The Union Budget 2024 has been the talk of the town over the last few days. With the BJP-led NDA alliance sworn in at the helm with the recently concluded Lok Sabha elections and various portfolios being allotted to Union Cabinet Ministers, the focus now shifts to the Union Budget for the Financial Year 2025.
Though there has been no confirmation as far as the dates are concerned, it is highly anticipated that the Finance Minister Nirmala Sitharaman would be presenting the budget on July 23 or 24 which coincides with the monsoon session of the parliament.
As we gear up for the Budget sessions, there is an inherent need to familiarise ourselves with important jargons pertaining to the Union Budget so as to understand and critically evaluate it.
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What is the Union Budget?
According to Article 112 of the Indian Constitution, the President shall lay before both the houses of the parliament the “Annual Financial Statement” which contains the receipts and expenditure of the country for each financial year.
This financial statement also known as the Union Budget contains a comprehensive report of the government’s revenues and expenditures of a fiscal year which starts from April 1 to March 31.
1. Capital Budget: In simple terms, Capital Budget consists of Capital Receipts and Payments. Capital receipts comprises of the loans raised by the government from the public, borrowings from the Reserve Bank and treasury bills, etc.
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2. Inflation: Inflation refers to the rise of the price level in goods and services. Inflation, if not nipped in the bud can lead to disastrous consequences. So, RBI steps in with its Monetary policy to address the problem of inflation. The tolerance range of inflation rate, as set by RBI, is between 2 per cent and 6 per cent.
3. Fiscal Deficit: One of the major contributors to inflation, the Fiscal deficit represents the total amount of money that the government needs to borrow to meet its expenditure. The gap is bridged through additional borrowings.
4. Direct taxes and Indirect taxes: Direct taxes are ones that are levied directly on individuals and businesses based on their earnings and profits. Indirect taxes, on the other hand, are levied indirectly when one buys goods and services.
5. Monetary Policy: It refers to the actions taken by the Reserve Bank of India (RBI) to achieve a sustainable economic growth by pumping liquidity, curbing inflation, and making changes with respect to interest rates.
6. Balance of Payments: Balance of Payments (BoP) is the difference between the total money entering a country and leaving over a specific period of time.
7. Contingency Fund: When there is a situation of emergency and the government cannot wait for the authorisation of the Parliament for funds, they withdraw it from the contingency Fund and subsequently get approval from the parliament. The amount withdrawn would be returned to the contingency funds later. This fund is just for emergencies.
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8. Consolidated Fund: Consolidated Fund of India includes all the Government revenues, recoveries of loans and loans raised. All the expenditure of the government incurred is from the consolidated fund of India and they cannot be withdrawn without the approval of the parliament.
9. Capital Expenditure: Capital Expenditure also referred to as Capital Payments which involves construction of infrastructure projects which help in contributing to the growth of the country in the longer run.
10. Revenue Expenditure: Revenue Expenditures are expenses incurred in running the government for its day to day operations.
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