Finance Minister Nirmala Sitharaman presented the Union Budget in the Lok Sabha on February 1, 2023. The budget was presented in Parliament at a time when India’s economic recovery is facing hurdles due to the worsening global recession, rising geopolitical tensions and high inflation.
With the onset of the Union Budget 2023, jargon related to the budget is being thrown around, leaving one confused and searching the internet for the meaning of the word. In today’s class with News18, we will help you understand budget and its related financial terms so that you can understand it better.
What is Union Budget?
According to Article 112 of the Constitution of India, the Union Budget for a year, also known as the Annual Financial Statement, is a statement of the estimated receipts and expenditure of the government for that particular year.
Why does the government prepare the budget every year?
The government prepares a budget every year because:
1. The Government of India estimates the expenditure required for developmental works in various sectors of the economy such as industry, construction, education, health, transport etc.
2. The government tries to find out the sources of revenue to meet the expenses of the coming financial year. (i.e. by imposing new taxes or by increasing or decreasing the previous rates of taxes or by removing or imposing subsidies on any commodity.
In other words, the governments decide what are the main items to be spent on and how the money will be arranged for these expenses. The statement of such income and expenditure statements is known as ‘Budget’.
types of budget
Revenue budget The estimated amount required for the growth, development and infrastructure of the country is called revenue budget. The revenue budget includes revenue receipts and expenditure of the government. Revenue receipts are of two types – tax and non-tax revenue. Revenue expenditure is the expenditure incurred on the day-to-day functioning of the government and various services provided to the citizens. If revenue expenditure exceeds revenue receipts, the government has a revenue deficit.
capital budget- It includes capital receipts and payments of the government. Debts from the public, foreign governments and the Reserve Bank of India form a major part of the government’s capital receipts. Capital expenditure is expenditure on the development of machinery, equipment, buildings, health facilities, education etc. Fiscal deficit occurs when the total expenditure of the government exceeds its total revenue.
Union Budget 2023 Summary
Union Budget 2023-24 presents Vision for Amrit Kaal – Blueprint for a Vibrant and Inclusive Economy
Capital investment outlay increased by 33 percent to Rs 10 lakh crore
– Effective capital expenditure at 4.5 per cent of GDP
Fiscal deficit estimated to be 5.9 per cent of GDP in budget estimate 2023-24
Real GDP will grow at the rate of 7 percent in the financial year 2022-23
Exports to grow at 12.5% in FY2023
Self-sustaining clean plant program to be launched with an outlay of Rs 2,200 crore to boost availability of quality planting material for high-value horticulture crops.
157 new nursing colleges will be established
Outlay for PM Awas Yojana increased by 66 percent to over Rs 79,000 crore
Highest ever capital outlay of Rs 2,40 lakh crore provided for Railways
Urban Infrastructure Development Fund (UIDF) will be set up through reduction in priority sector lending.
Under the Gobardhan scheme, 500 new ‘waste to wealth’ plants will be set up with a total investment of Rs 10,000 crore.
1000 Bio-input Resource Centers to be set up, which will form a nationally distributed micro-fertilizer and pesticide manufacturing network.
– Mantri Kaushal Vikas Yojana 4.0 to be launched.
Union Budget 2023-24 provided substantial relief for personal income tax.
New slabs were announced under the new tax regime
Resident individuals with total income up to Rs 7 lakh will not have to pay any income tax under the new tax regime
Under the new tax regime, salaried individuals will get a standard deduction of Rs 50,000.
The tax exemption limit on leave encashment on retirement of non-government salaried employees has been increased to Rs 25 lakh.
Several proposals were announced for the cooperative sector.
The indirect tax proposals are aimed at promoting exports, boosting domestic manufacturing, increasing domestic value addition and encouraging green energy and mobility.
The number of basic customs duty rates on goods other than textiles and agriculture was reduced from 21 to 13.
important financial terms
Economic Survey The Economic Survey is a flagship document of the Ministry of Finance. It is presented in both the Houses of the Parliament a day before the presentation of the Union Budget. The Economic Survey provides detailed information about the Indian economy in the previous financial year. Along with the current state of the economy, the Economic Survey provides the economic outlook. A team headed by the Chief Economic Advisor prepares the document. For the general public, the Economic Survey is a useful document to understand the state of economic affairs in India and the impact of the decisions taken by the Central Government.
inflation- Inflation, usually expressed in percentage, is a quantitative measure of the rate at which products and services in an economy are increased over a given period of time. When the price of a certain basket of goods increases due to internal or external economic factors, it can be termed as an increase in inflation. An increase in inflation indicates a decrease in the country’s currency value and purchasing power.
Treasury policy- Fiscal policy basically outlines projected taxation and government spending and serves as an important tool for monitoring the country’s economic situation. Fiscal policy refers to adjustments in spending levels and tax rates and also refers to the use of government spending and tax policies to influence economic conditions, especially aggregate demand for goods and services, employment, inflation, and economic growth. . It goes hand-in-hand with monetary policy, through which the Reserve Bank of India (RBI) influences the country’s money supply. In case of an ongoing recession, the government may implement an expansionary fiscal policy by reducing taxes to increase aggregate demand.
Fiscal deficit- The difference between the total expenditure of the government and its total revenue excluding the money generated from borrowings is known as fiscal deficit. It indicates the borrowing requirement of the government during the budget year, where non-debt capital receipts + recovery of loans + disinvestment proceeds of the government.
revenue loss- The difference between revenue expenditure and revenue receipts refers to the shortfall of current receipts or ‘deficit’ of the government over current expenditure. In terms of the formula, Revenue Deficit + RE-RR, where RE = Revenue Expenditure and RR = Revenue Receipts.
Disinvestment Disinvestment is a process involving the sale of existing assets. This is the opposite of investing. The government is looking to disinvest many of its assets which have turned sour over the years.
Capital expenditure- It refers to funds used by the government—in this case to acquire, maintain, or upgrade physical assets such as property, new infrastructure projects, or purchasing new equipment. Capital expenditure is classified as long-term expenditure and generally includes expenditure incurred by the government for asset creation, including development and infrastructure projects.
Outlay It is the division of funds or resources among different sectors or ministries. The outlay can also be referred to as the infrastructure of the Union budget.
surplus budget A situation when income or receipts exceed expenditure or outlay.
Tax- It is a legally mandated payment imposed on people by the government. Direct taxes include income tax and corporate tax.
Custom duty- Customs duty is a levy that is imposed when certain goods are imported/exported into the country. Eventually, these expenses are passed on to the end customer.
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