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    Explained: How India and China prepare their annual budgets

    Explained: How India and China prepare their annual budgets

    Explained: How India and China prepare their annual budgets
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    By CNBCTV18.com  IST (Updated)

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    China essentially has had four budgets since 2015, but only calculates its official fiscal deficit based on one of them, while India's is made over a period of six months with the Budget Division of the Department of Economic Affairs (DEA) under the Ministry of Finance taking the main responsibility.

    Union budgets are some of the most important processes that a nation’s economy is witness to. Every nation’s economy is significantly impacted by the information in the budget and the policies that follow suit. 
    For a significant portion of history, India and China were the two of the biggest economic superpowers. But with the advent of the steam engine, rapid economic development in the west, and other factors, the two nations saw many decades of crippling economic deprivation. But now China is the world’s second-largest economy and India is the fifth largest. 
    But despite being neighbours, rivals, and new age growth stories the two nations have vastly different ways of forming their national budgets. 
    China
    China’s budget is presented in a bizarrely confusing way wherein it is separated into four separate sections which are not consolidated. The sections are divided based on cash flow and are presented by the Chinese finance ministry. The four budgets include the general budget, the budget of government-managed funds, the budget of state capital operations, financed by transfers of profits by state-owned enterprises and the social security fund budget. 
    Aside from these budgets, there are several extra-budgetary measures that local governments are privy to. Additionally, a lot of liabilities are not included in the central government’s budget but instead assigned to various local governments. 
    India
    The Union Budget or the Annual Financial Statement, as Article 112 of the Constitution calls it, is made over a period of six months with the Budget Division of the Department of Economic Affairs (DEA) under the Ministry of Finance taking the main responsibility for it. Through consultation, review and revisions the final budget, along with the accompanying finance bill is presented by the Finance Minister to the Parliament for discussion and approval. 
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