For the future generation, it is essential to comprehend how Union Budget changes may impact their investments and financial objectives.
Are you in college or just started working, and your dad talks about listening to the budget speech or reading about it every year? Then, you are not alone, and your parents might have a valid point.
Listening to the budget speech or reading about it might seem very dull to a lot of people. Still, young people need to focus on the budget presented by our Finance Minister on 1 February every year.
But, before going into details about its importance, let us try to know what the Union Budget is all about?
The Indian Union Budget is an annual financial statement presented by the Finance Minister of India in Parliament. It outlines the government's revenues and expenditures for the upcoming fiscal year.
The nodal organisation in charge of creating the budget is the department of economic affairs (DEA) under the finance ministry. Before it can take effect on 1 April—the start of the Indian fiscal year—it must be introduced through the finance bill and be approved by the Lok Sabha.
READ MORE: Budget 2023: What is the importance of revenue and capital budget? MintGenie explains
The Union Budget can be segregated into two main parts: Capital Budget and Revenue Budget.
The capital budget records capital expenditures and receipts for the government. Loans from the general public or the Reserve Bank of India (RBI) are considered capital receipts, whereas costs associated with building and maintaining medical facilities, educational facilities, and equipment are considered capital payments.
A revenue budget, as its name indicates, takes into account all revenue-related expenses and receipts. The government experiences a revenue deficit if the revenue cost exceeds the revenue received.
Now let us understand why it is essential for young people to pay attention to the Union Budget.
The budget, in general, is important as it outlines the government's economic policies and plans for the upcoming year, which can affect various aspects of our lives, such as taxes, subsidies, and public spending on various sectors, such as education, healthcare, and infrastructure.
It is better to be informed about the government's financial plans. The Union Budget is a major tool the government uses to shape the country's future, and citizens must understand how it affects them and their communities.
Employment and economic growth
The budget includes details on the government's plans for public sector investments in different sectors and industries, which in turn can affect the availability and stability of job opportunities.
For instance, last year's budget mentioned that the Production Linked Incentive (PLI) across 14 industries has the potential to create 60 lakh employment. In the current scenario, experts believe that the upcoming budget will focus on job generation as this is the last budget before the general election. So, understanding the budget might help young people make more informed decisions about their education and career choices.
The budget also includes allocations for various social welfare schemes and schemes targeted towards specific groups such as farmers, women, and the economically weaker sections of society. Hence, by knowing about the different welfare schemes, you might be able to help someone in need.
The budget also includes details on the government's plans for subsidies and tax exemptions, which can directly impact the prices of goods and services and people's disposable income.
READ MORE: Budget 2023 Expectations: What students and young professionals are seeking from the government
Price of goods
The budget tends to promote specific sectors such as infrastructure, agriculture and housing. However, it is important to note that the focus of the budgets will vary.
The budget can state the increase and decrease in the customs duty on the import of parts of machinery, tools and equipment. As a result, it might lead to an increase or decrease in the final product. The budget can also increase taxes on luxurious and nicotine items to curb spending and increase government revenue. This also impacts the purchasing power of individuals.
Hence, focusing on the budget can help you know the goods and services that are likely to get expensive or cheaper and make informed decisions about your financial planning and how to allocate your resources.
Experts expect fuel, gold and luxury items to get costlier than budget.
Impact on investments
The Union Budget might impact the overall economic environment and the performance of various sectors, which can impact the returns on investments. For example, changes in tax laws can affect the profitability of companies and the dividends they pay to shareholders, and changes in government spending can affect the growth prospects of certain industries.
In addition, the government's focus on certain sectors might positively impact the share prices of related industries and companies. Hence, if you enjoy looking out for short-term trade ideas, you might want to pay attention to the budget.
In conclusion, the Union Budget plays a crucial role in shaping the economic environment and the performance of various sectors, which can have a direct impact on the financial future of the next generation. For young investors and entrepreneurs, it's important to understand the potential impact of the budget on their investments and financial goals.
Padmaja Choudhury is a freelance financial content writer. With around six years of total experience, mutual funds and personal finance are her focus areas.