Nirmala Sithraman, Union Budget 2023: The Union Budget is technically called the Annual Financial Statement.

Union Budget 2023-24: Finance Minister Nirmala Sitharaman will present the budget on February 1

Union Budget 2023-24: Finance Minister Nirmala Sitharaman will present the Union Budget 2023-24 for the next financial year on 1 February. The next general election will be held in early 2024, so this budget will be the last full budget for the current government. Before presenting the Union Budget, it is necessary to know how the budget is prepared.

An annual financial statement is Union's Budget

The Union Budget is technically called the Annual Financial Statement. Indeed, the budget has traditionally been seen as the most influential tool in the hands of any government to indicate its choice of policies.

Any budget essentially provides three big details. The total amount of money raised by the government in the coming year is called total receipts. Second, the total amount of money she will spend is called total expenditure. Third, how much money he will borrow from the market to fill the gap between the money he spends and what he earns, this is called a fiscal deficit.

At first glance, the Union Budget appears to be the biggest economic news event of any year. Before the budget, it may seem that the Union Budget can solve all the problems of the Indian economy. It is expected that as the size of the Union Budget increases, higher government expenditure will propel the economy. Know who presented the first budget of India.

What is the size of the economy?

Before the Union government can decide on its revenue and expenditure plans, it needs to know how the overall economy will fare in the coming year. This is because its revenue will depend on the size of the overall economy and its growth rate. To reach that number, the government will first have to work out what is the expected size of the economy in the current fiscal year (April to March). Keep in mind that the current financial year would not have ended yet at the time of the presentation of the budget.

Keep these things in mind while making budget

Nominal GDP (or what will be the size of the economy next year?)

The starting point of next year's Union Budget is to find out the "nominal" GDP of the current year. Nominal GDP is nothing but the total market value of all the goods and services produced in India in a financial year.

Fiscal deficit (or how much money can the government borrow?)

Generally, governments in India are forced to spend more than they earn. That is, they have to borrow money from the market. But India put in place strict rules limiting how much can be borrowed by the central government. These limits are set by the Fiscal Responsibility and Budget Management (FRBM) Act. The FRBM Act stipulates that the total borrowing (fiscal deficit) cannot exceed 3% of GDP (nominal).

Total revenue (or how much money can the government raise on its own?)

Once the government realizes that it can raise the maximum amount of money by borrowing, it turns its attention to its total revenues. The challenge now is to find out how much money can be raised through various means.

Total expenditure (or the maximum amount one can spend and where?)

By now the government knows both how much money it can raise on its own and how much money it can borrow. Together they provide it with a total corpus that it can spend on various old or new schemes.