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  • How Does Government Prepare Its Union Budget Every Year?

How Does Government Prepare Its Union Budget Every Year?

The Union Budget is an essential document that outlines the government's fiscal plans for the upcoming year. Its preparation begins six months before the presentation, with consultations involving ministries, states, and key stakeholders.

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How Does Government Prepare Its Union Budget Every Year?

Key Steps in Preparing India’s Union Budget Every Year


The Union Budget is one of the most important financial documents in India, outlining the country’s fiscal roadmap for the coming year. Prepared by the Ministry of Finance, it is a comprehensive statement of the government’s revenue and expenditure plans. Let’s take a closer look at how the Union Budget is crafted each year, from the initial consultations to the presentation in Parliament.

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Step 1: Issuance of Circulars to Ministries and States

The budget-making process begins around August or September, roughly six months before the presentation. The Ministry of Finance sends out circulars to all ministries, states, Union territories, and autonomous bodies, asking them to prepare estimates for the upcoming year. These estimates include detailed data on revenue and expenditures from the previous year, as well as proposals for the next fiscal year.

Step 2: Scrutiny and Consultations

Once the proposals are received, they undergo thorough scrutiny by senior officials in the Ministry of Finance. The Department of Expenditure reviews the requests, and extensive consultations are held with various ministries. The data is then analyzed and forwarded to the finance ministry for further assessment.

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Step 3: Allocation of Revenues

After reviewing the proposals, the Ministry of Finance allocates funds to various departments based on their requirements. In case of disputes over fund allocation, the Finance Ministry consults the Union Cabinet or even the Prime Minister. Input from key stakeholders, such as farmers, small businesses, and foreign institutional investors, is also considered.

Step 4: Pre-Budget Meetings with Stakeholders

The Finance Minister holds pre-budget meetings with a variety of stakeholders, including state representatives, economists, bankers, and trade unions. These consultations provide valuable insights into the needs and expectations of various sectors. Based on these discussions, the Finance Minister makes final decisions, which are further discussed with the Prime Minister before being finalized.

Step 5: Budget Finalization and “Halwa” Ceremony

Once the proposals are reviewed and finalized, the government begins the process of preparing the budget documents. Traditionally, this is marked by the “Halwa Ceremony,” where sweets are served to the staff working on the budget. This ritual has significance, as those involved in preparing the budget remain cut off from their families until the documents are ready for presentation.

However,after  Covid-19 pandemic, the government transitioned to a paperless budget format. As a result, the printing of physical documents has been discontinued, and the budget is now presented digitally. In 2022, the “Halwa Ceremony” was modified, and sweets were distributed among selected members due to pandemic protocols.

Step 6: Presentation of the Union Budget

Finally, the Finance Minister presents the Union Budget in the Lok Sabha. Historically, the budget was presented on the last day of February, but since 2017, the presentation has been moved to February 1 each year. The budget sets the tone for the country’s fiscal policy and is eagerly awaited by the public, business leaders, and government officials alike.

A Detailed Process to Shape India’s Future

The preparation of the Union Budget involves multiple steps, consultations, and careful planning to ensure that the government’s fiscal decisions align with the country’s economic priorities. By the time it reaches Parliament, the budget has undergone extensive scrutiny and is a result of collaborative input from various sectors. This process ensures that the Union Budget provides a comprehensive framework for India’s economic growth and development for the upcoming year.

ALSO READ: ‘Actual Businessmen Must Run The Finance Ministry’: Ashneer Grover Ahead Of The Union Budget 2025, WATCH

Filed under

Budget 2025

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