Topic 01 of 6 · Chapter 07 · Indian Economy
Union Budget — Structure & Components
What is Union Budget, Article 112, Revenue Budget vs Capital Budget, and how the budget is presented.
📋 In This Article
1. What is Union Budget?
The Union Budget is the annual financial statement of the Government of India. It presents the government’s estimated revenues and expenditures for the coming financial year (April 1 to March 31).
⭐ Constitutional Basis: Article 112 of the Constitution requires the President to cause to be laid before Parliament a statement of estimated receipts and expenditure for each financial year. This is the Annual Financial Statement — commonly called the Union Budget.
2. Article 112 — Annual Financial Statement
- Article 112 mandates the Annual Financial Statement
- The budget is presented by the Finance Minister
- Budget is presented on February 1 (changed from last day of February in 2017)
- The budget must be approved by Parliament before April 1
- If not approved, a Vote on Account is passed to allow government to spend for a few months
💡 Budget Day Change: Until 2016, the budget was presented on the last working day of February. From 2017, it is presented on February 1 — giving more time for implementation before the new financial year begins on April 1.
3. Structure of Union Budget
| Component | Description |
|---|---|
| Revenue Budget | Revenue receipts + Revenue expenditure. Revenue receipts = tax + non-tax revenue. Revenue expenditure = salaries, interest, subsidies. |
| Capital Budget | Capital receipts + Capital expenditure. Capital receipts = borrowings, disinvestment. Capital expenditure = infrastructure, loans to states. |
| Revenue Deficit | Revenue expenditure > Revenue receipts |
| Fiscal Deficit | Total expenditure > Total revenue (excluding borrowings) |
| Primary Deficit | Fiscal deficit − Interest payments |
4. Budget Presentation
- Budget is presented in two parts: Part A (macro-economic overview, policy announcements) and Part B (tax proposals)
- Budget documents include: Annual Financial Statement, Finance Bill, Demands for Grants, Budget at a Glance, Economic Survey
- Economic Survey is presented a day before the budget — gives overview of economy
- Budget is first presented in Lok Sabha, then Rajya Sabha
- Rajya Sabha cannot vote on budget — it can only discuss
💡 Budget — Simple Analogy
Think of the Union Budget like your household budget:
Income (Revenue): Salary (taxes), rent income (non-tax revenue)
Expenses (Revenue Expenditure): Food, electricity, school fees (salaries, subsidies)
Savings/Investment (Capital): Buying a house, investing in stocks (infrastructure, loans)
Borrowing: Home loan (government borrowings)
If you spend more than you earn, you have a deficit. The government’s deficit is the fiscal deficit.
5. Key Points for Exam
🔑 Must-Remember Facts
- Union Budget constitutional basis: Article 112
- Budget presented by: Finance Minister
- Budget presented on: February 1 (changed from last day of February in 2017)
- Financial year: April 1 to March 31
- Budget first presented in: Lok Sabha
- Rajya Sabha: can discuss but cannot vote on budget
- Economic Survey presented: day before budget
- Vote on Account: temporary approval to spend if budget not passed by April 1
- Finance Bill: contains tax proposals
- Demands for Grants: ministry-wise expenditure proposals