The budget is such a big deal because it combines the exercise of many powers. Among them, the power to run deficits is special. In a competitive democracy, the pressures to spend always exceed the willingness to tax. This creates a fertile ground for excessive deficits, whose consequences are suffered by future generations.
The legal framework for fiscal discipline is provided under the Fiscal Responsibility and Budget Management (FRBM) Act. Passed in 2003 when the NDA was in power, and notified in 2004 by the UPA government, the FRBM law sets deficit caps (fiscal deficit of 3 per cent of the GDP and elimination of revenue deficit) and limits on debt and guarantees, among other requirements.