Revision summary
Union Budget is Article 112 plus Appropriation and Finance Bills. Ministries send estimates; DEA Budget Division and FRBM set the envelope; FM presents, usually 1 February. Railway Budget merged from 2017–18; CAG audits later. Plan spending was Five-Year Plan schemes; non-plan was interest, defence, salaries, subsidies. The plan/non-plan label ended in 2017–18; books now use revenue/capital and scheme types.
Model answer
Introduction
The Union Budget is the Annual Financial Statement under Article 112, plus the Finance Bill and Appropriation Bill that give it legal force. Making it is a year-long estimate cycle in the Finance Ministry. Plan and non-plan spending was the old Five-Year-Plan split; it was dropped from 2017–18.
Body
Budget-making process
- The Budget Division of the Department of Economic Affairs issues a circular; ministries send revised estimates and budget estimates through their Financial Advisers.
- Pre-budget meetings with NITI Aayog, the Reserve Bank, and industry, plus the Finance Commission’s tax-share frame, set the fiscal envelope under the FRBM Act.
- The Finance Minister presents the Budget in Lok Sabha (by convention 1 February). The Railway Budget was merged into this general Budget from 2017–18.
- Parliament holds general discussion, standing-committee scrutiny of Demands for Grants, guillotine, then the Appropriation Bill (Article 114) and the Finance Bill for taxes.
- Vote on Account (Article 116) funds the first weeks if the full grant is delayed. The Comptroller and Auditor General later audits what was spent.
Plan versus non-plan expenditure
- Plan expenditure was spending on Five-Year Plan schemes and Plan assistance to states; it was treated as “developmental” in the old books.
- Non-plan expenditure was the rest: interest, defence, salaries, pensions, and most subsidies — often the larger share, and not “non-development” in real life.
- The split distorted priorities (new Plan schemes over maintenance) and was abolished from Budget 2017–18 after an expert committee. Spending is now shown as revenue and capital, and as central sector versus centrally sponsored schemes.
Flow diagram
flowchart TD C[Budget circular estimates] --> E[FRBM envelope] E --> P[FM presents Art 112] P --> G[Demands Appropriation Finance Bill] G --> V[Vote on Account if needed] O[Old plan vs nonplan] --> N[Now revenue capital schemes] N[N] --> P[P]
Conclusion
Budget-making is circular, ministry estimates, FRBM envelope, presentation, and two Bills. Plan versus non-plan was a Planning-Commission-era label, not a true development test; capital versus revenue is the cleaner split in use today.
Quick related
Students also ask
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'Infrastructure plays an important role in the economic development of a country.' Discuss.
Next question in the 2023 paper (Q5). View answer →
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Is non-plan spending always wasteful?
No. Interest, defence, and school salaries were non-plan. The label hid maintenance and overstated ‘Plan’ as development.
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Who prepares the Union Budget?
The Finance Ministry (Budget Division, DEA) with ministry estimates; Parliament must vote the grants and tax law.
Same topic · past papers
UPPSC has asked this before
These previous-year questions sit on the same topic. Open one to practise the earlier ask.
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2022 · Q4 · UPGS3 · 8 marks
Financial inclusion is a critical part of the development process to achieve social justice. Comment.
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