Finance Minister presents the Economic Survey a day before the Budget.
The Union Budget is an important document as it carries the details of the government's revenue, expenditure and financial policies for the upcoming financial year. It's an annual financial statement of the central government accompanied by key fiscal policies.
Finance Minister Nirmala Sitharaman will present an Interim Budget on February 1, as Lok Sabha elections are scheduled to be held in April-May. A full-fledged Budget for the financial year 2024-25 will be presented by the new government after the Lok Sabha elections.
A full Budget is presented for a complete fiscal year, which runs from April 1 to March 31 of the next year. The Interim Budget, meanwhile, acts as a temporary financial plan to cover the Centre's essential expenditures like salaries of the government staff and funding of ongoing schemes, among others, in the transition period.
Ahead of the Budget 2024, let's take a look at the important financial terms related to the Union Budget.
Annual Financial Statement
Under Article 112 of the Constitution of India, the central government is required to present to Parliament an annual financial statement of estimated receipts and expenditures with respect to every financial year. Usually, this document is divided into Consolidated Fund, Contingency Fund and Public Account.
Economic Survey
The Finance Minister presents the Economic Survey a day before the Union Budget. The Economic Survey provides an overview of economic performance and the key macroeconomic indicators. Last year, the Economic Survey projected GDP growth to be in the range of 6-6.8% for the financial year coming to an end on March 31.
Tax regime
The Income Tax regime defines the tax slabs and rates. In FY 2020-21, the Finance Minister introduced an optional simplified income tax regime, known as New Tax Regime. Under the New Tax Regime, the government reduced the tax rates for different slabs.
In the last Union Budget, Sitharaman introduced the New Tax Regime as the default option. This was accompanied by several incentives like a total tax rebate of up to Rs 7 lakh but without the benefits of deductions available under various sections of the Income Tax Act, 1961
Money Bill
A Money Bill is a specific type of Finance Bill that deals with matters related to taxes, revenues and government expenditure. A bill will be treated as a Money Bill only if it contains the matters specified under Article 110 (1) (a) to (g) of the Constitution of India. The Money Bill can only be presented in the Lok Sabha.
Finance Bill
A Finance Bill is a key Budget document as it contains all details of the government revenue, expenditures and allocations for a financial year. It contains all the details about new taxes and alterations to existing tax structures. The Finance Bill is presented for a period of one year and after the bill is passed it becomes the Finance Act. The Finance Bill is prepared as per the provision under Article 117 of the Constitution of India.
Fiscal Deficit
Fiscal Deficit is the difference between the government's total expenditure and the revenue receipts in a financial year. To bridge this gap, the government adopts several measures, including borrowing funds from the Reserve Bank of India (RBI).
Gross Domestic Product (GDP)
One of the most commonly used macroeconomic indicators, GDP serves as an important tool to judge how an economy is performing. It is the total value of consumer goods and services produced domestically in a country, within a given period of time.
Budget Estimates
With regards to the Union Budget, the Budget estimates refer to the estimated funds allocated to various ministries, departments, sectors and schemes of the central government. It determines the costs that will be incurred over a specific time period as well as how and where the money will be used.
Capital Expenditure
Capital expenditure includes the money that the Centre proposes to allocate for the various developmental projects, acquisition, or depreciation of machinery and assets linked with economic development.