Finance Minister Nirmala Sitharaman will present the Union Budget on July 5. Farm distress, unemployment, healthcare, education and inflation are some of the areas the government is expected to pay extra attention to in this year's budget. However, on the Budget day, some of the terms repeatedly used by the finance minister are not easy to understand for a layman.
Let’s have a look at some of these terms:
1. Fiscal Deficit
The fiscal deficit is the difference between the total income of the government and its expenditure. However, the government defines it as, “the excess of total disbursements from the Consolidated Fund of India, excluding repayment of the debt, over total receipts into the fund (excluding the debt receipts) during a financial year”. In a country like India, it's very difficult for the government to meet all necessary expenses by taxes, thus the government has to borrow money from different institutions. But sometimes in order to spur the economic growth the government has to let the fiscal deficit rise.
2. Capital Budget
It is a part of the Union Budget and has accounts for government-related capital expenditure and capital receipts.
3. Capital Receipts
Capital receipts are the money that the government gets through treasury bills, markets loans, loans received from a foreign government, disinvestment receipts or debt paid by Union Territories, state governments and other parties.
4. Capital Expenditure
Capital expenditure, also known as Capex, and it is the expenditure that creates assets such as building, highway etc. However, the loans, given by the centre, to the state also come under Capital Expenditure.
5. Inflation
Inflation is a quantitative measure of the rate at which the average price level of a basket of goods increases over a period of time. So it indicates the decrease in the purchasing power of the national currency.
6. Revenue Budget
It is a part of the Union Budget and has accounts for government-related revenue receipts and expenditure.
7. Revenue Receipts
Revenue receipt includes funds, the government earns through different taxes such as income tax, service tax, corporation tax, interest receipts, dividends and profits and other receipts of Union Territories.
8. Revenue Expenditure
Revenue expenditure is also known as income statement expenditure. These are the expenditures made by the government to maintain the assets in order to keep them functioning. But this expenditure does not create any assets for the government. For example paying the salaries to employees does not create any asset, however, the expenditure made on the bullet train is creating an asset thus this expenditure will not be revenue expenditure.
