With the 2018 budget session being commenced in the parliament, the nation is highly anticipating what Finance Minister Arun Jaitley is going to whip out from his briefcase. With trade pundits and experts terming this as #Modinomics2018, many say this budget could indeed be another step toward the ‘Acche Din’.
While, taxpayers, both individual and corporate are expecting a relief, the reality sector is also expecting some good news which will thrust the sector after it hit a low last year.
Before you stream the live Budget or put on your television, it is important that one is well versed with the technical jargons that are common while presenting a budget. We’ll walk you through these terms for a better understanding of the Union Budget 2018.
A bill is called an appropriation bill when it is put forward in the parliament for approval. If passed, it turns into an Act. The Act then allows any kind of appropriation or withdrawal from the Consolidated Fund of India.
The revenue receipts of the Government are deposited in a fund called the Consolidated Fund of India. The revenues mostly comprise of loans raised and the recovery amount from the same. Parliament’s nod is needed for any kind of withdrawal from this fund.
When Consolidated Fund cannot be used for any reason whatsoever, the backup fund is employed for the same. The fund is called the Contingency Fund. As the name suggests, only emergency and unanticipated expenses can be met from this fund.
The estimation of the amount of revenue to be collected from taxations as well expenditures to be incurred is called the ‘Budget Estimates’.
Approximation of all the capital expenditures of the upcoming financial year is known as ‘Capital Budget’.
Balance of Payment
A country’s balance sheet summating its trade and financial transactions gives an idea of the balance of payment. One also gets a clear picture of the amount receivable and payable from the other countries of the year that went by.
Current Account Deficit
The situation where expenses are more than receipts of the current account is called ‘Current Account Deficit’, is the balance of payment.
Current Account Surplus
The vice versa of a current account deficit is called ‘Current Account Surplus’.
The difference between Government’s revenue receipts (from taxes) and payments (for running the government and interest payments) is a ‘fiscal deficit’.
It is a part of fiscal deficit which is stated in a budget document. The fiscal deficit is met by loaning out money from World Bank, IMF etc by the Centre.
The basic amount of income that is exempted from being taxable is called ‘Basic Exemption’. Currently, the limit of basic exemption is Rs 2.5 lakh per year.
When the Government sells off its PSU (public sector undertaking) shareholding in parts or full, the process is known as ‘divestment’.
Foreign Direct Investment
An investment made by a foreign-based company in India through its branch or a representative office or a subsidiary company is recognised as ‘foreign direct investment’ or FDI.
Foreign Institutional Investor
A corporate investor from outside India who is investing in India is a ‘Foreign Institutional Investor’ or ‘FII’.
Gross Domestic Product (GDP)
The total amount of all the finished goods and services produced in the country at its market value is the GDP. It is compiled of three sectors - Agriculture, Industry and Services.
Gross National Product (GNP)
Putting it is a simple mathematical expression, GNP = GDP + Foreign investment income of residents of India – Income from Indian investment by foreigners.
Information source: indiatoday
Title image source: bullmenrealty