MAHARASHTRA NATIONAL LAW UNIVERSITY, MUMBAI.

Budget 2021 and 2022: Critical Analysis

Draft - I

Submitted By:
Name: Ayushman Singh.
Roll Number: 2021 130.
Section: A.
Year: 1st year.
Date of Submission: 1st April, 2022.

Submitted To:
Prof. Rohit Bhaskar Jadhav.
Assistant Professor (Economics).
Maharashtra National Law University, Mumbai.
 INTRODUCTION

This is the first draft towards the fulfilment of assessment in the Subject of Economics
– II. This research paper will focus on the critical analysis of the Indian annual budgets of years
2021 and 2022.

Research Problem:

To understand the research problem (i.e., Budget 2021 and 2022: A critical analysis)
we will need to understand what the annual budget actually means. In economics, a financial
budget entails estimating the business's long- and short-term income and expenses. Cash flow
estimates that are accurate help the company meet its objectives.

The development of a financial budget involves a detailed budget balance sheet, cash
flow budget, and the business's sources of income and expenses, among other things.
Depending on the suitability of the organisation, incomes and expenses are evaluated monthly,
quarterly, half-yearly, or annually. A financial budget is an extremely effective instrument for
achieving any company's long-term objectives. It also keeps the shareholders and other
members of the organisation informed about the business's operations.

Indian Government on Annual budget of India:

The Union Budget of India, also referred as The Annual Financial Statement, as defined
in Article 112 of the Indian Constitution, is the Republic of India's annual budget. The
government presents it on February 1st in order for it to be implemented before the start of the
new fiscal year in April. Until 2016, the finance minister presented it to Parliament on the final
working day of February. The budget division of the finance ministry's department of economic
affairs (DEA) is the nodal entity in charge of budget preparation. It is submitted in the form of
a Finance bill and an Appropriation bill, both of which must be enacted by the Lok Sabha
before they can take effect on April 1st, the start of the Indian fiscal year.

Every year there are some specific highlights in the annual budget, some of the
highlights of Union budget 2021 and 2022 are given below, which are descriptive in the
second draft of this very research project:

2021:

• Funds for Covid-19 Vaccination camps.

• Schemes to assist Discoms.
• PLI (Performance-Linked Incentive) schemes for 13 sectors.
• Development funds for Railways / Public Transport.
• Development of Financial Institutions (Central Banks).
• Rural Infrastructure Funds.
• Amendment of Section 16 of the CGST Act.
• Retrospective amendment to interest on late payment.
• Introduction of Advance tax on dividend income.
• Development of NMP (National Monetisation Pipeline) of potential assets of NHAI,
Railways, Airports, Warehouses, Sports stadiums, PGCIL. And many more highlights.

2022:

• Finalization of draft DPRs for five river links have been finished.
• Auction of 5G spectrum.
• Taxes introduced for Digital crypto currencies.
• RBI to introduce digital rupee using blockchain technology.
• Bharatnet project contracts for optical fibre networks will be launched and all villages will
be having access to same digital resources as in urban areas.
• Introduction of a national tele mental health programme.
• Increased focus on public investments to modernize infrastructure.
• PLI scheme for Atmanirbhar Bharat received a great response creating 60 lakhs of new
jobs.
• Aiming to develop 400 Vande Bharat trains with higher efficiency.

The Need of Union Budget

The importance of a union budget are as follows:

Planned approach to government activities: Due to a significant increase in government

activities, the need of a budget has increased. This necessitates the mobilisation of significant
resources to cover the costs of these initiatives. There must be a clear plan in place for the
anticipated revenue and intended expenditure.

Integrated approach to fiscal operations: The government cannot make taxation, borrowing,
spending, and other fiscal decisions at will. All of these decisions and policies are intertwined,
and they must be considered as part of the government's broader goals. This can be
accomplished with the help of a union budget.
Instrument of economic policy: A budget is a powerful tool for implementing the
government's many economic and social objectives. It is more than just a tool for raising
revenue and planning expenditures. It is a key tool for fostering economic development,
eliminating income disparities, and efficiently allocating resources, among other things.

Index of government's functioning: A budget is an important indicator of how well a

government is running. The efficiency of the government is reflected in its revenue and
expenditure planning. The absence of revenue and expenditure budgeting could lead to
government corruption, inefficiency, and insolvency. The budget is a reflection of the
government's performance.

Influences economic activities: The budgetary operations of the economy have a significant
impact on the economy's functioning. Since the beginning of planning, the size of the
government's revenue and expenditure in India has grown dramatically. Such large-scale public
transactions through the budget have a significant impact on the economy.

APPROACHES FOR STUDYING UNION BUDGET 2021 AND 2022

The Union budget is prepared by the Ministry of Finance with Niti Ayog and other
concerned ministries. The people who are concerned for this work are senior level IAS officers
called as Finance Secretary, Economic Affairs Secretary, Revenue Secretary, etc. These very
officers prepare the budget and later on it is circulated to all the ministries, after the acceptance
of the proposal there is scrutiny of the circular by the top government officials, after this process
the data is sent to the finance ministry; after the allocation of the revenues the budget is finally
presented. The union

There are difference social security measures on which the budget focuses on, such as
job creation, pandemic relief, and rehabilitation activities for people, particularly the elderly
such as migrants and immigrant populations, are also at the top of the budget since they
received a lot of attention. Growth challenges include income inequality, support for
overcoming educational challenges, incentives for macro-level investment, tax exemptions for
innovation and technological advancement that address pressing societal issues, transformation
of public transportation that meets societal needs and reduces default social distancing,
international collaboration on integrated vaccine improvement at international standards,
agriculture as a source of food, and agriculture as a source of income.
 Every year the officials take different aspects to prepare an ideal budget for the
betterment of the economy of the nation. There is a small comparison between the union
budgets of each year 2021 and 2022.

This basic comparison of the budgets of both years shows that budget of year 2022 has
better resources than that of year 2022. However, this is not necessary that the budget of year
2022 was better than the previous year has there are numerous aspects which are taken into
mind each year, and the government has to focus on different agendas each year.

The union budget of both years 2021 and 2022 are some kinds of special in themselves
as they were prepared at the time of pandemic as well as minding all the new factors which
needed to be included in the budget. Both of these budgets have some mentions of the pandemic
and the schemes to overcome the loss done due to the pandemic, this shows that someway or
the other public opinion also matters in the preparation of the budget. Coming to the ‘hidden
pressure’ which is over the officials while creating the budget is itself a very controversial
topic, as there are political agendas which are needed to be fulfilled and the government is also
affected by the public presentation of budget if the central elections are nearby.

Concluding, in the research paper a critical approach has been followed to study the
budget of both the years. The economic terms have been explained in a very simple manner
connecting it with real life examples of small scale. The research paper will mainly focus on
the analysis of budgets, but there are also some other factors which have been discussed in
detail which are necessary to build a basic idea of the analysis presented.