India's Union Budget 2025: Constitutional Framework and Presentation Details
As one of the world's top five economies, India is preparing to present its Union Budget in Parliament on February 1, 2025. This will mark the 15th budget presentation under the Prime Minister Narendra Modi-led government, with Finance Minister Nirmala Sitharaman presenting the financial blueprint as mandated under Article 112 of the Indian Constitution.
Historical Shift in Budget Presentation Date
Interestingly, February 1 was not always the designated date for presenting the Union Budget. For several decades, the budget was traditionally presented on February 28. This long-standing practice underwent a significant change in 2017 when the annual Union Budget was first presented on February 1. Since then, this date has been officially fixed for budget presentations, marking a departure from historical tradition.
Significance of the 2025 Budget Presentation
The upcoming February 1 presentation will represent the second full annual budget of the Modi 3.0 government. For Finance Minister Sitharaman, this will be her ninth consecutive budget presentation, placing her in an elite category of finance ministers. She now stands second only to former finance minister Morarji Desai, who also briefly served as India's prime minister during his distinguished career.
Understanding the Union Budget: Constitutional Basis and Structure
What is the Union Budget?
The Union Budget serves as the government's comprehensive financial record, documenting all accounts and financial transactions for a complete fiscal year. In India, the fiscal year runs from April 1 to March 31, providing a standardized 12-month period for financial reporting by both government and businesses.
The constitutional foundation of the Union Budget is clearly defined in Article 112 of the Constitution, which states that the President authorizes the government's "estimated receipts and expenditure" for the year. This authorization is formally referred to as the "annual financial statement."
Budget Structure: Revenue and Capital Components
The Union Budget is broadly divided into two essential parts:
- Revenue Budget: This component details how much money the government earns and spends on regular operations. Revenue receipts come from both tax and non-tax sources, while revenue expenditure covers daily government functioning and public services. When government spending exceeds earnings in this category, it results in a revenue deficit.
- Capital Budget: This section focuses on government funds received and spent for long-term purposes. Capital receipts primarily include loans from the public, foreign governments, and the Reserve Bank of India. Capital expenditure encompasses investments in infrastructure development, including roads, machinery, buildings, hospitals, schools, and other developmental projects. When total government spending surpasses total income, it creates a fiscal deficit.
Parliamentary Process and Constitutional Privileges
The Lok Sabha holds special constitutional privileges regarding the Union Budget. The Constitution grants directly elected members of the Lower House the first right to budget presentation and decisive authority over money matters and Money Bills. Following presentation in the Lok Sabha, budget documents are laid before the Rajya Sabha for discussion.
However, it's important to note that the Rajya Sabha does not possess voting or amendment powers concerning Money Bills, including the Budget. The Upper House can only discuss budget provisions and make recommendations, maintaining the Lok Sabha's supremacy in financial matters.
Economic Significance and Public Impact
The Union Budget represents a fundamental practice of government functioning in India, occurring annually with rare exceptions during general election years. During election-bound years, the budget presentation divides into two parts: the finance minister presents an "Interim Budget" before elections, followed by the new government's finance minister presenting the final Union Budget.
This division was last observed during the 2024-2025 budget cycle due to the 18th Lok Sabha elections scheduled between April and June 2024.
Budget's Economic Implications
The budget carries serious implications for India's economy through several mechanisms:
- Resource Allocation: Budget preparation ensures optimal resource distribution to fulfill various governmental goals and objectives, directly impacting public welfare and economic progress.
- Sectoral Support Indicators: The budget clearly indicates which sectors the government plans to support, revealing restrictions or leniency for specific industries. This serves as crucial signals for investors who may choose to invest in government-prioritized industries.
- Economic Direction: Overall, the budget reflects the direction in which the economy is headed, addressing key issues such as direct and indirect taxes that affect citizens in their daily lives.
- Financial Planning: The Union Budget helps individuals plan their finances better for the coming year by determining income tax slabs, rates, deductions, and calculation methods.
Budget Process: From Presidential Address to Parliamentary Approval
Constitutional Initiation
The entire Union Budget process begins with the President of India. Under Article 87, the President addresses a joint sitting of both Houses of Parliament—the Lok Sabha and the Rajya Sabha—at the start of the first session after a general election and at the beginning of the first session every year. This address sets the tone for the government's agenda and outlines policies, priorities, achievements, and plans for the year ahead.
Although delivered by the President, the speech is prepared by the Union Cabinet. Following the address, a "Motion of Thanks" is moved in both Houses, where members debate and vote on it, formally acknowledging the President's speech and the government's roadmap.
With the inauguration of the new Parliament building, this joint sitting continues in the new chamber. The President's role remains crucial, as the office stands at the constitutional apex of both the executive and legislature. The President's prior recommendation is required for Money Bills, including the Budget, making this step essential to its presentation.
Cultural Rituals and Traditions
Dahi-Cheeni Ceremony
Under President Droupadi Murmu, the custom of dahi-cheeni (curd and sugar) has gained renewed prominence. Finance Minister Sitharaman has met the President at Rashtrapati Bhavan on several occasions before presenting the Union Budget, where President Murmu offers dahi-cheeni as a cultural symbol of good luck and blessings for a successful Budget presentation.
Halwa Ceremony and Bahi-Khata Tradition
Before budget documents are printed and officials enter the confidential "lock-in" period, the finance minister participates in the traditional halwa ceremony. Additionally, the colonial-era briefcase has become part of history, as Finance Minister Nirmala Sitharaman introduced the tradition of carrying Budget papers in a red, folded cloth called a bahi-khata (ledger), reflecting indigenous cultural practices.
These rituals and traditions add cultural significance to the formal constitutional process, creating a unique blend of modern governance and traditional practices that characterizes India's democratic functioning.
