Budget 2026: How India's Union Budget Is Prepared, A Behind-The-Scenes Explainer

Union Budget 2026: The Union Budget of India, officially called the Annual Financial Statement under Article 112 of the Constitution, is the government's annual plan for revenue and expenditure for the next financial year. It sets out spending priorities, taxation policies, and fiscal targets for the economy.

When and Why Preparation Begins Early

Although the Budget is usually presented on February 1 each year, preparations begin much earlier, typically in August or September, about six months in advance. This long lead time allows detailed planning, data collection, consultation and analysis involving government ministries, departments, and economic experts.

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How the Budget Process Starts

The Department of Economic Affairs in the Ministry of Finance issues budget circulars to all ministries, states, Union territories, and autonomous bodies. These circulars request estimates of revenue and expenditure for the coming year. The inputs collected form the basis of the Budget exercise.

Review and Consultations

Once submissions are received, officials review and analyse the data. The Finance Minister, along with senior officials and experts - including inputs from NITI Aayog, line ministries and economic advisors, coordinates inter-ministerial consultations to align spending priorities and revenue projections.

Finalisation and Cabinet Approval

After detailed review and negotiations, the proposals are consolidated into a draft. The Union Cabinet or the Prime Minister gives final approval before the document is prepared for presentation in Parliament.

Halwa Ceremony and Secrecy

A key tradition in the budget process is the Halwa Ceremony, held about nine to ten days before presentation. It marks the start of the final phase of preparation and budget printing. During this ritual, senior officials and the Finance Minister share a sweet dish called halwa. After the ceremony, officials involved in drafting the Budget observe strict secrecy, often remaining within the Finance Ministry's North Block until the Budget is presented.

The Blue Sheet and Key Documents

One of the most critical pieces of the budget process is the Blue Sheet, a document containing key figures and financial estimates that underpin the entire Budget proposal. It remains confidential and controlled by senior officials until the final presentation.

Presentation in Parliament

The Finance Minister presents the Budget in Parliament, traditionally at 11 am on February 1. This date was adopted in 2017 to ensure Budget approval before the new fiscal year begins on April 1, replacing the earlier practice of presenting the Budget at the end of February.