Union Budget :A Festival

                                                     BUDGET CONCEPTS

 

  

 

Budget is an annual exercise and fascinates most of us. We always look as if our phones, vehicles, gadgets have become cheaper or expensive. But there is a larger picture to be seen. Fun fact is that discussions in India revolves around Cricket, Politics & Budget during a year. 
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We often see heated and deliberate discussions over budget before and after its announcement by Finance Minister (FM) of the country. But the fun part is most of the recommendations made by the experts never show up in his speech. There is always a pre-budget discussion and post-budget analysis. We see all stakeholders becoming some kind of economist throwing up their point of views on what to be done and what not. Editorials, Columns, Debates shows up various aspects of budget and they start a month before the announcements.
 


Unfortunately, there is a lack of awareness among  general public about what a budget actually is and what to be taken out of it?

So the first question:

What is a Budget?

Now every middle class household has some earning members (Income), spending prospects(Expenditure). Every month, suppose on day 1, the man of the house (although its a lady generally) checks his/her previous month income and expenditure and then plans his upcoming income and expenditure.




Now see this exercise in a bigger perspective i.e. monthly becomes annually and house hold becomes a country. This is annual budget building exercise.

Further, Budget speech of the finance minister consist of two parts:

A. Economic Survey of India

B. Budget for upcoming year

Also the Budget word comes from "bougette" which means a leather bag. We always see the finance minister posing with the leather brief case pretending the countrys future lies in hand.  Every one sees him with hopes and aspirations.

Trivia: The printing of budget documents starts roughly a week ahead of presenting in the Parliament with a customary 'Halwa ceremony' in which halwa (a sweet dish) is prepared in large quantity and served to the officers and support staff involved.

 

  

What is Economic Survey?

Remember, we talked about the man of the house preparing previous months financial reports. Economic surveys does the same thing on an annual basis i.e. reviews the developments in the Indian economy over the previous 12 months, summarizes the performance on major development programmes, and highlights the policy initiatives of the government and the prospects of the economy in the short to medium term. This document is presented to both houses of Parliament during the Budget Session. It is prepared by Chief Economic Advisor and Secretary of Economic Affairs. The data is collected from Central Statiscal Organisation (CSO).

It usually tells about:

1. Previous and expected Gross Domestic Product (GDP)*
 2. Per-capita GSDP (Gross State Domestic Product)
3. Industrial Growth.
4. States’ performance
5.  Non Performing Assets (NPA)
6. Job creation 
etc.

So next time you see discussion on economic survey, try to look for these figures and analyze these to get a good idea how the government is performing.
   



 **
1. GDP: GDP is the total value of goods and services produced over a specific time period; you can think of it as the size of the economy. Usually, GDP is expressed as a comparison to the previous quarter or year. For example, if the year-to-year GDP is up 3%, this is thought to mean that the economy has grown by 3% over the last year.The gross domestic product (GDP) is one of the primary indicators used to gauge the health of a country's economy.

2. NPAs: A Nonperforming Asset (NPA) refers to a classification for loans on the books of banks that are in default or are in arrears on scheduled payments of principal or interest. In most cases, debt is classified as nonperforming when loan payments have not been made for a period of 90 days.

 Thats it for now. Do read Part 2 for more insights.


Chao🙋
Prashant