 "New Parliament Building")
Budget 2024: India's Union Budget for the next financial year (2024-25) is set to be presented by Finance Minister Nirmala Sitharaman on February 1. However, the upcoming budget will be an interim budget and not a comprehensive one due to impending Lok Sabha elections, likely scheduled during April-May.
As the name suggests, an interim budget is a provisional measure designed to cover expenditures until a new government is elected. Thereafter, the full budget will likely be introduced by the newly elected government around July.
The annual budget process is the foundation of any country’s financial planning. The crucial financial exercise paves the way for the design and implementation of different welfare schemes, the government’s expenditure, revenue and other policies.
Here is a curated list of key terms to help you simplify the intricacies of financial planning:
Budget At A Glance
Budget at a Glance is a reader-friendly guide that explains all the data related to the Union Budget. It is a simplified document that describes the gist of all broad aggregates and estimates. It shows all receipts, expenditures, fiscal deficit, revenue deficit, primary deficit of the Government of India.
Annual Financial Statement
The Annual Financial Statement is a document comprising the details of the government’s finances presented to Parliament every financial year. As part of the budget process, this key document is constitutionally required to be presented under Article 112 of the Constitution of India. It contains receipts and expenditures of the government in the current year, the previous year and the Budget year in three separate parts — Consolidated Fund of India, Contingency Fund of India, and Public Account of India.
Tax Revenue
The government’s income gained by the taxation process is termed as the tax revenue. It forms a part of the Receipt Budget, which in turn is part of the Annual Financial Statement of the Union Budget. It is the application of a tax rate to a tax base and is collected via two methods: direct tax and indirect tax.
More From This Section
Direct tax is the tax that is paid directly to the government by the person or company on whom it is levied, such as income tax, wealth tax, or corporation tax. At the same time, indirect taxes are those that intermediaries collect from individuals and corporations who bear the burden of the tax and passed on to the government. Goods and Services Tax (GST) is an example of an indirect tax.
Non-Tax Revenue
The non-tax revenue is the government’s recurring income. These include our utility bills, toll taxes, interest collected on the loans among other services.
Revenue Deficit
The revenue deficit occurs when the government's total revenue expenditure exceeds its total revenue receipts. This includes those transactions that have a direct impact on the government's current income and expenditure and happens when the actual amount of revenue and/or the actual amount of spending do not correspond with the budgeted revenue and expenditure. The revenue deficit can be calculated by subtracting total revenue expenditure from total revenue receipts.
Fiscal Deficit
A country’s fiscal deficit is the total money spent by the government in excess of its income, with the income figure including only taxes and other revenues and excluding money borrowed to make up the shortfall.
Gross Domestic Product
Gross Domestic Product (GDP) is the final monetary value of the goods and services produced within the country during a specified period of time, normally a year. In simple terms, GDP is the measure of the country's economic output in a year.
Capital Expenditure
Capital expenditure is the government’s investment or development spending. This includes the money spent on the development of machinery, equipment, buildings, health facilities, education, etc. This is why capital spending is associated with expenditure, which has benefits extending years into the future.
Budget Estimate
The budget estimate is the approximation of funds that are allocated for various activities and ministries. The finance minister presents this during the annual budget speech in the Parliament. Budget estimates represent the government's wishes and ambitions. Later, the government also revises its estimates, suggesting how the expenditure is likely to pan out.
Fiscal Policy
Fiscal policy, in simple terms, is an estimate of taxation and government spending that impacts the economy. There are two types of fiscal policy: Expansionary and Contractionary. While the former is designed to boost the economy, mostly used in times of high unemployment and recession, the latter is designed to slow economic growth in case of high inflation.
