Understand a ministry of finance in India that oversees financial institutions, taxation, financial legislation, capital markets, centre and state finances and much more.
In the Union Budget 2023-24, Finance Minister Nirmala Sitharaman presented a vision for ‘Amrit Kaal’, laying out a blueprint for an empowered and inclusive economy. This annual event, known as the “budget,” is held every year outlining the government’s fiscal policy and priorities.

Who holds the responsibility for executing this budget? The Ministry of Finance holds the responsibility for executing the budget along with overseeing financial institutions, taxation, capital markets, financial legislation, etc.
The Ministry of Finance serves as a cornerstone of the government, holding a crucial position in the country’s economic structure. This department is the lifeblood of the economy, entrusted with the task of devising and executing the nation’s fiscal and economic strategies.
Let’s delve deeper into this department and understand its role in running the economy.
Understand the Ministry of Finance
The Ministry of Finance, formed in 1946, is also known as ‘Vitta Mantralaya’.
Sir Ramasamy Chetty Kandasamy Shanmukham Chetty KCIE, distinguished as the first Finance Minister of sovereign India, made history by delivering the country’s first budget on November 26, 1947.
The Ministry of Finance, a vital component of the government, is tasked with managing the country’s financial assets. It includes preparing the yearly budget, collecting taxes, and supervising government expenditures.
Furthermore, the ministry is responsible for creating policies related to public finance and revenue. It holds a central position in the nation’s financial administration, which involves managing public funds, preparing the annual budget, and enforcing tax laws. In other words, it functions as the Indian Treasury Department.
It is also the regulatory authority of
- Indian Economic Service
- Indian Audit and Accounts Service,
- Indian Revenue Service, and
- Indian Civil Accounts Service.
What is the role of the Ministry of Finance?
The Ministry of Finance plays an essential role in the nation’s economic progression. It is tasked with the governance and advancement of the economy, which encompasses:
- Crafting the nation’s monetary strategy
- Distributing resources in line with national priorities
- Handling public debt
- Supervising financial institutions
- Gathering public resources
- Overseeing the capital market
The Ministry of Finance also supervises financial legislation, ensures macroeconomic stability, and contributes to the establishment of a favourable environment for economic expansion.
Furthermore, the Ministry is accountable for executing the government’s economic policies and initiatives, which include strategies to stimulate economic growth, maintain price stability, and uphold fiscal discipline.
The Ministry’s work impacts every aspect of the economy, from the macroeconomic environment to the financial health of individual citizens.
Composition of the Ministry of Finance
The Ministry of Finance has six departments, each responsible for a specific aspect of fiscal management.

1. Department of Economic Affairs
The Department of Economic Affairs is responsible for formulating and supervising the nation’s economic policies and initiatives. These policies and programs have both domestic and international implications.
This department’s primary role is to compile and present the Union Budget to Parliament and the Provincial Government Budget under the Presidential Act and manage the union premises.
2. Department of Expenditure
As the name suggests, this department manages the government’s expenditures. It is in charge of implementing financial rules and regulations, which encompass the service status of all Central Government employees.
This department determines employee’s salary structures and grades, wage policies, the introduction of new roles, revisions to the pay scale system, and the fundamental rules that govern payment structure settlement.
It also oversees other allowances for central government personnel, including house rent allowance, luxury allowance, daily travelling allowance, and many more.
3. Department of Revenue
The Department of Revenue is responsible for the collection of taxes and other forms of revenue. This department controls all direct and indirect taxes through two statutory boards. They are the Central Board of Indirect Taxes and Customs (CBITC) and the Central Board of Direct Taxes (CBDT).
Here, the CBDT imposes and collects all direct taxes. On the other hand, the CBIC imposes and collects customs and central excise duties, along with other indirect taxes.
4. Department of Investment & Public Asset Management
As the name suggests, this department manages the government’s investments and assets. It supervises the government’s investments in equity, including the process of disinvestment in companies owned by the central government.
5. Department of Financial Services
This department is responsible for overseeing a broad range of sectors. This includes the banking industry, insurance companies, and various financial services offered by both government entities and private corporations.
6. Department of Public Enterprises
The main focus of this department is to manage policies related to Central Public Sector Enterprises (CPSEs). It involves establishing policy guidelines for enhancing performance, evaluation, autonomy, financial delegation, and personnel management within CPSEs.
Role and responsibilities of finance minister
The Finance Minister, who leads the Ministry of Finance, plays a vital role in guiding the country’s economic trajectory and maintaining fiscal discipline.
Additionally, the Finance Minister is tasked with collaborating with other ministries and departments to ensure the effective execution of the government’s economic policies and programs.
Since 2019, Nirmala Sitharaman has been serving as the Minister of Corporate Affairs and Minister of Finance of the Government of India.
The Finance Minister is tasked with supervising the country’s economic and financial policies. The duties of the minister include:
- Enforcing the government’s fiscal policy
- Controlling government spending
- Presenting the yearly budget in the parliament
- Regulating financial institutions and
- Supervising the collection and distribution of revenue
Conclusion
The Ministry of Finance, with its intricate organisation and extensive duties, is a key player in sculpting a nation’s economy. By efficiently administering public funds and enforcing prudent fiscal strategies, the ministry substantially aids in the nation’s economic expansion and stability. Indeed, the Ministry of Finance acts as a master planner, crafting and constructing the nation’s economic terrain.
DISCLAIMER: This article is not meant to be giving financial advice. Please seek a registered financial advisor for any investments.
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