Here is a glossary of commonly used terms and trivia on the Budget:
This is the total quantity of goods and services demanded in an economy.
Balance of Payments
It is the difference between the demand for and supply of a country's currency in the foreign exchange market.
The Union Budget is in balance when current receipts are equal to current expenditure. That means that taxes on income and expenditure, etc. are sufficient to meet payments for goods and services, interest on the national debt, etc.
Capital expenditure or payments comprise:
- expenditure on acquisition of assets like land, building and machinery, and also investments in shares, etc.;
- and loans and advances granted by the union government to state and Union Territory governments, government companies, corporations and other parties.
Capital expenditure also incorporates transactions in the public account.
The principal items of capital receipts are:
- loans raised by the government from the public (called market loans);
- borrowings by the government from the Reserve Bank of India (RBI) and other parties through sale of treasury bills;
- loans received from foreign governments and bodies; and
- recoveries of loans granted by the union government to state governments, Union Territories and other parties.
Capital receipts also include the proceeds from disinvestment of government equity in public enterprises.
This is the Central Value Added Tax, an excise duty levied on manufacturers. It was introduced in the Budget of 2000-01, with a single rate of 16 per cent across the board with special excise duty (SED) on various goods.
All revenues received by government, the loans raised by it, and receipts from recoveries of loans granted by it, form the consolidated fund. All expenditure of government is incurred from the consolidated fund.
This is the fund into which the government dips its hands in emergencies, to meet urgent, unforeseen expenditures and can't wait for authorization by Parliament. The contingency fund is an imprest placed at the disposal of the President for such financial exigencies.
This is the tax paid by corporates or firms on the incomes they earn.
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.
These are the taxes that are levied on the income and resources of individuals or organizations. Normally they are levied on wealth or income through income tax, corporate tax, capital gains tax, inheritance tax, etc.
Income minus income tax.
These are levies paid by manufacturers on items manufactured within the country. Usually, these are passed on to the consumer.
This is the gap between the government's total spending and the sum of its revenue receipts and non-debt capital receipts. It represents the total amount of borrowed funds required by the government to completely meet its expenditure.
Fiscal policy is a change in government spending or taxing designed to influence economic activity. By fine-tuning the level and pattern of budgetary surpluses and how they are financed, governments can control the level of aggregate demand in the economy.
This is the tax levied on individual income from various sources like salaries, investments, interest, etc.
These are the taxes paid by consumers when they buy goods and services. They include sales tax, excise and customs duties.
A sustained increase in the general price level. The inflation rate is the percentage rate of change in the price level.
This is the Minimum Alternative Tax, a minimum tax that a company must pay, even if it is under zero tax limits.
The Modified Value Added Tax (MODVAT) is an excise duty scheme. It applies to certain specific items and is meant to limit the cascading effect of duty incidence on a number of goods where the MODVAT credit can be claimed on the purchase of raw materials on which excise has been paid. This MODVAT credit can be used to set off the excise duty payable on subsequent manufacture of goods.
This comprises actions taken by the central bank (the RBI) to change the supply of money and the interest rate, and thereby affect economic activity. Governments hope that by regulating the level of money or liquidity in the economy, they will achieve policy objectives like controlling inflation, improving the balance of payments, raising the growth of the Gross National Product, or maintaining a certain level of employment.
It is the total outstanding borrowings of the central government exchequer. It is the debt owed by the government as a result of earlier borrowing to finance budget deficits. That part of the debt not held by the central bank (RBI) is the publicly held national debt.
Non-Plan expenditure covers all expenditure of government not included in the Plan. It includes both development and non-development expenditure.
This is the highest rate of customs duty applicable on an item.
Plan outlay is the amount for expenditure on projects, schemes and programmes announced in the Plan. The money for the Plan Outlay is raised through budgetary support and internal and extra-budgetary resources. The budgetary support is also shown as plan expenditure in government accounts.
Money given from the government's account for the central Plan is called Plan expenditure. This is developmental in nature and is spent on schemes detailed in the Plan.
The primary deficit is the fiscal deficit minus interest payments. It tells us how much of the government's borrowings are going towards meeting expenses other than interest payments.
A tax in which the rich pay a larger percentage of income than the poor, in contrast to Regressive Tax.
A tax taking the same percentage of income regardless of the level of income.
A tax in which the poor pay a larger percentage of income than the rich. Contrast with Progressive Tax.
The Revenue Budget consists of revenue receipts of government and the expenditure met from these revenues. Tax revenues are made up of taxes and other duties that the Union government levies.
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.
Revenue expenditure is for the normal running of the government's department and various services, interest charged on debt incurred by government, subsidies, etc.
Revenue receipts consist of tax collected by the government and other receipts consisting of interest and dividend on investments made by government, fees and other receipts for services rendered by government.
The value of a firm's output less the value of intermediate goods bought from other firms.
Value-Added Tax (VAT)
This is a tax levied on a firm as a percentage of its value added, to avoid the multiplying effect of taxes as the product passes through different stages of production. The tax is based on the difference between the value of the output and the value of the inputs used to produce it.
1. R.K. Shanmukham Chetty presented India's first Budget in November 1947. The entire exercise was more of a review of the economy and no new taxes were proposed.
2. K.C. Neogy has been the only finance minister who hasn't presented a Budget.
3. Jawaharlal Nehru was the first Prime Minister to present the Budget when he held the finance portfolio (1958-59).
4. Morarji Desai has presented 10 Budgets, the maximum by any finance minister.
5. Both Manmohan Singh and Yashwant Sinha have presented five Budgets in a row.