Why Union Budget is Presented on February 1?

January 15, 2025

The Union Budget of India is presented annually, specifically on February 1 since 2017. This date allows the government to make necessary financial adjustments before the fiscal year begins in April. Finance Minister Nirmala Sitharaman will outline India’s financial trajectory for the upcoming year. The change to February 1 ended a long-standing colonial practice.

Historical Context of Budget Presentation

Previously, the Union Budget was presented on the last working day of February.
This tradition persisted since colonial times.
The shift to February 1 was initiated by then Finance Minister Arun Jaitley in 2017.
The rationale behind this change was to provide the government with more time to implement financial adjustments before the new fiscal year.

Reasons for Changing the Budget Date

The primary reason for moving the budget presentation date was to end a colonial-era practice.
Additionally, it allowed the government a longer period to implement necessary changes.
The previous timing left little room for adjustments, which could impact effective governance.

Changes in Presentation Timing

The historical timing for presenting the budget was at 5 pm. This practice was altered in 1999 by Finance Minister Yashwant Sinha, who moved the presentation to 11 am. The shift was made to align with Indian time zones and to move away from colonial traditions that favoured British time.

Constitutional Provisions of the Union Budget

According to Article 112 of the Constitution of India, the Union Budget is known as the Annual Financial Statement. The Constitution does not explicitly mention the term “budget.” Key documents associated with the budget include the Annual Financial Statement, Demands for Grants, and the Finance Bill.

Key Budget Documents

The Union Budget comprises several important documents. These include the Annual Financial Statement, which outlines estimated receipts and expenditures. The Finance Bill contains taxation proposals. Additional documents provide detailed explanations of the budget’s provisions and implementation strategies.

Budget Preparation and Classification

The Department of Economic Affairs is responsible for preparing the Union Budget. The budget is classified into two main categories – the Revenue Budget and the Capital Budget. The Revenue Budget includes expected income from taxes, while the Capital Budget focuses on expenses related to government assets and infrastructure development.

Parts of the Union Budget

The Union Budget consists of two main parts. Part A includes the macroeconomic section, which announces government schemes and priorities. Part B involves the Finance Bill, which outlines taxation proposals, including revisions to income tax.

Arun Jaitley initiated the February 1 budget date change.
The Railway Budget merger aimed to improve financial health.
The budget presentation time changed from 5 pm to 11 am in 1999.
Article 110 defines a Finance Bill as a Money Bill.
The Union Budget is classified into Revenue and Capital Budgets.

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