Advertisement
This annual address holds significant importance on the economic calendar, shedding light on the nation’s financial priorities, resource allocations, and initiatives aimed at fostering economic growth.
With the impending Lok Sabha elections in 2024, this year’s budget, set for February 1, takes the form of an Interim Budget. As a temporary financial blueprint, it addresses immediate expenditures and government obligations during the transitional phase until the new government takes charge. A comprehensive Full Budget will follow post-Lok Sabha elections.
In a previous article, we explored the key considerations for understanding the budget (Click here to view it)
Related Articles
Advertisement
Here are 15 of the must-know terms associated with the budget:
1. Gross Domestic Product (GDP): GDP represents the total market value of all finished products and services produced within a country in a financial year. It serves as a benchmark to assess the economic conditions and is a key indicator of a country’s economic health.
2. Indirect Tax: Indirect taxes, such as the Goods and Services Tax (GST), are levied on the consumption of goods and services. Customs duty, excise duty, and VAT also contribute to the revenue from indirect taxes.
3. Direct Tax: Direct taxes, including corporate tax and income tax, are levied directly on taxpayers. These taxes constitute a significant portion of the government’s revenue.
4. Fiscal Deficit: A fiscal deficit arises when the government’s expenditures exceed its total receipts in a financial year. It reflects the gap between revenue and spending, indicating the potential need for government borrowing.
5. Economic Survey: Usually presented a day before the Union Budget, the Economic Survey offers an overview of the current financial year’s economic state. It sets the framework for the budget of the following fiscal year, providing insights into economic conditions and trends.
6. Budget Estimates: During the Union Budget presentation, the government allocates funds for projects, welfare schemes, ministries, and departments. These allocations, termed as budget estimates, represent the maximum amount the government plans to spend on specified areas. It is important to note that these are initial estimates and not final commitments.
7. Revised Estimates: As the financial year progresses, some ministries or departments may require more funds than initially allocated. In response, the government presents revised estimates, reflecting modifications to the allocations announced in the Union Budget. This allows for a dynamic adjustment based on the evolving needs of different sectors.
8. Inflation: Inflation refers to the sustained rise in the average level of prices within an economy. It signifies a gradual decline in a currency’s purchasing power over time. Understanding inflation is crucial for evaluating changes in the cost of goods and services.
9. Disinvestment: Disinvestment involves the government selling stakes in public sector companies to private players. This strategic move is aimed at generating revenue, and the government announces a divestment target in each Union Budget.
10. Capital Expenditure (Capex): Capital expenditure represents the government’s spending on infrastructure projects, asset upgrades, and the acquisition of new equipment. It covers costs related to purchasing fixed assets with the potential for future earnings.
11. Finance Bill: The Finance Bill, presented annually in the Parliament, outlines the government’s fiscal strategies. It delves into details of taxation, revenue, expenditure, and borrowings for the upcoming financial year. It serves as the legislative backing for the government’s tax proposals, encompassing modifications to existing tax rates or the introduction of new taxes.
12. Fiscal Policy: Fiscal policy refers to the government’s use of taxation and public expenditure to influence the economy. It plays a crucial role in promoting economic stability and growth.
13. Revenue Receipts: Revenue receipts are funds received by the government through taxes, fees, and other sources that do not create liabilities for the public exchequer.
14. Capital Receipts: Capital receipts involve funds raised by the government through borrowings and the sale of its assets.
15. Subsidies: Subsidies are financial aid provided by the government to support specific industries, commodities, or groups. They aim to promote economic activities and benefit targeted sectors.
Understanding these terms is fundamental for comprehending the nuances of the budget and its impact on the nation’s economic landscape. Stay tuned for our coverage and analysis following the Finance Minister’s budget speech on February 1.