Fiscal Deficit, GDP, Tax Reforms And More: 10 Budget Keywords

Finance Minister Nirmala Sitharaman will present the Union Budget 2025 on Saturday, February 1. The Budget is a crucial document that contains information about the government's financial policies, expenditure plans, and revenue for the next fiscal year. 

As the nation gears up for the Union Budget 2025, here are key terms you must know before tomorrow's presentation. 

Fiscal Deficit
A fiscal deficit is the difference between the total expenditure and total revenue of the government in a financial year. If there is a high fiscal deficit, it means the government is spending more than it earns and needs to borrow money to bridge this gap.

Tax Reforms
Tax reforms refer to changes and improvements in the tax system to make it more efficient, transparent, and fair. The government implements these reforms to make tax laws simpler. For example, in 2017, the government introduced GST and replaced multiple indirect taxes like VAT, Service tax, and excise duty.

Consolidated Fund
The consolidated fund is the total revenue raised by the government, including market borrowings and loan receipts. It covers all major expenses, such as the President's salary, judiciary expenses, defence spending, construction, investments, and other purposes.

Contingency Fund
The Contingency Fund is set aside for emergencies or unexpected situations, especially during the economic crisis. It is used for emergencies like natural disasters, war, or any other unforeseen event. Unlike consolidated funds, the government can withdraw money immediately from this fund.

GDP
GDP, or gross domestic product, is the value of all the final goods and services produced within a country in a particular year. It indicates the country's economic health and growth, which, in turn, helps the state make sound policy decisions related to taxation, spending, and monetary policies. 

Budget Estimates
A Budget estimate is the projected amount of revenue and expenditure that the government expects for a financial year. It is prepared before the financial year begins which helps the government in economic planning, policy planning and allocating resources. 

Capital Expenditure
Capital Expenditure (CapEx) refers to the money spent by the government or businesses on acquiring, upgrading, or maintaining long-term assets. CapEx includes building highways, buying new trains and defence equipment, or renovating roads or airports.

Inflation
Inflation refers to the increase in prices of goods and services in the country. It affects the cost of living because the rising prices weaken the purchasing power of the consumers.

Money Bill
A Money Bill deals with matters concerning taxes, revenues and government expenditure. A Finance Bill is treated as a Money Bill only if it contains the matters specified under Article 110 (1) (a) to (g) of the Constitution of India.

Tax Regime
A tax regime is a system or set of rules the government uses to determine how much tax people and businesses need to pay. It includes the tax slabs and the rules for deductions and exemptions. There are two types of tax regimes: Old regime and the New regime. 

Under the old regime, taxpayers can claim various deductions and exemptions, whereas in the new regime, taxpayers have no exemptions or deductions but the tax rates are lower.