be presented on February 1. This article explores how the Budget is prepared, the key steps involved, and what we can expect from this year’s financial plan.
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Union Finance Minister Nirmala Sitharaman is all set to present the Union Budget for the financial year 2025-26 on February 1. This marks her eighth consecutive budget presentation. The previous year's budget, announced in July 2024, was based on the interim measures laid out in the Interim Budget of February.
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The preparation of the Union Budget is a lengthy and detailed process that requires months of hard work, planning, and consultations. This process ensures that the government allocates money in the right areas to keep the economy moving forward, and it also outlines how the government plans to earn money through taxes, duties, and other sources.
What is the Union budget?
Under Article 112 of the Indian Constitution, the Union Budget is an official document that explains the government’s financial plans for the upcoming year. It covers the revenues the government expects to earn and the expenditures it plans to make. The Budget is important because it shows how the government will allocate funds for various projects, such as infrastructure, healthcare, education, and welfare programs.
How is the Union Budget prepared?
Step 1: Initial planning and estimation
The preparation process starts months before the Budget is presented. It typically begins in August or September of the previous year. During this time, the Ministry of Finance sends out guidelines to various ministries and state governments. These guidelines are meant to help them make estimates about how much money they will need for the coming year.
Revenue projections: The government looks at how much money it expects to earn through taxes, duties, and other sources. This helps determine if the government will have enough income to cover its planned expenses.
Expenditure requests: Ministries then send their budget requests to the Finance Ministry, outlining how much money they need for their projects and services.
Step 2: Reviewing the estimates
Once all the estimates are in, the Finance Ministry looks over them carefully to check for any mistakes, inconsistencies, or overlaps. This ensures that resources are being allocated efficiently. It’s also at this stage that the budget deficit is calculated—the difference between what the government plans to spend and what it expects to earn.
Step 3: Consultation with stakeholders
The Finance Minister and the Finance Ministry consult with various stakeholders, including economists, business leaders, politicians, and representatives from different industries. These consultations are essential to ensure that the Union Budget addresses the needs of different sectors of society and promotes growth in important areas such as agriculture, infrastructure, and manufacturing.
Step 4: Cabinet review and final approval
Once the budget has been drafted, it is presented to the Union Cabinet. The Cabinet reviews the Budget to make sure it fits with the government’s overall economic plan. Any necessary changes or adjustments are made before it’s approved by the Cabinet. After this, the Finance Minister gets ready to present the Budget to the Parliament.
Step 5: Halwa ceremony
One interesting tradition before the Union Budget is presented is the Halwa Ceremony. This ceremony marks the official start of the printing process for the Budget documents. The Finance Minister and senior officials gather to make halwa, a sweet dish, in a big iron pot. It is a symbolic gesture that marks the end of the preparation phase.
During this time, all officials involved in preparing the budget enter a "lock-in" period, where they are cut off from the outside world to maintain confidentiality. They cannot communicate with their families or anyone else until the Budget is officially presented.
Step 6: Budget Presentation
Finally, on February 1, the Union Finance Minister presents the Budget in Parliament. The Finance Minister’s speech outlines the government’s spending plans, tax proposals, and key economic reforms for the year. After the speech, the Budget documents are shared with the public and Parliament members, and discussions begin.
What to expect in Budget 2025
This year’s Budget is likely to focus on making taxes simpler and improving the new tax system. It may also raise tax exemptions and make it easier for taxpayers to follow the rules. The government could also prioritise increasing investments in important areas like infrastructure, green energy, and manufacturing, while continuing to support social welfare programs.
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