Union Budget 2022-2023 is around the corner and will be presented by Finance Minister Nirmala Sitharaman on February 1, 2022. The Economic Survey will be presented in the parliament a day before the Budget.
While presenting the Budge,the Finance Minister uses financial terms like fiscal policy, fiscal deficit, inflation, divestment, revenue deficit, and more. Here are some terms that you should know before the budget.
The Economic Survey is presented every year ahead of the union budget and is a flagship document of the finance ministry. The survey analyses the relevant economic factors of the budget. The survey also provides detailed information about the Indian economy in the previous year. The economic survey is like a report card of performance of the government’s development programme.
Annual Financial Statement
The Annual Financial Statement(AFS) highlights the receipts and expenditures of the government during the financial year. It is mandated under Article 112 of the Indian Constitution, and AFS is presented as a document as a part of the Budget every year in the parliament.
The Annual Financial Statement will be presented in three separate parts - the consolidated fund, contingency fund, and public account.
The rise in the general price of goods and services of common or daily use, expressed in percentage, which increases the cost of living is Inflation. There are two main sets of inflation to measure changes in price levels - Consumer Price Indes (CPI) and Wholesale Price Index (WPI).
Direct tax is levied directly on taxpayers. Direct taxes include tax and corporate tax. It is also one of the most important components of the budget. Income tax is paid by individuals based on their income. Corporate tax is paid by the companies and businesses by the income earned by them in the financial year.
Fiscal Policy is a key instrument to monitor the country’s economic position. In simple terms, fiscal policy is an estimate of taxation and government spending.
Fiscal Deficit accounts for the government’s total expenditure exceeding total revenue excluding the money from borrowings. It is calculated as a percentage of the country’s Gross Domestic Product (GDP).
This involves the process of the sale of existing assets. To raise revenues or to pare losses from non-performing assets, the government resorts to selling stakes in the State-run companies. The government often sells stakes to private sector companies or to general public through the stock market to raise revenues.
Revenue deficit occurs when the government’s total revenue expenditure exceeds the total revenue receipts. It is a key indicator of government overspending from its regular income.
Revenue surplus occurs when the total income exceeds the projected amount of expenditure. It is the opposite of the revenue deficit.
Capital expenditure is the money spent by the government on development or to acquire, or to upgrade machinery or assets.