On October 10, the preparations for the Union Budget 2023 began in full earnest. From then till February 1, various departments of the government, especially Finance Ministry, will be a hive of relentless activity.
Most of the nation just sees the Finance Minister’s speech in Lok Sabha on February 1, but the budget itself is more than that. And it takes a lot of preparation, planning, coordination and forecasting to get to that day.
October-November
The budget process officially begins in September when a Budget Circular is issued, signed by Joint Secretary (Budget division) in the Finance Ministry. In it are fomats and timelines for submitting the relevant information with the Finance Ministry. This year, the pre-budget circular was issued on September, giving officials and financial advisors of other ministries more than a month to draw up a list of their requirements for revised estimates of the current year (FY23) and budget estimates for FY24.
These would include whatever the various central government ministries plan to spend on schemes, programmes, capital expenditure and administrative expenditure for the remainder of the current financial year and what they project to spend in the coming year.
From October 10 to November 10, officials from the Expenditure and Economic Affairs Departments are meeting representatives from all the central governments, ministries, agencies and union territories. The aim of these meetings will be to set RE for FY23 and BE allocations for FY24.
It is clear that allocating sums for the flagship schemes and for major welfare and economic ministries like agriculture, highways, power, railways, food distribution, education, health, and of course defence, among others, requires more of policymakers’ attention than that of other departments.
From mid-November onwards, the Finance Minister will start her own set of pre-budget consultations with various stakeholders and interest groups, like industry bodies, representatives from sectors such as agriculture, social and welfare sector, labour bodies, economists and others. Each of these interest groups present their own set of demands on what issues they would like the budget to focus on.
December
The Finance Ministry, by this time, goes into ‘quarantine’ and is shut to all outsiders. Paramilitary guards and Intelligence Bureau officials are placed in North Block, and especially outside the offices of key budget-makers. Secrecy becomes paramount.
Meanwhile, the Revenue Department starts drawing up its own estimates of what the revised tax proceeds could be for the current fiscal year and the projected revenue for the coming fiscal year, from income tax, corporate tax, Goods and Service Tax, custom duties and various cesses. Estimates are also drawn up by the relevant departments on what non-tax revenues will be for the current and next year, including spectrum sales, divestment, and dividends from the Reserve Bank of India, state-owned financial institutions and from the state-owned companies in various sectors.
The underlying assumptions for the coming financial year, including what could be the nominal GDP growth, the macro-economic state of play, and other such details are provided by the economic division, headed by the Chief Economic Advisor. At this time, the division is also working full-tilt on the Economic Survey, which is tabled in Parliament a day before the budget.
It should be remembered that the budget is not just a statement of accounts of the central government, but also a political document, which lays down the socio-economic vision of the Prime Minister.
There are inputs received from the ruling party’s economic wing, and a lot of the overseeing of the budget-making does happen in the Prime Minister’s Office. Given how centralized the Narendra Modi administration is, a lot of inputs also come in from PMO. By mid-December, all of the processes mentioned above start coming together.
January
The Finance Minister’s speech is written by many people, but the personal, finishing touches come from her. Part B of the speech, which mentions taxation announcements, is written by the Revenue Secretary. Part A of the speech, which contains views on the state of the economy, and announcements on various schemes and initiatives, is written primarily by the Economic Affairs Secretary.
In many cases, the Chief Economic Advisor also drafts part of the speech. For example, Arvind Subramanian did contribute to Arun Jaitley’s budget speeches. It is expected that Nageswaran could do the same for Sitharaman.
Activity reaches fever-pitch in this month. In early January, the National Statistical Office releases the advanced estimates for GDP for the current financial year. These assumptions are also worked into the budget calculations by budget-makers.
Estimates, like fiscal deficit, capital expenditure, revenue expenditure, centre’s gross borrowing, tax revenue, non-tax revenue and others are worked and re-worked. Work continues on drafting of all documents (and there are many, apart from the budget speech). The final contours of the shape of the centre’s economic vision are drawn up.
In mid-January, the process of printing the budget begins. The printing press is underground, below North Block. It starts with a traditional halwa ceremony. A number of key officials and printing staff are locked up in the Finance Ministry, where they will stay for the next couple of weeks.
Even as the printing process starts, numbers and paragraphs are still being worked upon. Many of the figures are finalized quite late.
All of this culminates on February 1, when the Cabinet approves the budget, the Finance Minister presents it to the President, then proceeds to Lok Sabha, where she rises at 11 am to begin her speech.