Union Budget 2022-23: Jargon, FAQs

The government presents the budget to highlight its expenditure and receipts in a financial year.

Finance Minister Nirmala Sitharaman will present the Union Budget 2022-23 on February 1. It is that time of the year when citizens wait with bated breath for declarations, especially those related to income tax. Understanding budget as a whole is a challenging task as it involves many complex terms that many people are unfamiliar with. So, ahead of Ms Sitharaman’s budget presentation, here is a brief rundown of key phrases and frequently asked questions.

Union Budget: The government presents the budget to highlight its expenditure and receipts in a financial year. When revenue collection is equal to revenue expenditure in a year, it is said to be ‘balanced’. The term ‘revenue deficit’ refers to when the expenditure of the government exceeds its income. A ‘fiscal deficit’ occurs when expenditure, excluding borrowings, exceeds receipts in a particular year. Parliament should approve the budget.

Interim Budget: The interim budget of the government is usually presented in the last year of its term. Although it is similar to a full budget, the administration must obtain a vote on account in Parliament to approve funds from the Consolidated Fund of India, until the elected government approves the entire budget after elections. As part of the process, Parliament must also approve a vote on account, which empowers the government to spend until the full budget is approved after elections.

fiscal consolidation: The goal of this policy is to reduce the deficit and debt of the government.

Gross domestic product (GDP): It is the value of all officially recognized products and services produced in a given period. It is used to measure the standard of living of a country.

Revenue Expenditure: It is also known as an income statement expense, and refers to non-capitalized short-term cost-related assets. These are ongoing expenses that the government incurs on a regular basis to pay the workers and maintain the immovable assets.

Capital expenditures: It refers to the money spent by the government for the acquisition, maintenance or improvement of assets such as property, infrastructure projects, or buying new equipment. When the government spends money on large projects, the cost is usually classified as a capital expenditure.

aggregate demand: The term refers to the total quantity of goods and services demanded in an economy.

balance of payments: In the foreign exchange market, the difference between the demand and supply of a country’s currency refers to the balance of payments.

budget estimate: The funds allocated for various activities and ministries are determined at the time of presenting the budget. These figures are called budget estimates. They are the wishes and objectives of the government.

direct tax: It is a tax levied on the earnings of an individual or organization. Direct taxes include income tax, corporation tax, inheritance tax, etc.

Indirect Taxes: Consumers pay these taxes when they buy products and services.

Goods and Services Tax (GST): It was implemented on July 1, 2017 to bring several indirect taxes under one umbrella. It is a tax levied on the provision of goods and services.

Income tax: It includes earning of an individual from various sources like salary, investments and interest.

Custom duty: When specific goods are imported or exported into the country, customs duty is levied. These costs are passed on to the final consumer.

Monetary policy: It refers to the decision of the Reserve Bank of India (RBI) to change the money supply and interest rates, consequently affecting economic activity.

current account deficit: It is a measure of a country’s trade in which the value of imported goods and services exceeds the value of exported goods and services. It is part of the total balance of payments of the country.

revenue loss: When the income or revenue of the government falls below the estimated net income, there is a revenue deficit. It is a situation in which the actual revenue or expenditure differs from the budgeted estimates.

Revenue Surplus: This is the opposite of revenue deficit. Here, the net received income or revenue generation exceeds the estimated net income. Actual revenue and expenditure is higher than estimated in the budget.

Fiscal deficit: The fiscal balance of a country is determined by the government’s revenue versus its expenditure in a financial year. The difference between the two is the fiscal deficit – when the government’s expenditure exceeds its revenue. It is calculated in both absolute and percentage terms of the GDP of the country.

Government Borrowings: It is an amount borrowed by the government to pay for public services and benefits.

Disinvestment: It is a way in which the government sells or liquidates an asset. This is a calculative step to ensure that the proceeds from disinvestment are used elsewhere where they can yield maximum returns.

Inflation: It means the increase in the overall prices of goods and services in an economy over time. As the price rises, each unit of money buys fewer products and services.

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