Insights Union Budget 2025

Decoding Union Budget Announcements: A Glossary of Key Terms4 min read

January 17, 2025

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Decoding Union Budget Announcements: A Glossary of Key Terms4 min read

The Union Budget, a document packed with financial jargon and economic indicators, can often seem like a foreign language. But fear not! With this glossary of key terms, you’ll be able to decode budget announcements like a pro and understand the implications for your finances and the economy at large.

A

  • Annual Financial Statement (AFS): The official name for the Union Budget, as mandated by Article 112 of the Indian Constitution. It outlines the government’s estimated receipts and expenditures for the fiscal year.
  • Appropriation Bill: A bill that authorizes the government to withdraw funds from the Consolidated Fund of India to meet its expenses.

B

  • Budget Estimates (BE): The estimated expenditures for various government departments and ministries for the upcoming fiscal year.
  • Balanced Budget: A situation where government revenue equals government expenditure.

C

  • Capital Budget: The portion of the budget dealing with capital receipts and payments. This includes investments in infrastructure, loans, and debt repayment.
  • Capital Expenditure (CAPEX): Spending on creating assets like roads, railways, and other infrastructure. This boosts economic growth in the long term.
  • Capital Receipts: Funds raised through borrowings, disinvestment, and recovery of loans.
  • Consolidated Fund of India: A single account where all government revenues, loans raised, and receipts from loans given are credited.
  • Contingency Fund of India: A fund used for unforeseen expenditure, which requires parliamentary approval after the fact.
  • Corporate Tax: Tax levied on the profits of companies.

D

  • Deficit Financing: When the government spends more than it earns, financing the gap through borrowing.
  • Direct Taxes: Taxes levied directly on individuals and corporations, such as income tax and corporate tax.
  • Disinvestment: The sale of government-owned assets or stakes in public sector undertakings.
  • Dividend Distribution Tax (DDT): Tax on dividends paid by companies to shareholders (abolished in Budget 2020).

E

  • Economic Survey: A pre-budget document that analyzes the economy’s performance and provides insights into the government’s economic outlook.
  • Excise Duty: Tax levied on the manufacture or production of goods within the country.

F

  • Fiscal Deficit: The difference between the government’s total expenditure and its total receipts, while the expenditure is more than receipts (excluding borrowings).
  • Fiscal Policy: The government’s use of taxation and spending to influence the economy.
  • Finance Bill: A bill that gives effect to the tax proposals of the Union Budget.

G

  • Goods and Services Tax (GST): A comprehensive indirect tax on the manufacture, sale, and consumption of goods and services.
  • Gross Domestic Product (GDP): The total value of all goods and services produced within a country’s borders in a specific period.

I

  • Income Tax: Tax levied on the income of individuals, Hindu Undivided Families (HUFs), and other entities.
  • Indirect Taxes: Taxes levied on goods and services, such as GST and customs duty.
  • Inflation: The rate at which the general level of prices for goods and services is rising.

N

  • Non-Plan Expenditure: Expenditure on items that are recurring in nature, such as salaries, pensions, and interest payments.
  • Non-Tax Revenue: Revenue earned from sources other than taxes, such as dividends, interest, and fees.

P

  • Plan Expenditure: Expenditure on developmental activities, such as infrastructure projects, social welfare programs, and subsidies.
  • Primary Deficit: Fiscal deficit minus interest payments.
  • Public Account: Government accounts that relate to transactions where the government acts as a banker or trustee.

R

  • Revenue Budget: The part of the budget that deals with revenue receipts and expenditure.
  • Revenue Deficit: Excess of revenue expenditure over revenue receipts.
  • Revenue Expenditure: Spending on the day-to-day running of the government, including salaries, pensions, and subsidies.
  • interest.

S

  • Subsidies: Financial assistance provided by the government to individuals or industries to reduce costs and encourage consumption or production.
  • Surplus Budget: A situation where government revenue exceeds government expenditure.

T

  • Tax Expenditure: The opportunity cost of tax concessions or exemptions.
  • Tax Revenue: Income earned from direct and indirect taxes.

V

  • Vote on Account: Special provision that allows the government to obtain Parliament’s approval for expenditure for a limited period, typically until the new government presents a full budget.

This glossary provides a foundation for understanding the key terms used in budget announcements. By familiarizing yourself with these concepts, you’ll be better equipped to analyze the budget and its potential impact on your finances and the economy.

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