Introduction
Today, the Union Budget of India was presented in Parliament. For most people, Budget Day means tax slabs, prices, and quick headlines. But behind the spreadsheets and speeches lies something deeper. The Union Budget is not just an economic speech. It is a legal and constitutional exercise that reflects how the State governs public money.
This article is written in the immediate context of the Union Budget’s release to explore a question we often forget to ask: where did India get the idea of a Budget from, how did it evolve into a constitutional practice, and what legal rules and democratic culture now shape it?
The Foreign Roots of India’s Budgetary System
India’s budgetary framework did not originate in isolation. It was inherited from the British parliamentary system during colonial rule. The British introduced annual financial statements primarily to regulate revenue extraction and expenditure in the colony.
The first formal budget in India was presented in 1860 by James Wilson, following the British model of presenting estimates of income and expenditure before the legislature. This system ensured legislative oversight over finances, even though true democratic participation was absent at the time.
After independence, India chose not to discard this structure. Instead, it constitutionalised it. What was once a colonial administrative tool was transformed into a democratic mechanism of accountability.
The Budget as a Constitutional Document
In independent India, the Union Budget derives its authority directly from the Constitution. It is formally referred to as the Annual Financial Statement under Article 112.
The Constitution mandates that:
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The government must present estimated receipts and expenditures before Parliament.
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No money can be withdrawn from the Consolidated Fund of India without parliamentary approval.
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No tax can be imposed or collected without authority of law.
Articles 113 and 114 require Lok Sabha approval for expenditure, while Article 265 ensures that taxation remains strictly a matter of law, not executive discretion.
This makes the Budget a living constitutional process. Every allocation, tax proposal, or exemption exists only because Parliament allows it to exist.
Finance Bill: Where Policy Becomes Law
One of the most legally significant aspects of the Budget is the Finance Bill. It is through this Bill that taxation proposals are translated into binding law.
The Finance Bill:
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Is introduced along with the Budget
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Requires parliamentary approval
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Can be challenged judicially if it violates constitutional principles
This is why Budget announcements are not final on the day they are made. They acquire legal force only after legislative debate and passage. In this sense, the Budget is not merely policy. It is legislation in progress.
Limits on Government Power Over Public Money
The Constitution places clear limits on how the government handles public finances.
The executive cannot:
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Spend public money without legislative sanction
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Levy taxes arbitrarily
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Bypass parliamentary scrutiny in financial matters
Additionally, all government expenditure is subject to audit by the Comptroller and Auditor General of India (CAG). This ensures post-spending accountability and prevents misuse of public funds.
These limitations reflect a core constitutional idea: the government is a trustee of public money, not its owner.
Budget, Federalism, and Cooperative Governance
The Union Budget also reflects India’s federal structure. Though the Centre controls major taxation powers, states depend significantly on central transfers.
Through Finance Commission recommendations, grants, and shared taxes, the Budget becomes a tool of cooperative federalism. At the same time, debates around fiscal centralisation show how financial power continues to shape Centre–State relations.
Thus, the Budget is not just about national priorities but also about maintaining constitutional balance.
Budget as a Reflection of Democratic and Social Values
Beyond law and structure, the Budget reveals the moral and social priorities of the State. Allocations to education, health, defence, welfare schemes, and climate action signal what the government considers important.
Dr. B.R. Ambedkar warned that political democracy cannot survive without social and economic democracy. In that sense, the Budget becomes the yearly test of that promise. It shows whether constitutional ideals of equality and justice are reflected in economic decisions.
Conclusion: More Than an Annual Ritual
The Union Budget is often reduced to numbers and reactions. But at its core, it is a constitutional ritual rooted in borrowed history, shaped by legal discipline, and sustained by democratic culture.
Understanding the Budget as a legal instrument helps citizens move from passive consumption of announcements to active constitutional awareness. It reminds us that public money flows not from executive generosity, but from constitutional permission.