31 January 2021

Eco Basics: What is the Economic Survey?

In India, there is hardly any economic event that captures popular imagination as much as the Union Budget. In this Budget series, The Explainer will focus on the complex budget jargon that puts off even 'interested-in-budget' souls.

What is a Fiscal Year?
Any twelve-month period that is used for submission of accounts, taxation purposes and to state financial reporting by private and public sector companies is called a Fiscal Year.

In India, the Government has laid down the provision that the 12month starting on April 1 and ending on March 31 of next year will be treated as a Fiscal Year.

To put it in perspective, this article is being written on 31 January 2021, i.e., in Financial Year 202021 (FY21). This is also called Fiscal Year ’21.

In the same way, the financial year for 202122 will start on 1 April 2021 and will end on 31 March 2022. So on 1 April 2021, we will enter Fiscal Year ’22. 

What is the Economic Survey?
The Finance Minister's Budget Speech contains two major components: Part A and Part B.

Part A of the Speech contains the Economic Survey while Part B comprises the Union Budget Speech.

The Economic Survey is an assessment of the performance of the Indian economy in the financial year going by. For example, the Economic Survey 2020–21 presents an assessment of the performance of the Indian economy in that financial year (i.e., 2020–21). 

The Economic Survey 2020–21 was tabled on 29 January 2020. You can access it here.

What is the Budget?

The Union Budget is a statement of revenues and expenditures for the coming financial year, i.e., the one that starts on April 1 of this year.

Why is the Union Budget presented in February?
The Finance Minister of India presented the annual Union Budget for 2021–22 in the Parliament of India on February 1. It is typically presented in February (and not in March) for the following reasons: 

(a) After its presentation, the Budget is tabled in the Parliament so that MPs can, over the next few days, discuss and debate the various provisions listed in the Budget. 

(b) After the parliamentary debate, any amendment to the original provision (like increasing or decreasing the allocation for a said ministry/program and rolling back any budget proposal) will have to be tabled, discussed, passed, and brought into law by the Parliament. 

(c) Also, the administrative system, especially in case of tax administration, would need to be geared up to reflect any change in the financial, taxation or any other system.

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