The Budget Session of Parliament is likely to be held from January 31 to February 13 and is slated to begin with the address of President Ram Nath Kovind to the joint sitting of Lok Sabha and Rajya Sabha. In order to maintain the fiscal discipline, the annual budgetary exercise is crucial for the government anywhere in the world.
The finance minister presents a comprehensive statement of government's finances including spending, revenues, deficit and debt etc. on the budget day.
Budget session of Parliament to be held from January 31 to February 13; Interim budget on Feb 1: Sources
It is important to decipher the finance minister's documents and terminologies to understand those better. Here we take a look at the documents and terminologies alphabetically:
Aggregate Economic Data: It explains total expenditures and total production of goods and services related to the entire economy.
Annual Financial Statement (AFS): Under Article 112 of the Constitution, the government requires to present a statement of estimated receipts and expenditure in respect of every financial year in the Parliament.
Appropriation Bill: It is a document that empowers the government to withdraw funds from the Consolidated Fund for meeting its yearly expenses.
Balanced Budget: Budgets in which revenues are equal to expenditures are referred to as "balanced budget". It means there is neither a budget deficit nor a budget surplus.
Budget at a Glance: It is a document that shows in brief, receipts and disbursements along with broad details of tax revenues and other receipts.
Budget Cycle: It consists of the major events or stages in making decisions about the budget and implementing and assessing those decisions. The budget cycle usually has four stages: budget formulation, enactment, execution, and auditing and assessment.
Budgetary Deficit: It is the difference between all receipts and expenses in both revenue and capital account of the government. It means the government has spent more money that it earned in a financial year.
Balance of Payments: The term is used to denote the difference in total value between payments into and out of a country over a period.
Central Plan Outlay: It is the division of monetary resources among the different sectors in the economy and the ministries of the government.
Consolidated Budget: Or "unified budget", is the presentation of the budget in which revenues from all sources and spending for all activities are included.
Debt: Government debt is the outstanding amount that the government owes to private lenders at any given point in time.
Demands for Grants (DG): It is a kind of form that is submitted in pursuance of Article 113 of the Constitution.
Disinvestment: Disinvestment is the action of government selling or liquidating an asset or subsidiary.
Expenditure: The term refers to government spending (or outlays) made to fulfil a government obligation, generally by issuing a check or disbursing cash.
Expenditure Budget: It shows the revenue and capital disbursements of various ministries and departments and presents the estimates in respect of each under 'Plan' and 'Non-Plan'.
Expenditure Profile: Once the budget is approved, by allocating costs to the activities in a schedule, a profile of expenditure is produced.
Extra-governmental: Or "extra-budgetary", term refers to government transactions that are not included in the annual budget.
Finance Bill: It is presented at the time of presentation of the AFS in fulfilment of the requirement of Article 110 (1)(a) of the Constitution.
Fiscal Policy Strategy Statement: It outlines government's strategic priorities relating to taxation, expenditure, lending and investments, administered pricing, borrowings and guarantees.
Finance Bill: The proposals of the government for levy of new taxes, modification of the existing tax structure or continuance of the existing tax structure beyond the period approved by Parliament are submitted through the Finance Bill.
Fiscal Deficit: This is the gap between the government's total spending and the sum of its revenue receipts and non-debt capital receipts.
Fiscal Envelope: It refers to the aggregate level of expenditures and revenues (and the resulting deficit or surplus) in the budget.
Fiscal Policy: Government actions with respect to aggregate levels of revenue and spending. Fiscal policy is implemented through the budget and is the primary means by which the government can influence the economy.
Fiscal Year: It is the government's 12-month accounting period that frequently does not coincide with the calendar year. The fiscal year is named after the calendar year in which it ends.
Gross Domestic Product: This is the total value of final goods and services produced in a country during a calendar year. Economic growth is measured by the change in GDP from year to year.
Household Income: This is money received by people that may or may not be earned from productive activities and, after adjusting for taxes, is saved or spent on consumption of goods and services.
Income Tax: It refers to the tax that is levied directly on personal income.
Inflation: It is the rate at which the general level of prices for goods and services is rising and, consequently, the purchasing power of currency is falling.
Joint Account: It means that a bank account held in the names of two or more people.
Liquid asset: It is an asset that can be converted easily into cash.
Macro-Economic: This term refers to the part of economics that studies the economy as a whole and particularly topics such as gross production, unemployment, inflation, and business cycles.
Macro-Economic Framework Statement: It comprises an assessment of the overall growth prospects of the economy with specific underlying assumptions.
Medium Term Fiscal Policy Statement (MTFP): It is a statement that is presented in the Parliament under Section 3(2) of the Fiscal Responsibility and Budget Management (FRBM) Act, 2003.
Medium Term Expenditure Framework Statement: This document sets forth a three-year rolling target for the expenditure indicators with specification of underlying assumptions and risks involved.
Memorandum Explaining the Provisions in the Finance Bill: It deals with information to facilitate understanding of the taxation proposals in the Finance Bill.
Micro-Economic: The term is related to the part of economics that studies topics such as individual markets, prices, industries, demand, and supply.
Non-plan expenditure: Non-plan revenue expenditure is accounted for interest payments, subsidies (mainly on food and fertilisers), wage and salary payments to government employees, grants to States and UTs governments, pensions, police, economic services in various sectors, other general services such as tax collection, social services, and grants to foreign governments.
Outcome Budget: It is a budgeting technique that entails ministries preparing their budget and submitting it to the Ministry of Finance before the Annual Budget is presented.
Opportunity Cost: The highest valued alternative foregone in the pursuit of an activity.
Output/Outcomes: The performance of government programs is assessed by examining whether they have delivered the desired outputs and outcomes.
Plan Expenditure: Plan expenditures are estimated after discussions between each of the ministries concerned and the Planning Commission. Plan expenditure forms a sizeable proportion of the total expenditure of the Central government.
Quarterly Report: It is a set of financial statements issued by a company every three-month providing details about the firm's financial health.
Receipts Budget: This provides an analysis of estimates of receipts included in the AFS.
Resources: This term is often used in a budgetary sense to mean the amount of funds available to the government to spend. Resources generally will come either from revenues or borrowing.
Revenue: The annual income collected from taxes by the government as a result of its sovereign powers.
Subvention: Government sometimes asks financial institutions to provide loans to farmers at below market rates. The loss is usually made good through subventions.
Tax Revenue: It gives a detailed report on revenue collected from different items. Taxes collected from both direct and indirect tax are considered in tax revenue.
Value-Added Tax (VAT): VAT helps avoid cascading of taxes as a product passes through different stages of production/value addition. The tax is based on the difference between the value of the output and inputs used to produce it. VAT brings in transparency to commodity taxation.
Zero-based budgeting: A budgeting technique that begins at zero and justifies every expenditure. See also incremental budgeting, performance-based budgeting and program budgeting.