Union Budget 2023: What is Union Budget?

The Union Budget is an annual financial statement presented by the government in the Parliament. Know more about the Union Budget.

<div class="paragraphs"><p>Source:&nbsp;Freepik</p></div>
Source: Freepik

In accordance with Article 112 of the Constitution of India, Finance Minister Nirmala Sitharaman will present the Union Budget 2023 on February 1, 2023, at the Parliament. The Union Budget 2023 will be allotted for the upcoming financial year, which will start on April 1, 2023, and end on March 31, 2024.

But what is the Union Budget and why is it important? Let’s find out.

What Is Union Budget?

The Union Budget is an annual financial statement that contains details about the government’s projected expenditures and revenues for the upcoming financial year. The Budget is presented by the country’s Finance Minister in the Parliament.

The Union Budget in India is divided into two major parts- the capital budget and the revenue budget.

Capital Budget: The capital budget details the government’s proposed capital payments and receipts. Capital payments include expenses incurred towards infrastructure development, development and maintenance of health facilities, educational facilities, etc., while capital receipts include borrowings from the public or from the Reserve Bank of India (RBI).

Revenue Budget: The revenue budget details the government’s proposed revenue expenditure and receipts. Revenue receipts include tax and non-tax revenue, while revenue expenditure includes expenses incurred towards the day-to-day functioning of the government and on various services offered to citizens. If revenue expenditure is more than the receipts, the government incurs a revenue deficit.

What Is The Importance Of The Union Budget?

The main objective of India’s Union Budget is to maintain the country’s balanced economic growth along with social justice and equality. Here are the key reasons that highlight the importance of the Union Budget:

  • Ensures efficient allocation of resources: In the Union Budget, the government allocates the available resources as per the best interest of the country to achieve profit maximisation for the government and to ensure public welfare.

  • Reduces income and wealth disparities: The Union Budget influences the distribution of income through taxes and subsidies. It helps in maintaining a balance by levying a high rate of tax on the rich class, thereby reducing their disposable income, and levying a lower rate of tax on the lower income group.

  • Keeps a tab on prices: The Union Budget helps in controlling economic fluctuations. It ensures that inflationary or deflationary situations are handled properly, thus bringing economic stability. A surplus budget policy is implemented during inflation, while a deficit budget policy is devised during deflation. This helps in maintaining price stability in the country’s economy.

  • Makes changes in tax structure: The Union Budget is responsible to make necessary changes in the direct and indirect tax structure if required. This includes changes in the income tax rates and tax brackets. 

The Union Budget is crucial as it impacts numerous areas. The Union Budget in India is closely watched by investors, businesses, and the common man as it gives insight into the government’s economic policies and can impact the economy and people’s lives.

Learn more about Union Budget 2023: The Four Primary Stages Of Budget.