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UNION BUDGET 2019

FM Nirmala Sitaraman has presented her maiden budget on 5th July.

Read the highlights here.

Interim Finance Minister Piyush Goyal announced the Union Interim Budget 2019 on the 1st of February 2019. The Budget presented by FM Piyush Goyal had some small time announcements for the benefit of low income and middle income individual taxpayers in India.

Everyone knows about the annual Budget. We also know how important it is in our day to day life. However, some of the jargons used in the Budget can be difficult to understand. Which is why we have compiled a list of important terminology so you can understand the upcoming Budget 2019 with ease!

Sl no. Budget Terms Meaning
1 Finance Minister Finance Minister (FM) is the head of the Ministry of Finance of the Government of India – also goes by the name FinMin or FM. On 1 February 2019, the current Finance Minister Arun Jaitley will present the annual Union Budget in the Parliament.
2 Incumbent Government A government that currently holds office in a country is known as the Incumbent Government. For example, BJP is India’s incumbent government.
3 Halwa Ceremony The print of budget starts roughly a week before presenting it in the Parliament with a customary ‘Halwa Ceremony’ in which halwa (a sweet dish) is served to the officers and support staff involved. Because India starts everything on a sweet note.
4 Blue Sheet The blue colour secret sheet containing the key numbers and consists hundreds of pages of the budget document is called the Blue Sheet. It forms the backbone of the whole budget process and is kept as a secret even from the FM.
5 Union Budget The Union Budget in Parliament every year, which details the government’s plan for taxation and spending in the coming financial year. The FM is in charge of presenting the Union Budget.
6 Interim Budget In India, an Interim Budget is presented only if the government does not have the time to present a full budget or because the General Lok Sabha elections may be close.
7 Vote-on-account Vote on account is the process by which an incumbent government obtains votes from Parliament to spend money on various items for a part of the year.
8 Direct and Indirect Taxes Direct taxes are the taxes which are directly levied on the income of the individuals and corporates — for example, income tax, corporate tax, etc.
Indirect Taxes are taxes which are levied on the goods and services supplied. The final consumer pays it at the time of sale. For example, GST, Customs Duty, etc.
9 GST & Excise duty An Excise Duty is levied on goods manufactured in India and meant for home consumption. Goods and Services Tax (GST) is levied on the supply of goods and services in India.
GST came into effect from 1st July 2017.
10 Customs duty Customs Duty is imposed on the export and import of the goods from or into the country. It is also a type of Indirect tax and is passed on to the final consumer of the goods.
11 Fiscal Deficit Fiscal Deficit occurs when the government’s total expenditures exceed the revenue, excluding the money from borrowings. Fiscal means Money. Deficit means Shortage. So, Fiscal Deficit can also be called Money Shortage.
12 Revenue Deficit Revenue Deficit arises when the government’s revenue expenditure exceeds its revenue receipts. This means that the government’s income is not sufficient to meet its day-to-day functioning.
13 Primary Deficit Primary Deficit = Fiscal Deficit – Interest payments on the previous borrowings made by the Government
To summarise, Primary Deficit is the difference between the fiscal deficit of the current year and the interest paid on the previous borrowings made by the Government.
14 Fiscal Policy Fiscal policy is the decision taken by the government for adjusting its expenditure level and revenue collection (through taxation) to monitor and accomplish the nation’s economic goals.
15 Monetary Policy Monetary Policy is the action plan initiated by the monetary authority, primarily RBI, to monitor and manage the demand and supply of money in the economy.
16 Inflation Inflation is the situation where prices of the goods generally increase and purchasing value of money falls in an economy.
17 Capital Budget Capital Budget is the estimated amount of the 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.
18 Revenue Budget In the context of Union Budget, Revenue Budget is the estimated amount required for the growth, development and infrastructure of the country.
19 Finance Bill When the Central Government proposes to introduce or amend taxes or the current tax structure (or continue with the same), the proposal is forwarded to the Parliament for approval in the form of Finance Bill. It can only be presented in Lok Sabha.
20 Excess Grants When the Grant authorised by the Parliament after the Budget proposal falls short, another estimate can be formulated and forwarded to the Parliament for additional funds or Excess Grants.
21 Budget Estimates Budget Estimates is the approximate expenses the Government will incur to run the country and their rough income made through taxes in a financial year. Expenditures include spending on different sectors, infrastructure and nation building.
22 Revised estimates Revised Estimates is a mid-year review (predictions) of potential expenditures for the remainder of the financial year – based on the trends noticed in the first half of the year.
23 Re-appropirations Appropriation means keeping aside funds for a specific purpose – fund allocation by the Legislature to meet the expenditure of various government departments as Grants. Re-appropriation is to transfer money approved to one department (detailed head) to another.
24 Outcome of Budget Outcome of Budget is like a progress report card on how the Ministries and their Departments have handled the expenditures in the previous annual budget. It assesses the success quotient of all Government programs and how well the money was utilised.
25 Consolidated fund of India Consolidated Fund of India includes revenues received and expenses incurred by the government in a financial year, except exceptional expenses like disaster management. Government cannot access it without approval from the Parliament.
26 Contigency fund of India Contingency Fund of India exists to meet unexpected expenses by the President of India. And once the Parliament approves additional funds, the amount has to be resumed to the Contingency Fund. It usually contains Rs. 500 crores.
27 Public Account Public Provident Fund and National Pension Scheme are examples of Public Accounts of India. Here the government acts as a banker – keeps your (account holder) money safe and pays you back after its respective tenures with assured interest returns.
28 Corporate tax Corporate tax is a direct tax levied on a company or a corporate their profits. For this company estimates the operating earnings after expenses (like the cost of goods sold (COGS) and revenue depreciation) pays the enacted tax rates to the government.
29 Minimum Alternate Tax There are some ‘Zero Tax Companies’ that show minimal to zero income to evade taxes. Minimum Alternate Tax (MAT) enables the government to levy a minimum tax on such companies based on their book profits.
30 Non-plan expenditure Non-plan expenditure is any expense incurred by the government other than plan expenditure (like 5-year plan). Examples include interest payments, grants, and govt employees’ salary among many others.
31 Plan expenditure Plan expenditures are calculated after discussing with concerned ministries and the Planning Commission. Example, expenses needed for programmes under Five Year Plan of the Central Government.
32 Disinvestment When the government sells or liquidates any of its asset or subsidiary (some or all of it), we call it Disinvestment’. It is also called ‘divestment’ or ‘divestiture.’
33 Aggregate Demand Aggregate Demand is the total demand for all goods and services in the entire economy. It includes every single thing purchased/produced within India and details the relationship between every goods/service and their respective prices.
34 Balanced Budget A balanced budget is a budget in which revenues are equal to expenditures. This means there is neither a deficit nor a surplus. Typically, it is a budget that does not have a budget deficit but could have a budget surplus.
35 Annual Financial Statement As per Article 112 of the Constitution, the government is required to present a statement of estimated receipts and expenditure in respect of every financial year (from April 1 to March 31), to the Parliament. This is the annual financial statement.
36 Appropriation bill An appropriation bill is a proposed law that authorises the expenditure of government funds. It is also known as a supply bill or spending bill. This Bill gives power to the government to withdraw funds to meet the expenditure during the financial year. The funds are withdrawn from the Consolidated Fund of India.
37 Budget at a glance This document shows a brief of receipts and disbursements with details on tax revenues, etc. It also provides a break-up of expenditure – Non-Plan and Plan, the allocation of Plan outlays by Ministries and Departments and sectors, and details of the resources transferred to the State and Union Territory Governments by the Central Government.
38 Budget Cycle Budget cycle is the life of a budget right from its creation to its evaluation. The four stages of the budget cycle comprise of preparation and submission, followed by approval, execution and audit, and evaluation of the budget.
39 Balance of payments As per the RBI, balance of payment is the statistical representation of the transactions in goods and services and income that takes place between an economy and the rest of the world. It shows the changes in the economy’s monetary gold, the special drawing rights (SDRs) and the financial claims, along with details of unrequited transfers.
40 Fiscal Year A fiscal year, also known as a financial year, is the period used by governments for budget and accounting purposes. This is a one year period where financial statements of a company or a government are prepared. India’s financial year starts on April 1st and ends March 31st of the next year.
41 Gross Domestic Product The Gross Domestic Product or GDP is the final value of the goods and services that are produced within the geographic boundaries of a country in a given time period, typically a year. This metric is an important indicator of a country’s economic performance.
42 Net Domestic Product The Net Domestic Product or NDP is the annual measure of the economic output of a country with adjustments for depreciation. NDP is equal to GDP minus depreciation of the country’s capital goods.
43 Household Income A household income is one that comprises the combined incomes of all the individuals sharing a place of residence and having some form of income. This could be anything from salary, wages, investment gains, retirement income, etc.
44 Macro-economic Macroeconomic is a branch of economics that studies the behaviour of aggregates in an economy. These behaviours include inflation, rate of growth, price levels, GDP, National Income and changes in unemployment.
45 Micro-economic Microeconomic concerns itself with the decisions individuals and firms have to make regarding the allocation of scarce resources in an economy. These decisions affect the goods market by affecting the supply and demand and hence the price.
46 Resources A resource in the economic sense implies the inputs used in the creation of goods or services. It can be categorised as Human Resources like labour and management, and Non-Human Resources which comprises financial resources, capital goods, land and technology, etc.
47 Subvention Subvention refers to a grant or aid support by the government. The government may, for instance, ask financial institutions to grant loans to certain sectors below the market rates, like in the case of loans to farmers, etc.
48 Zero based budgeting This is a practice where all the expenditure for the economy are allocated and the estimates for revenue are made for a new period. In this method, when the budget is created it will have to justify every expense for the new period.
49 Central Plan Outlay Cental Plan Outlay is the division of the monetary resources among various sectors of the economy and ministries of the government.

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