Budget 2024- Here are key terms you should know before Budget session

Budget 2024: Here are key terms you should know before Budget session

Union Finance Minister Nirmala Sitharaman will be presenting the interim Budget for fiscal year 2024-25 on February 1, 2024. This will be the sixth consecutive year for the finance minister to present the Budget under the Modi-government. Given that the Lok Sabha elections are scheduled for early this year, the finance minister will present the interim Budget instead of a full-year Budget. The full budget for the fiscal year 2024-25 will be presented after the formation of the new government following the general elections. The Budget is allotted for the upcoming fiscal year, which runs from 1st April to 31st March of the next year.

Before the Parliament presents the interim Budget in February, here are few financial terms one should familiarize with:

Economic Survey: Unveiled during the Budget session, the Economic Survey serves as an important document providing an overview of the current fiscal year’s economic performance. It lays the groundwork for the presentation of the budget for the upcoming financial year.

Finance Bill: The government uses the Finance Bill as a document to introduce the policy of levying new taxes, making alterations in the tax structure or continuing with the existing tax structure.

Tax Revenue: Tax revenue is the amount of money that is collected in the form of taxes that is levied on your income, goods, and profits among other things. Tax revenue is the government’s primary source of income.

Direct Tax and Indirect Tax: Direct tax is the tax that is paid by an individual directly to the government. This constitutes both income tax and corporate tax. Indirect tax, on the other hand, is the tax paid by the people to a person/organisation/entity that holds the burden of paying tax to the government. This is paid in the form of GST, VAT and excise duties on a service.

Revenue Deficit: Revenue deficit is the difference in the amount spent by the government on everyday operations and its total income from taxes and other sources. Whenever a revenue deficit is generated, the Centre is expected to borrow money to balance the difference.

Fiscal Deficit: The term, fiscal deficit, refers to the difference between the total spending of the government and revenue receipts of the previous financial year. In order to bridge this gap, the government resorts to measures such as borrowing funds from the Reserve Bank of India, among other strategies.

Gross Domestic Product: Gross Domestic Product (GDP) is the measurement of the monetary value of all goods and services bought by the final user and that are produced within the country in a given amount of time.

Capital Expenditure: A country’s capital expenditure or capex includes the total amounts that the central government proposes to allocate for the development, acquisition, or depreciation of machinery and assets linked with economic development.

Budget Estimate: Budget Estimates are the estimated funds allocated to ministries, departments, sectors and schemes in the country. It determines how and where the money will be used and what costs will be incurred during a given period of time.

Fiscal Policy: Fiscal Policy is the policy adopted by the government where it uses taxation, public borrowing, and public spending to influence its economy so that sustainable growth is achieved. A healthy fiscal policy is very instrumental in controlling inflation.

Monetary Policy: This refers to the action taken by the Reserve bank of India (RBI) to control the supply of money in the economy. It is important to monitor the liquidity in an economy so that optimum growth is achieved.