Every year February India awaits its Union budget to know the financial health of the country and government policies and planning to boost the each sector of the economy at large. Independent India's first Budget was presented by first Finance Minister R.K. Shanmukham Chetty on November 26, 1947 for the seven and a half month-period from August 15, 1947 to March 31, 1948. Budget making is a complex process, that involves four phases.
Budget formulation: The preparation of estimates of expenditure and receipts for the ensuing financial year
Budget enactment: Approval of the proposed Budget by the Legislature through the enactment of Finance Bill and Appropriation Bill;
Budget execution: Enforcement of the provisions in the Finance Act and Appropriation Act by the government—collection of receipts and making disbursements for various services as approved by the Legislature; and
Legislative review of budget implementation: Audits of government’s financial operations on behalf of the Legislature.
The process of budget starts in August-September by the budget division in the department of economic affairs under the ministry of Finance.
The budget division, issues an annual budget circular around the last week of August or the fortnight of September.
To simplify the, lets say that Budget circular for year (2017-18) is issued, then the circular contains the entries of estimates (2017-18), revised estimates (2016-17), and actual expenditure (2015-16).
The real test of the budget maker is to pass the legislation which fiscally disciplines the government. The fiscal responsibility and Budget management (FRBM) act sets the target of keeping the revenue deficit nil and fiscal deficit below 3%.
The estimates from different ministries are collected and compared to previous estimates. Then the fund reallocations are worked upon.
The budget division then starts consolidating the plan and all figures and fact are made to put in the final document. It is assisted by the National Information Centre (NIC) in the computerized consolidation of the budget data.
Then finally the finance minister takes the permission of the president to present the budget in the parliament.