Know
the budget definitions and key terminologies about budget in MoneyWiseMind.
Check details terms of budget and their impacts on our day to day
lives.
This year in February,
the Indian government presented an interim budget due to the Loksabha
Election in our country. After the election held in May, the new NDA government
was formed. Now the full size Budget will be presented on 23rd July, 2024 by our
Finance Minister Nirmala Sitaraman.
Budget can be a
difficult subject to understand. The different jargons used in the budget
are difficult to understand by the common people. So, we compiled a list of key
terminologies about budget to understand the complexity at ease.
𝐅𝐢𝐧𝐚𝐧𝐜𝐞 𝐌𝐢𝐧𝐢𝐬𝐭𝐞𝐫:
Finance
Minister or FM is the head of the finance department (Ministry of
Finance) of the Government of India. Present Finance Minister Nirmala Sitaraman
will present the full size Union budget on 23rd July, 2024,on behalf of the
newly formed BJP led NDA Government.
𝐈𝐧𝐜𝐮𝐦𝐛𝐞𝐧𝐭 𝐆𝐨𝐯𝐞𝐫𝐧𝐦𝐞𝐧𝐭:
A Government who is
holding the office currently in a country is known as an incumbent Government. At
present BJP led NDA is an incumbent Government of India.
𝐁𝐥𝐮𝐞 𝐒𝐡𝐞𝐞𝐭:
The blue colored
secret sheet which contains the key numbers and includes hundreds of pages
containing important budget documents is called the blue sheet. This blue sheet
is the main pillar of the complete budget process. It's so important that it is
kept secret even from the FM.
𝐔𝐧𝐢𝐨𝐧 𝐁𝐮𝐝𝐠𝐞𝐭:
A Union Budget is a comprehensive
report of the Government's financial policies in which revenues from all
possible sources and outlays in different activities on priority basis are
consolidated. As per Article 112 of the Indian Constitution a statement of
estimated receipts and expenditures, called the Annual Financial Statement is
to be presented before the parliament for each fiscal year.
This statement is the
main document. It contains the estimate of the revenues and expenditures of the
Government at the end of a fiscal year which starts from 1st April and ends at
31st March each year. The FM is in full charge to present the Union
Budget.
𝐈𝐧𝐭𝐞𝐫𝐢𝐦 𝐁𝐮𝐝𝐠𝐞𝐭:
In India an interim
budget is presented only on the condition of the Government's full year non
availability to present the full size Budget. If the Government does not have
enough time to present the full budget due to Loksabha Elections then only an
interim budget is presented by the existing Government. This year in 2024, we
have seen an interim budget was presented on 1st February, 2024.
𝐕𝐨𝐭𝐞 𝐎𝐧 𝐀𝐜𝐜𝐨𝐮𝐧𝐭:
When there are elections
and the incumbent government has not enough time to pass all the bills in the parliament,
the finance ministry brings the necessary bills on the table to secure parliamentary
approval for smooth running of the government ensuring all the commitments for
the next 2-3 months, this is called a 'Vote on Account'.
𝐃𝐢𝐫𝐞𝐜𝐭 𝐓𝐚𝐱 𝐚𝐧𝐝 𝐈𝐧𝐝𝐢𝐫𝐞𝐜𝐭 𝐓𝐚𝐱:
Taxes which are levied
directly levied on income of individuals, corporate bodies, institutions are
called direct taxes. Income tax, corporate tax are the examples of direct taxes.
Indirect taxes are levied on goods and services that we buy from the vendors.
Finally customers pay taxes. For examples GST, excise duty, customs duty.
𝐆𝐒𝐓(𝐆𝐨𝐨𝐝𝐬 𝐀𝐧𝐝 𝐒𝐞𝐫𝐯𝐢𝐜𝐞𝐬 𝐓𝐚𝐱):
GST is an example of indirect tax
levied on goods and services in the country. The seller charged this tax to the
customer, in turn seller deposits this tax to the government. On some goods and
services, the government allows the seller to claim for input tax credits. GST
came into effect from July, 2017 in India.
𝐂𝐮𝐬𝐭𝐨𝐦𝐬 𝐃𝐮𝐭𝐲:
It is also an example of indirect tax. This tax
is levied on imports and exports of goods and services. This indirect tax is
finally passes on to the customer.
Excise Duty:
A tax levied on the manufacturing of goods
within a country. It is an indirect tax that is included in the price of the
goods.
Finance Bill:
A bill presented in the parliament along with the budget,
detailing the imposition, abolition, remission, alteration, or regulation of
taxes proposed in the budget. It is the main part of the Union Budget. A finance
bill once permitted in the parliament, it transformed into a finance act. All
the procedures are enacted as per Article 117 of the Indian Constitution.
Fiscal Policy:
Fiscal policy is the measure through which the
government uses different weapons like Taxation, public spendings, public
borrowings to influence or control the economy. For an example, if the
government wants to control inflation, it raises taxes as it will reduce the
disposable income. It aims to manage economic stability, control inflation, and
stimulate growth.
Monetary
Policy:
The process by which the central bank (Reserve Bank of India)
controls the supply of money, interest rates, and availability of credit to
achieve economic objectives such as controlling inflation and ensuring economic
stability.
Inflation:
The rate at which the
general level of prices for goods and services rises, decreasing purchasing
power of the common people over a given period. Inflation is a broad based
concept such as it's an overall price rise or the rise of cost of living. It is
usually measured by the Consumer Price Index (CPI) or the Wholesale Price Index
(WPI).
Capital Budget:
Part of the budget that
deals with the government's investments in long-term assets like
infrastructure, machinery, and buildings. It includes capital receipts and
capital expenditures.
Revenue Budget:
Part of the budget that
deals with the government's current income and expenditure. It includes revenue
receipts (tax and non-tax revenues) and revenue expenditures (day-to-day
operating expenses).
Excess Grants:
Additional funds approved
by the parliament when the amount authorized in the budget for a particular
purpose, when the government needs sufficient funds for the purpose.
Budget
Estimate:
The estimated receipts and expenditures of the government for
the upcoming financial year, presented in the annual budget. Most vital part of
the budget, as it is the key document.
Re-appropriations:
The transfer of funds from one head of expenditure to another
within the budget. It allows the government to reallocate resources as needed
during the fiscal year on special permission of the finance ministry.
Outcome Budget:
A
performance measurement tool that assesses the outcomes of government programs
and schemes against the financial resources allocated. It aims to link outlays
with outcomes to ensure efficient use of funds.
Guillotine:
A parliamentary procedure where undiscussed budgetary grants are
put to vote on a specified date without further discussion. It ensures that the
budget is passed in a timely manner.
Public Account:
An account where transactions relating to debt, deposits, and
advances are recorded. It includes provident funds, small savings, and other
accounts.
Disinvestment:
The process of selling or liquidating the government's stake in
public sector enterprises. It aims to reduce the fiscal burden and improve the
efficiency of these enterprises.
Final Thoughts:
We
hope that now you can understand easily most of the terms about budget. As
budget in our country is an important event and there are so many things to
learn from it, so everyone must watch the budget event every year.
If you want to know more terminologies relating to budget, put your comment in the comment section. We will try to satisfy your query. Happy reading, happy learning.
Disclaimer: The information provided on MoneyWiseMind is for educational and informational purposes only. It is not intended to be financial advice, and you should not rely on it as such. Before making any financial decisions, you should consult a licensed financial advisor.
