Important Terminology related to Budget and Economic Survey

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What is Union Budget?

Union Budget is the most comprehensive report of the Government’s Finances in which revenues from all sources and outlays for all activities are consolidated. The Budget also contains estimates of the Government’s accounts for the next fiscal year called Budgeted Estimates.

What is Economic Survey?

Economic Survey is the flagship annual document of the Ministry of finance. It gives a detailed account of the various sectors of the economy and overall economic scenario of the country in the past years and provides an outline for the year ahead. Increasingly it has also become a forum for analysis and research on the economy, and hence also a source of policy ideas. Indias first Economic Survey was presented in the year 1950-51.

What is Capital Budget?

The Capital Budget consists of capital receipts and payments. It includes investments in shares, loans and advances granted by the central Government to State Governments, Government companies, corporations and other parties.

What is Revenue Budget?

The revenue budget consists of revenue receipts of the Government and its expenditure. Revenue receipts are divided into tax and non-tax. Tax revenues constitute taxes like income tax, corporate tax, excise, customs, service and other duties that the Government levies. The non-tax revenue sources include interest on loans, dividend on investments.

What is Outcome Budget?

From the Fiscal year 2006-07, every Ministry presents a preliminary Outcome Budget to Ministry of Finance, which is responsible for compiling them. The Outcome Budget is a progress card on what various Ministries and Departments have done with the outlays in the previous annual budget. It measures the development outcomes of all Government programs and whether the money has been spent for the purpose it was sanctioned including the outcome of the fund usage.

What is Zero Based Budgeting?

Zero-based budgeting is a method of budgeting in which all expenses for each new period must be justified. Under zero-based budgeting, no reference was made or considered of previous years. The budget request has to be evaluated thoroughly with its commencement from the zero-base.

What are Budget Estimates?

Amount of money allocated in the Budget to any ministry or scheme for the coming financial year.

What are Revised Estimates?

Revised Estimates are mid-year review of possible expenditure, taking into account the rest of expenditure, New Service and New Instrument of Services etc. Revised Estimates are not voted by the Parliament, and hence by itself do not provide any authority for expenditure. Any additional projections made in the Revised Estimates need to be authorized for expenditure through the parliament’s approval or by Re-appropriation order.

What is Fiscal Policy?

It is the government actions with respect to aggregate levels of revenue and spending. Fiscal policy is implemented though the budget and is the primary means by which government can influence the economy.

What is Monetary Policy?

This comprises action taken by the central bank(i.e. RBI) to regulate the level of money or liquidity in the economy, or change the interest rates.

What is Finance Bill?

The bill produced immediately after the presentation of the Union Budget detailing the imposition , abolition, alteration or regulation of taxes proposed in the Budget.

What is Contingency Fund of India?

A fund placed at the disposal of the President to enable him/her to make advances to the executive/Government to meet urgent unforeseen expenditure.

What is Consolidated Fund of India?

All revenues raised by the Government, money borrowed and receipts from loans given by Government flow into it. All Government expenditure other than certain exceptional items met from Contingency Fund and Public Account are made from this account. No money can be appropriated from the Fund except in accordance with the law.

What is Public Account?

Under provisions of Article 266(1) of the Constitution of India, Public Account is used in relation to all the fund flows where Government is acting as a banker. Examples include Provident Funds and Small Savings. This money does not belong to government but is to be returned to he depositors. The expenditure from this fund need not be approved by the Parliament.

What is Vote on Account?

The Vote on Account is a grant made in advance by parliament, in respect of the estimated expenditure for a part of new Financial year, pending the completion of procedure relating to the voting on the Demand for Grants and the passing of the Appropriation Act.

What is Fiscal Deficit?

When the government’s non-borrowed receipts fall short of its entire expenditure, it has to borrow money form the public to meet the shortfall. The excess of total expenditure over total non-borrowed receipts is called the Fiscal deficit.

What is Primary Deficit?

The primary deficit is the fiscal deficit minus interest payments. It tells how much of the Government’s borrowings are going towards meeting expenses other than interest payment.’

What is Revenue Deficit?

The difference between revenue expenditure and revenue receipt is known as revenue deficit. It shows the shortfall of government’s current receipts over current expenditure.

What is Revenue Deficit?

The difference between revenue expenditure and revenue receipt is known as revenue deficit. It shows the shortfall of government’s current receipts over current expenditure.

What are Direct and Indirect Taxes?

Direct taxes are the one that fall directly on individuals and corporations. For example, income tax, corporate tax etc.
Indirect taxes are paid by consumers when they buy goods and services. These include excise duty, customs duty etc.

What is Goods and Services Tax?

The constitution defines ‘Goods and Services Tax’ as any tax on supply of goods, or services or both except taxes on the supply of the alcoholic liquor for human consumption.
‘Goods’ means every kind for movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply.
‘Services’ means anything other than goods, money and securities but including activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged.

What is Customs Duty?

These are levies charged when goods are imported into, or exported from, the country, and they are paid by the importer or exporter. Usually, these are also passed on to the consumer.

What is Corporate Tax?

This is the tax paid by corporation or firms on the incomes they earn.

What is Minimum Alternative Tax?

Minimum Alternative Tax is a minimum tax that a company must pay, even if it is under zero tax limits.

What is Disinvestment?

By disinvestment we mean the sale of shares of public sector undertakings by the Government. The shares of government companies held by the Government are earning assets. If these shares are sold to get cash, then earning assets are converted into cash, therefore it is referred to as disinvestment.

What are Cut Motions?

Motions for reduction to various Demands for Grants are made in the Form of Cut Motions seeking to reduce the sums sought by Government on grounds of economy or difference of opinion on matters policy or just in order to voice a grievance.

What is Guillotine?

Parliament, unfortunately, has very limited time for scrutinising the expenditure demands of all the Ministries. So, once the prescribed period for the discussion on Demands for Grants is over, the Speaker of Lak Sabha puts all the outstanding Demands for Grants,whether discussed or not, to the vote of the House. This process is  known as Guillotine.

What is Guillotine?

Parliament, unfortunately, has very limited time for scrutinising the expenditure demands of all the Ministries. So, once the prescribed period for the discussion on Demands for Grants is over, the Speaker of Lak Sabha puts all the outstanding Demands for Grants,whether discussed or not, to the vote of the House. This process is  known as Guillotine.

What is Excess Grants?

If the total expenditure under a Grant exceeds the provision allowed through its original Grant and Supplementary Grant, then the excess requires regularization by obtaining the Excess Grant from the Parliament under Article 115 of the Constitution of India. It will have to go though the whole process as in the case of the Annual Budget, i.e. through presentation of Demands for Grants and passing of Appropriation Bills.

What are Re-appropriations?

Re-appropriations allow the Government to re-appropriate provision from one sub-head to another within the same Grant. Re-appropriation provision may be sanctioned by a competent authority at any time before the close of the financial year to which such grant or appropriation relates. The Comptroller & Auditor General and Public Account Committee reviews these re-appropriations and comments on them for taking corrective actions.

What is Inflation?

A sustained increase in the general price level. The inflation rate is the percentage rate of change in the price level.

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