Introduction

• It is an annual financial statement of income (receipts)  and spending (expenditure) of the government for a particular financial year.
• The financial year starts from 1st April and ends on 31st March.
• Article 112 of the Indian Constitution requires the annual financial statement to be laid before the Parliament. 
• The budget is made through a consultative process involving the Ministry of Finance, NITI Aayog, and other ministries.
• The Budget Division of the Department of Economic affairs under the Ministry of Finance is the nodal body for preparing the budget.

Objectives of Budget

• To stimulate economic growth.
• Redistribution of Income (Reducing inequalities).
• Optimal allocation of resources.
• Employment generation and poverty reduction

Budget Estimates

The general budget has three sets of figures which are:  

• Actual Estimates: Estimates of expenditure and receipts of the preceding financial year.
• Provisional Estimates: Estimates of revenue and expenditure of the current financial year. 
• Budget Estimates: Estimates of the coming financial year.

The estimates are arrived at by one of the following three methods:

• Advanced estimates: These estimates are made before the actual occurrence of economic activity.
• Revised Estimates: Estimates which are revised in the mid-year, after the sex month’s actual economic trends. These estimates are based on changes in the economic scenario or actual occurrence of some economic activities.
• Quick Estimates: These estimates are based on sample surveys. Information gathered from the sample is used to predict the overall economic activity.

Rationale of Budget

• To ensure transparency in public finance.
• To ensure accountability of the government.
• To ensure advance planning. 
• To ensure financial control of the legislation over the executive.