Terms about the Union Budget you should know

Union Budget terms you must know

Here’s a list of Union Budget terms that will help you analyze the budget announcements better:

1. Union Budget

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   The term Union  Budget has been defined under Article 112 of the constitution of India as the expected expenditure and receipts of each year. In simple terms, the Union Budget represents the government’s financial policies, planning, and expenditures for the given year. A fresh Union Budget is announced for every financial year.

   
   

2. Fiscal policy

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   Simply put, fiscal policy represents the government's intention to influence the country‘s economy based on its revenue and expenditure. Therefore, these policies include tax changes, income tax slabs and several other monetary policies that influence the country’s economy and promise profits for the government.

   
   

3. Economic survey

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   The economic survey is prepared by the Finance Ministry's Economic Division of the Department of Economic Affairs under the guidance of the Chief Economic Advisor and is scrutinised by the country's financial secretary. Each year, the government prepares an economic survey report of various sectors and industries before presenting the new Union Budget. Economic surveys are of vital importance as budget decisions are largely based on these surveys.

   
   

4. Inflation

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   Simply put, inflation refers to the change in the average price level in the economy. A high inflation is regarded as a negative aspect of the economy as it devaluates money or simply put reduces the purchasing power of money. Keeping the country’s inflation balanced is another crucial factor in deciding budget policies.

   
   
   

5. Revenue deficit

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    Revenue deficit measures the gap between anticipated income and the realised income. Simply put, a deficit revenue arises when the actual net income falls short of the projected net income. In order to deal with revenue deficit, governments may increase taxes or reduce their spending.
   
   

   
   

6. Fiscal deficit

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   A fiscal deficit happens when a government spends more money than it earns in a given period, usually a year. This means its expenses are higher than the revenue collected from taxes and other sources. It is an important measure of a country's economic stability , showing the gap between income and spending.

7. Capital expenditure

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   It includes spending on acquiring assets such as land, buildings, and investments in stocks, among other things. Additionally, it covers loans and advances provided by the Union Government to state and Union Territory governments, government-owned companies, corporations, and other entities.

8. Revenue expenditure

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   It pertains to the regular operational expenses of government departments and services, including interest on government debt, subsidies, and more. Typically, revenue expenditure includes all spending that does not result in the creation of assets. However, grants provided to state governments and other entities are also classified as revenue expenditure, even though some of these may contribute to asset creation.

   
   

9. Non-plan expenditure

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    Non-plan expenditure includes all those expenditures that are not part of plan expenditure. A major part of the non-plan expenditure includes interest payments, debt servicing, defense costs, subsidies and funds that are allocated to states and Union Territories governments.

    

Conclusion

The finance minister announces the Union Budget every year. Typically, it is announced when one financial year is ending and another one is starting. The purpose behind the same is simple. It reflects the total amount the government was able to raise the previous year, what its spending was, and what its expectations are for the coming year.

By understanding all these details, you can be aware of government expenditures, policies, and plans. Understanding Union Budget terms is crucial in analysing the budget better and ensuring smarter decisions.

FAQs

1. What is the Union Budget?

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   As per Article 112 of the Indian constitution, the annual financial statement or what you call the Union Budget statement of government estimated expenditures and receipts for a particular year.

   
   

2. Why is it important to understand Union Budget terms?

   
   

   The Union Budget lays out the details of government finances for the whole year. However, to have a clear understanding of different policies and plans put forward by the government, it is important to understand the Union Budget terms. Once you get a clear understanding of these terms, the government estimates finances, policies, taxation plans, and much more.

   
   

3. What are important Union Budget terms that I should know?

   
   

   The Union Budget is announced every year and provides a detailed layout of government finances. However, to understand the budget in detail, you must be aware of some common terms like fiscal policy, economic survey, inflation, capital receipts, expenditure, deficit, etc.

Reference

1.https://m.economictimes.com/definition/union-budget/amp

2.https://m.economictimes.com/definition/fiscal-policy/amp

3.https://indianexpress.com/article/explained/explained-economics/takeaways-economic-survey-9810433/lite/

4.https://www.investopedia.com/terms/i/inflation.asp

5.https://www.investopedia.com/terms/r/revenuedeficit.asp

6.https://economictimes.indiatimes.com/definition/fiscal-deficit

7.https://mospi.gov.in/sites/default/files/Statistical_year_book_india_chapters/NATIONAL%20FINANCE-WRITEUP_0.pdf

8.https://m.economictimes.com/definition/non-plan-expenditure/amp