Union Budget 2019 and Aam Budget 2019: Here are some key terms related to Budget explained.
Finance Minister Piyush Goyal will present the NDA government's interim budget on Friday. two months ahead of the general elections. All eyes are will be on the Budget presentation and Mr Goyal's speech as the government may announce sops for common man, farmers and traders.
For the PM Modi Cabinet, which is facing increasing criticism over several issues like rising farmer distress, loss of jobs and a lower growth rate, the Budget will be a do or die attempt. The government is likely to be focused on wooing its three key constituencies -- farmers, the middle class-women-senior citizens segment and small businesses.
From Common folks to experts, everyone will be glued to the TV, computer or mobile screens watching the Budget speech live which will begin at 11 am. However, not all of us can understand the economic jargons and terms that are used in the document.
For those who find it difficult to understand the Budget presentation because of limited knowledge about economy and finance, here are 10 key terms explained to you in easy layman language:
1. Vote-on-account
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Vote on Account is an advance grant that enables the government to carry on until the voting of demands for grants and the passing of the Appropriation and Finance Bill. This enables the government to fund its expenses for a short period of time or until a full-budget is passed. Normally, the Vote on Account is taken for two months only.
2. Monetary policy
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Monetary policy is the macroeconomic policy issued by the central bank of the country. It includes the management of money supply, interest rates and is the economic approach used by a government to meet macroeconomic goals like inflation, consumption, growth, and liquidity.
3. Fiscal deficit
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It is a term used to denote a deficit in government earnings during a financial year. A fiscal deficit occurs when the total expenditure of the government exceeds the total revenue (excluding borrowed funds).
4. Capital gains tax
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Capital gains tax is a tax levied on gains or profit earned through a sale of capital assets in the previous year. It is of two kinds i.e Short term capital gains tax ( STCGT ) and Long term capital gains tax (LTCGT). A 10 per cent LTCG is levied on the gains from the capital held for more than 36 months, while 12 months in case of stocks, debentures, bonds, govt. securities etc. However, As per Union Budget 2018, LTCG on the sale of listed securities exceeding Rs 1 lakh will be taxed at 10% without the benefit of indexation. On the other hand, a 15 per cent STCG is levied on the capital held for less than 36 months.
5. Macro-economics
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It is the study of economics that identifies the behavior and performance of the economy of a country as a whole. It emphasises the aggregate changes in the national economy such as unemployment, growth rate, gross domestic product and inflation. It also takes into account all supportive aggregate indicators and the micro-economics factors that influence the economy. It helps the government and corporations in formulating the economic policies and strategies in the national interest.
6. Micro-economics
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It is the core study on the behavior of individuals, households and firms' in policy formulation and allocation of resources in the nation. It is related to the markets of goods and services, that deals with individual and economic issues. Its' theories deal with people's performance, the number of factors influencing their choices and how these choices affect the markets in deciding the price, demand and supply of goods and services.
7. Excise duty
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An excise or excise duty is a tax levied on goods produced within the country (other than customs duties, charged on goods from outside the country). It is a kind of tax on the production or sale of a good. Excise duty is an indirect tax that is not paid directly by the customer but is passed on to the consumer by a manufacturer or producer of goods as a part of the price.
8. Tariffs
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A tariff is a tax charged by a government on imported goods and services from other countries that increases the price in order to make imports less desirable, or at least less competitive, versus domestic goods and services. Tariffs are generally used as a tool to cut trades from particular countries or reducing the importation of specific types of goods and services.
9. Surcharge on income tax
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t's an additional tax that is levied on the tax itself. Government puts different surcharge rates on various income categories. In addition to surcharge, all individuals who are liable to pay income tax also have to pay health and education cess on the tax payable.
10. GDP
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Gross Domestic Product (GDP) is an aggregate value of all the goods and services produced in the country during the financial year or quarterly or half yearly. It helps in determining the economic status of a country in order to formulate corrective measures on time. However, there are few limitations of GDP, as it does not include important parameters like cost of living, standard, purchasing capacity, inflation, unemployment, etc.
11. Revenue deficit
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Union Ministry of Finance through its Twitter handle explained Revenue deficit as "Generally Fiscal Deficit takes place due to either Revenue Deficit or a major hike in Capital Expenditure. But what is a ‘Revenue Deficit’?"
12. Primary Deficit
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Describing the term ‘Primary Deficit’, the ministry stated, "‘Primary Deficit’ is a part of Fiscal deficit. Let us see how ‘Primary Deficit’ is defined."
13. Direct & Indirect Taxes
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Talking about the country's tax structure, the MoF tweeted, "Tax structure in India is divided mainly into Direct & Indirect Taxes. In the last 4 years, the present Government has undertaken multiple Tax Policy & Process Simplification Reforms to have greater predictability, transparency, fairness & automation among others."
14. GST
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It also explained the much-discussed GST as, "Goods & Services Tax (GST) has paved the way to a harmonized system of Indirect Taxes bringing uniformity in the taxation system in India. GST has also helped to ease the complex multiple Indirect Tax regime. Today we will be familiarizing with GST & associated terms:"
15. Fiscal Policy
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The Finance Ministry defined Fiscal Policy and tweeted, “It is the government actions with respect to aggregate levels of revenue and spending. Fiscal Policy is implemented through the budget and is the primary means by which the government can influence the economy.”
16. Inflation
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Explaining inflation, the ministry said, “A sustained increase in the general price level. The inflation rate is the percentage rate of change in the price level.”
17. Finance Bill
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About Finance Bill, the Finance Ministry said, “ The Bill produced immediately after the presentation of the Union Budget detailing the Imposition, abolition, alteration or regulation of taxes proposed in the Budget.”
18. Excess Grants
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Explaining Excess Grants, the ministry said, “If the total expenditure under a Grant exceeds the provision allowed through its original Grant and Supplementary Grant, then, the excess requires regularisation by obtaining the Excess Grant from the Parliament under Article 115 of the Constitution of India. It will have to go through the whole process as in the case of the Annual Budget, i.e. through presentation of Demands for Grants and passing of Appropriation Bills.”
