Union Budget: What It Is & Why You Need To Understand It, Finance Expert Weighs In

India's first budget was announced in the year 1860 by a Scottish economist and politician James Wilson from the East India Company. Post independence, the first budget was presented by then Finance Minister R K Shanmukham Chetty. Ever since then, the budget continues to be delivered by the Finance Minister every year on February 1.

What Is the Union Budget?

In accordance with the Constitution of India's Article 112, a financial statement is presented in the parliament every year. The budget includes details of the government's revenue and expenditure in the fiscal year. It comprises both the revenue budget and capital budget. Further, it also includes the taxes in the budget.

An RBI document read, "Under Article 112 of the Constitution, a statement of estimated receipts and expenditure of the Government of India has to be laid before Parliament in respect of every financial year which runs from 1st April to 31st March. This statement titled “Annual Financial Statement” is the main Budget document. The Annual Financial Statement shows the receipts and payments of Government under the three parts in which Government accounts are kept: (i) Consolidated Fund, (ii) Contingency Fund and (iii) Public Account."

We asked financial expert Ms. Jyoti Bhandari, Founder and CEO, Lovak Capital, to share reasons on why it is important to follow and understand the Union Budget.

Why Is It Important For You To Understand The Budget?

Union Budget is an annual financial statement shared by the Finance Ministry every year and it is helpful for the citizens of India to understand the following things -

It helps to understand the economic path of the country and how its wealth distribution will ensure social justice and equality in the next financial year.

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The expert said, “For the common man, budget announcements mean tax SOPs and benefits, and how it is going to affect the pocket. What gets cheaper, and what will cost more is the primary reason most people follow the budget. However, it's more than that. The government is expected to optimally allocate available resources in the best interest of the country and the annual financial statement presented by the government of India helps to understand the vision of the government and how it fared in employing India's wealth to reduce unemployment and poverty level.”

With the budget, the government announces various tax deductions and changes in the direct and indirect taxes. This is one reason why it is important for you to follow the budget, especially if you are into business and service.

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The government also announces various subsidies with which they hope to eradicate poverty as well as reduce economic disparity. Another reason why it is important for you to keep a close eye on the budget. (How well do you know FM Nirmala Sitharaman)

Over the years, India has emerged as a bright spot in the midst of a global economic downturn. The Union Budget helps check the economic condition of the country. It also helps the citizens understand what measures the government is taking to control economic fluctuation.