Finance Minister Nirmala Sitharaman is gearing up to present the interim Union Budget 2024 on February 1, which marks the final budget before the upcoming general elections. It’s essential to note that this budget is interim, pertaining to the next financial year, and its policies won’t take effect until a new government is formed.
In preparation for the imminent presentation in Parliament, here are some key financial terms to be acquainted with:
1. Economic Survey: This flagship document, presented during the Budget session, offers a comprehensive summary of the economy’s performance in the ongoing financial year. It serves as a precursor to the upcoming financial year’s budget.
2. Inflation: Inflation signifies the rate of increase in the prices of goods, services, and commodities within the country. A higher inflation rate weakens the purchasing power of consumers for a defined set of goods.
3. Direct and Indirect Taxes: Direct taxes, like income tax or corporate tax, are levied directly from taxpayers. In contrast, indirect taxes, such as GST, VAT, and excise duties, are imposed indirectly.
4. Finance Bill: The Finance Bill serves as a crucial document for introducing new tax policies, altering the tax structure, or maintaining the existing structure.
5. Capital Expenditure (Capex): This is the total amount of money allocated by the government for the development, acquisition, or degradation of machinery and assets aimed at boosting the economy.
6. Budget Estimate: These are the estimated funds allocated to ministries, departments, sectors, and schemes, determining how and where the money will be utilized during a specific period.
7. Fiscal Deficit: Fiscal deficit represents the difference between the government’s total spending and revenue receipts from the previous financial year. To bridge this gap, the government resorts to borrowing funds from entities like the Reserve Bank of India.
As the budget presentation approaches, understanding these financial terms is essential for grasping the nuances of economic policies and their impact on various sectors.
