Two colleagues sharing a cab ride to office discuss the Union Budget ahead of the February 1 event.

Saisha: Yet, another Budget is upon us. So much will be written in the papers and discussed on TV channels.

Faiz: I just listen to the Budget speech. Then, I go back to work or trade. That's Budget day for me.

Saisha: Tuning in to the speech is good, but not exhaustive. If you really want to understand the Budget, read the documents. They are available within hours of the Budget presentation here: https://www.indiabudget.gov.in/

Faiz: You are assuming I never went there! Truth is I went and there are tens and hundreds of links and documents. So, I got confused.

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Saisha: You don't need to read all of them. There are about a dozen that contain all the relevant info. In fact, many from this list of Budget documents are presented to the Parliament, besides the Budget Speech. Do read the Annual Financial Statement or AFS.

Faiz: What's that?

Saisha: The AFS shows the estimated receipts and expenditure of the Government of India for the Budget year in relation to estimates made a year before as also actual expenditure for the year before that. The receipts and disbursements are shown under three parts under which government accounts are kept. The AFS distinguishes the expenditure on revenue account from the expenditure on other accounts. Do note that the revenue and the capital sections together, make the Union Budget.

Faiz: I keep on hearing about Demands for Grants. Is that a document too?

Saisha: Yes. The Constitution mandates that the estimates of expenditure from the Consolidated Fund of India included in the AFS and required to be voted by the Lok Sabha, be submitted in the form of Demands for Grants or DG. The DG are presented to the Lok Sabha along with the AFS. Generally, one DG is presented for each ministry or department. However, more than one demand may be presented, depending on the nature of expenditure. For instance, in Budget 2021-22 there were 101 DG.

Faiz: What about the Finance Bill? I have often seen markets react to disclosures in this bill.

Saisha: Good observation. At the time of presentation of the AFS before the Parliament, the Finance Bill is also presented. This details the imposition, abolition, alteration or regulation etc. of taxes proposed in the Budget. If an important tax measure is not announced in the Budget speech, but is found in the Finance Bill, there is some knee-jerk reaction.

Faiz: Is there no explanation document for the Finance Bill? Because it seems like a legal document to me.

Saisha: There is one. It’s called the memorandum explaining the provisions in the Finance Bill. It is to facilitate understanding of the taxation proposals contained in the Bill. The provisions and their implications are explained in that document.

Faiz: I have one more doubt. I have heard about the FRBM Act. Are there some documents related to this in the Budget?

Saisha: Yes, there are some statements mandated under the FRBM Act. Typically, the macro-economic framework statement and the medium-term fiscal policy cum fiscal policy strategy statement. Unless you are a hardcore macroeconomics guy, you can skip them.

Faiz: Thanks Saish. That's a lot to digest. Let me see how many documents I can read this time. And, we have reached office as well. Bye.

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