Budget 2023: Explaining Budget and Related Financial Terms For Students

Budget 2023: Finance Minister Nirmala Sitharaman will present the Union Budget in the Lok Sabha on February 1, 2023. Check out budget-related financial terms for students here.

Budget 2023: Finance Minister Nirmala Sitharaman will present the Union Budget in the Lok Sabha on February 1, 2023. However, Parliamentary Budget Session will begin on January 31. With only a few days until the Budget 2023, many Budget-related jargons are being thrown around, leaving one befuddled and cluelessly searching word meaning on the internet. In this article, we will help you to understand Budget and its related financial terms so that you have a better understanding of the contours of ‘bahi-khata’:

What is Budget?

A government budget is an annual financial statement of the estimated receipts and expenditure of the government over the fiscal year.

Objectives of Budget

• Redistribution of income
• Allocation of Resources
• Bring Economic Stability

What is Revenue Budget?

The approximate amount required for the growth, development, and infrastructure of the country is called Revenue Budget. It consists of the revenue receipts of the government (tax and non-tax revenues) and the expenditure met from these revenues.

What is Capital Budget?

It consists of capital receipts and payments. The main items of capital receipts are loans raised by government from public which are called Market Loans, borrowings by government from Reserve Bank and other parties through sale of Treasury bills, loans received from foreign governments and bodies and recoveries of loans granted by Central Government to State and Union Territory governments and other parties.

What is Fiscal Deficit?

The difference between the government’s total expenditure and its total revenues excluding money generated from borrowings is known as fiscal deficit. It indicates the borrowing requirement of the government during the budget year, where the non-debt capital receipts + recovery of loans + disinvestment proceeds of the government.

What is Revenue Deficit?

The difference between Revenue Expenditure and Revenue Receipt, denoting the shortcoming or ‘deficit’ of government’s current receipts over current expenditure. In terms of formula, Revenue Deficit + RE-RR, where RE = Revenue Expenditure and RR= Revenue Receipts.

What is Outlay?

It is the division of money or resources into different sectors or ministries. Outlay can also be referred to the basic framework of the Union Budget.

Surplus Budget

The condition when the incomes or receipts overreach the expenditure or outlay.

Demand for Grants

The estimates of expenditure from the Consolidated Fund included in the budget and required to be voted by the Lok Sabha are submitted in the form of Demands for Grants. Once the budget is presented, the government releases the Demand for Grants. Demand for Grants refers to the expenditure estimate which includes provisions related to revenue expenditure, capital expenditure, and government grants for the next financial year.

Tax

It is a legally compulsory payment imposed on the people by the government.