How is a Budget prepared by the government?

NEW DELHI: Budget is the annual financial statement of a government which lays out fiscal roadmap for the country for the next one year. It is prepared by the ministry of finance in consultation with Niti Aayog and other concerned ministries.


The Budget division of the department of economic affairs (DEA) in the finance ministry is the nodal body responsible for producing the Budget.

Budget-making process starts in August-September, that is, about six months prior to its date of presentation.

It needs to be passed by both houses of Parliament before beginning of the financial year, that is, April 1.

1) Issuance of circulars to all ministries
A circular is issued to all ministries, states, Union territories, autonomous bodies by the finance ministry asking them to prepare estimates for the coming year.

The circular comprises skeleton forms along with requisite guidelines based on which ministries present their demands.

Apart from providing their estimates, the ministries also give a detail of their revenues and expenditures in the past year.

2) Consultations on proposals received
After requests are received, it is then scrutinised by the top officials of the government. Extensive consultations are undertaken between the ministries and the department of expenditure.

Upon approval, the data is then sent to the finance ministry.

3) Allocation of revenues
The finance ministry, after going through all recommendations, allocates revenues to various departments for their future expenditures.

In case dispute arises over allocation of funds, the finance ministry consults the Union Cabinet or the Prime Minister.

Other stakeholders like farmers, small business owners, foreign institutional investors are also consulted by the DEA and department of revenue to gain more insights.

4) Pre-Budget meetings
The finance minister holds pre-Budget meetings with various stakeholders to know about their proposals and demands. These stakeholders include state representatives, bankers, agriculturists, economists and trade unions.

Once the pre-Budget consultations are done, the finance minister takes the final call on all demands. It is also discussed with the Prime Minister before finalisation.

5) Budget printing
Every year, the government follows an annual tradition of hosting a halwa ceremony, a few days before the Budget is presented. The ceremony marks the beginning of printing of Budget documents.

As part of the ritual, 'halwa' is prepared in a big 'kadhai' (large frying pot) and served to the entire staff in the finance ministry.

The significance of the event is that after the sweet dish is served, a large number of officials and support staff, who are directly associated with the Budget making are required to stay in the ministry and remain cut off from their families till the presentation of the Budget.

However, unlike the past years, the voluminous budget documents will not be printed this year following the Covid-19 protocol and will instead be distributed electronically to the Members of Parliament (MPs).

6) Presentation of the Budget
Finance minister presents the Budget in Lok Sabha. Until 2016, it was presented on the last day of February. However, from 2017 the Budget has been presented on February 1 every year.

Finance minister Nirmala Sitharaman has promised that

Budget 2021

will be one never seen before.

For the first time, all Budget documents will be available on the

Union Budget

mobile app launched recently.

Stay informed with the latest Business News on Times of India. Explore updates on International Business, gain insights with Financial Literacy tips, and make use of Financial Calculators. Don’t forget to check the list of Bank Holidays in 2025, including Bank Holidays in January.


Ready to Master Stock Valuation? ET’s Workshop is just around the corner!