About Budget and its Importance

The whole nation will possibly look for several bold reforms in the newly formed budget this Thursday in a strong bid to turn around the economy, which has been going down consistently. Even though major changes to the taxes are not expected, there might still be a lot of positives to look at. The finance minister Mr. Arun Jaitley will put forward his maiden budget after his party won by a landslide victory in the month of May this year. It would not be wrong to admit that the upcoming budget has immense significance and the expectations of the people are also quite high as the party won with majority votes.

The significance of the budget is immense because it will affect the middle and lower income class groups in a strong way. It remains to be seen whether some steps against inflation will be taken by the new government or not. To understand the budget, it is important to be well versed with the key terms and structures.

Have a look at the key terms associated with the budget which you must know about.

Demand for Grants:

The statement of estimates of all the expenses related to various departments and ministries in India are incurred out of India’s consolidated fund. The estimates require the approval of the House of People in India.

Consolidated Fund of India:

All the revenues which are collected by the Indian government in the form of loans raised by it and the various recoveries and receipts of loans granted form the consolidated fund.

Contingency Fund of India:

This is the fund into which the current government of India dips its resources into in times of emergencies for the purpose of meeting some unforeseen expenditures. The fund is a little over Rs 500 Crores at present.

Capital/Revenue Expenditure:

All the expenditures which are incurred with the major objective of acquiring tangible assets that are permanent in nature can be classified as capital expenditure. However, the assets which are acquired for the normal running of the government system are related to revenue expenditure.  

Finance Bill:

The finance bill basically contains all the government proposals for the purpose of imposing some new taxes and modifying the present tax structure in the upcoming year. It forms an integral part of the government’s system.

The General Budget Paper’s Structure:

• Speech of the Finance Minister  
• Specific features of the budget
• Budget at a glance
• Annual Financial Statement
• Finance Bill
• Demand for Grants by the Central Government
• Memorandum Explaining the Provisions in the Finance Bill
• Fiscal Responsibility and Budget management Statement
• Receipts Budget
• Statement of Revenue Foregone
• Implementation of Budget Announcements

The General Procedure in Lok Sabha:

• General Discussion on the Budget
• Vote on Account
• Consideration of Demands for Grants
• Discussion and voting on Demand for Grants
• Appropriation Bill
• Finance Bill

These are some of the most important things which showcase the importance of budget in today’s time. The upcoming budget is one of the highly anticipated ones and we can just hope that it will bring some good fortune for the people of the middle and lower sections of the society. 

Tips for Financial Planning - Professional Tip for Indians

Much has been said and written about the benefits of financial planning. There is no denying the fact that financial planning is a must to usher in financial security for the individual and his or her family. There are however a lot of myths surrounding financial planning and a lot of common mistakes. Not everyone can be a financial planner and a number of people with self devised financial plans often end up in a messy financial situations. It is recommended to get the services of a professional financial planner especially when faced with a life changing situation like marriage or birth of a child. Let us look at some common financial planning tips that can help create a secure financial future.

Prepare and Stick to a Budget:
The basic principle of having a well developed financial plan is to spend less than one earns. It is easier said than done as most people fail to follow a savings plan involving keeping aside money for a rainy day. The best way to offset such a scenario is to create a monthly financial budget depending on the income and expenses and allocating some part for regular monthly savings. One big advantage of having a monthly financial budget is the fact that it brings transparency to the funds keeping you aware of where your money is being used. This can be helpful in cutting out any unwanted expenses and money used for savings instead.

Plan Finances:
Planning one’s finance is the most important part of any financial planning program. Financial planning begins by cutting out any unwanted expenses and paying and debts. Pay off any high interest debt or loans like credit card loans. This is significant as high interest loans like credit card debts can undermine even the best of financial planning. Having a well oriented financial planning program must include three intrinsic features, repaying old debt, creating emergency reserve funds and investing the money for wealth creation for both short term and long term. If you are not sure where to begin, hire the services of a professional financial planner to create your personalized financial planning program.

Have an Emergency Corpus:  
A well drafted financial plan must keep allowance for an emergency fund which can be useful in case of a sudden financial need or emergency. Ideally speaking an emergency corpus must cover minimum six month of all household and essential expenses. Keeping an emergency fund as a debt fund is recommended as it is safe investment option while offering returns on the corpus when left unused.

• A savings bank account is also a good option for keeping emergency corpus fund.
• Avoid keeping emergency fund as cash stacked din the house as it can be at high risk of theft or impulsive spending.

Start Retirement Planning early:
One big mistake a lot of people commit is that they keep retirement planning till very late in life. Retirement planning must be initiated in the early 20's as it offers the best time to devise a long term retirement planning solution. Since retirement planning works on the principle of compounding, the earlier one starts the better. Remember to take inflation into account while planning for your life after sixty and make sure your retirement corpus grows at a better rate than inflation rate.

Keep Reviewing your Financial Plan:
Remember financial planning is an ongoing process and one must always review the financial plan after every couple of years. Any major changes in life like marriage, birth of a child, a change in job or any other circumstances that can lead to alter one's risk capacity must be covered in a financial plan. The best way is to monitor one's investments and review financial plan annually.

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I am trying to provide the financial data and updates about Indian Economy.