Explain the Process of the Budgetary Cycle in India

• A budgetary cycle refers to the process by which a government allocates its financial resources for the upcoming fiscal year.

Annual Financial Statement 

• The Union Budget of India also referred to as the Annual Financial Statement in Article 112 of the Constitution of India, is the annual budget of the Republic of India.

Five phases: 

Formulation:

• This is the stage where the government develops its budget proposal. The executive branch, typically the Ministry of Finance, takes the lead in this stage.
• They gather data on the government’s revenue and expenditures, as well as input from various government agencies on their spending needs.
• This may involve several meetings, hearings, and revisions before a final budget proposal is submitted to the legislature.

Appropriation:

• Once the budget proposal is submitted to the legislature, it is reviewed and debated by the legislative body. The legislature has the power to approve, modify, or reject the budget proposal.
• This stage can be very political, as different parties may have different priorities for government spending.

Enactment:

• After the budget is approved by the legislature, it is signed into law by the head of state.
• This is the final stage of the budgetary cycle, and it marks the point at which the government is authorized to spend money according to the approved budget.

Execution:

• Once the budget is enacted, the government begins to implement it. This involves spending money on the programs and services that have been approved by the legislature.
• The government must also track its spending and ensure that it is staying within the budget limits.

Audit:

• After the end of the fiscal year, the government’s financial records are audited by an independent auditor.
• The auditor examines the government’s spending to ensure that it has complied with the approved budget and that there has been no fraud or waste.

Budget proposals – information: 

Accounts classification 

• Budget estimates of the current year 
• Revised estimates of the current year 
• Actuals for the previous year; and
• Proposed estimates for the next financial year. 

• Financial Year When the first modern budget was presented in 1860, the financial year adopted by the government was from 1st May to 30th April. 
• Beginning with the year 1866, however, the financial year was changed to 1st April to 31stMarch, in conformity with the practice in England.