Union Budget 2014-2015

Important details you should know about Union Budget


Friends, as you know, our Finance Minister Mr. Arun Jaitely has presented the Union Budget 2014-15on 10th July 2014. 

Introduction 
The budget is an extensive account of the government's finances, in which revenues from all sources and expenses of all activities undertaken are aggregated.
The Finance Minister presents the union budget every year in the Parliament that contains the Government of India's revenue and expenditure for one fiscal year, which runs from 1st April to 31st March.

Historical Preview

• The term 'Budget' is actually derived from a French word 'Bougette', which means a sack or pouch. It was first used in France in 1803.
• In the Constitution of India the term Budget is no where used. It is rather mentioned as Annual Financial Statement under Article 112 comprising the revenue budget, capital budget and also the estimates for the next fiscal year called budgeted estimates.
• As per the British Legacy, the Union Budget of India used to be presented on the evening of last  working day of the month of February to follow the British Budget.

Preparation of Budget 
The budget is prepared by the budget division in the Ministry of Finance (MoF), after consulting with other ministries and the Planning Commission. The process majorly includes following steps which may be sequential or overlapping too.

Stages in Budget Enhancement

1. The budget goes through the following six stages in the Parliament.
2. Presentation of the budget on the floor of the House before the Lok Sabha.
3. General discussion on the budget
4. Scrutiny by departmentally related standing committees
5. Voting on demands for grants
6. Passing of appropriation bill (Article 114 of the Constitution of India)
7. Passing of finance bill (under Rule 219 of the Lok Sabha)

Vote on Account

• If budget is not passed of before the beginning of financial year, then government use the concept of vote on account. Usually, the Appropriation Bill (expenditure part of budget) is passed by end of April, but government needs money from beginning of financial year, so government use vote-on-account to remove money from consolidated fund of India.

Types of Budgeting

• Line Item Budgeting : It emphasizes on the items (objects) of expenditure without highlighting its purpose. It gives object-wise (Line-item) classification in budget. Under this system, the amount granted  by the legislature on a specific item should be spent on that item only. 
• Output Budgeting : It concentrates only on the quantitative aspect of expenditure. 
• Performance Based Budgeting : Its attempt to solve decision making problems based on a programme's ability to convert inputs to outputs and use inputs to affect certain outcomes.
•           Performance may be judged by a certain programme's ability to meet certain objective that contribute to more abstract goal as calculated by that programmes ability to use resources efficiently by linking input to outputs. 
• Outcome Budgeting : This type of budgeting tries to ensure that budget outlays translate into concentrate outcomes. 
• Zero Based Budgeting : It is a method of budgeting, in which all budgetary allocations are set to nil at the beginning of a financial year. Zero-based budgeting requires the budget requests be re-evaluated throughly, starting from the zero-base. This process is independent of whether the total budget or specific line items are increasing or decreasing. Zero based budgeting also refers to the identification of a task or tasks and then funding resources to complete the task independent of current renouncing.
• Gender Budgeting : It came into being in 2004-05. To contribute towards the women empowerment and removal of inequality based on gender, role of budgeting has been accepted through this step.
• Programme Budgeting : It emphasis the planning aspect of budgeting for selecting the beset out of a number of available programmes and for optimizing the choice.

Quick Review of Some Important Facts about Budget

• John Mathai proposed the first budget of Republic of India in 1950 and also the creation of Planning Commision. 
• Finance Minister Morarji Desai has given budget for the maximum number of times (10 times - 8 budgets and 2 interims) followed by P Chidambaram, who has given 9 budgets (8 budgets and 1 interim).
• CD Deshmukh was the first Indian Governor of RBI to have presented the Interim Budget for the year 1951-52
• Mrs. Indira Gandhi is the only woman to hold the post of the Finance Minister and to have presented the budget in her capacity as the Prime Minister of India in the year 1978
• The first mini-budget was presented by TT Krishnamachari on 30th November, 1956, in form of fresh taxation proposals through Finance Bills, Demanded by the prevailing domestic and international economic situation. 

The year 2014 has seen two budgets. One Interim (presented by P. Chidambaram on 17th February 2014) and one General Budget (Presented by Arun Jaitley on 11th July 2014). You can download pdf versions from below.

Difference between Interim Budget and Union Budget  
As you know, every year on the last working day of financial year, the Government of India presents the Union Budget for the next financial year. However, if it is an election year just like it was in 2014, teh government can not present a full-fledged Union budget, because they can't be sure that they'll form the next government or not. This Kind of Budget is known as Interim Budget. The Interim Budget is a temporary budget as its name suggests, passed by the departing government. The interim Budget includes reports of all the expenses incurred and incomes by the government in the previous financial year. The interim budget also includes the likely expenses to be incurred in coming few months till the new government takes over. There are no proposals of incomes in this interim budget but information on collection of taxes.

Important Highlights of Union Budget 2014-2015:

New Projects and New Schemes:-

* 5 IIMs to be opened in HP, Punjab, Bihar, Odisha and Rajasthan

* 5 more IITs in Jammu, Chattisgarh, Goa, Andhra Pradesh and Kerala.

* 4 more AIIMS Hospitals.

* ‘Digital India  to ensure broad band connectivity at village level

* Kisan TV for farmers, Arun Prabha TV for northeast.

* Govt proposes Ultra Modern Super Critical Coal Based Thermal Power Technology

* A project on the river Ganga called ‘Jal Marg Vikas’ for inland waterways between Allahabad and Haldia; Rs 4,200 crore set aside for the purpose.

* EPFO to launch the “Uniform Account Number” Service for contributing members. One Account No For All.

* New programme “Neeranchal” to give impetus to watershed development in the country with an initial outlay of Rs. 2142 crores.

* Beti Bachao, Beti Padhao Yojana for girl child education.

* Swachh Bharat Abhiyan to cover every household with sanitation facility by the year 2019

Tax Policy and Monetary:-

Fiscal deficit target retained at 4.1% of GDP for current fiscal and 3.6 for 2015-16 and 3% for 2016-17.
Revenue Deficit seen at 2.9% for FY15
 Aim to achieve 7-8 per cent economic growth rate in next 3-4 years: FM
Committed for growth of agriculture at the rate of 4 per cent.
Defence FDI cap raised to 49% from 26% at present.
Exemption limit on income tax from Rs. 2 lakh to Rs. 2.5 lakh.
For senior citizens, the exemption on income has been raised to Rs. 3 lakh per annum.
Tax-free cap on home loan interest from Rs. 1.5 to Rs. 2 lakh.
No change in Income tax rates and slabs .
Annual PPF ceiling to be enhanced to Rs 1.5 lakh, from Rs 1 lakh
Minimum pension increased to Rs 1,000 per month
Amount Allocated To Various Schemes:-

* Rs 100 crore to support about 600 new and existing Community Radio Stations.

* Rs 100 crore for metro projects in Lucknow and Ahmedabad

* Rs 2,037 crore set aside for Integrated Ganga Conservation Mission called ‘Namami Gange’

* Rs 150 crore allocated for increasing safety of women in large cities

* Rs. 7,060 crore for the project of developing 100 Smart Cities.

* Set aside Rs 11,200 crore for PSU banks capitalisation

* Govt provides Rs 500 crore for rehabilitation of displaced Kashmiri migrants

* 1000 crore provided for “Pradhan Mantri Krishi Sinchayee Yojna” for assured irrigation.

* Rs. 50,548 crore under the SC Plan and Rs. 32,387 crore under TSP