Budget was the common word across TV, Print and Web during the last week of February in India. How many of you understand what a budget is? Let me explain it to you in five simple steps
It is an estimate of the income and expenditure for a given period. The budget can be for an individual, a family, a community, a company, a state, and for a country. So when one refers to the Union Budget, it is understood that it is the budget of the whole country.
In India, we have a separate budget for the Railways and another budget for the country as a whole. Normally, the Railway budget is announced two days prior to the union budget. Why do we have a separate budget for the Railways?
The practice started in 1924 during the British rule.
c)Main Components of the Budget
The country looks forward to the budget announcements as the Union Budget spells out how much each ministry will be able to spend on its schemes and programmes during the coming year. It talks about the major income sources, ways of boosting the production of goods and services in the country by extending various kinds of concessions such as lower taxes. It also announces how much money wil be set aside by the government for spending on food grains, kerosene, etc. The government sells these items at lower costs to the people who have smaller incomes.
d)Main Income Sources of the Government
The major income sources are through the taxes levied at various levels. That means all goods and services produced in the country are taxed by the government Any individual who draws a salary above a certain amount is also required to pay tax. There are various kinds of tax – income tax, service tax, sales tax, etc. in India. For example, if you buy a car or a bike, the owner pays a fixed amount of tax in the form of road tax. And this road tax or the tolls collected are being used to develop more roads in the country.
The major expenses of the government are to meet the expenses of the subsidized things in the country. The major allocation of the expenditure/ fund goes to defence and aero space, infrastructure (developments of road, ports, building electricity capacity etc).
In the budget speech the Finance Minister instead on increasing the use of electronic money. One was left wondering why the FM took such a firm stand on promoting electronic money. What are electronic transactions? In simple terms it means there is no exchange of physical money. A transaction made through debit card, credit card or net banking is primarily defined as electronic money. Eg when someone buys a TV and makes the payment through debit card, then this transaction qualifies under electronic transaction.
India as country is battling to curb the flow and use of black money. The finance minister through this step meant to put a stop to the black money movement in the country. If more and more people opt for the said route, it will be easy for the authorities to track the source of money and the exchange of money in the country.
The second reason behind this movement is that, when you reduce the physical exchange of money, it prevents the soiling of currency. You may have noticed that many a times the currency note we get in our hands are soiled and torn. Electronic transactions will, over a period of time will reduce the burden on the government to print notes.
The third reason is aimed at reducing the cost of banking in the country. Earlier, the check books, the ATM cards, and many other facilities were offered to the customers free of cost. However, the customers are being charged for all the facilities offered by the banks in the past few years.