Key Terms and Definitions of Union Budget

The Union Budget uses a wide range of financial, fiscal, and policy-related terms that appear in budget speeches, official documents, and media coverage. Understanding these terms helps readers better interpret budget announcements and their broader economic context.

This page serves as a comprehensive glossary of commonly used Union Budget terms and definitions, explained clearly for quick and easy reference.

Budget Glossary: Key Union Budget Terms Explained

Union Budget: The Union Budget is the annual financial statement of the Government of India that presents estimated revenues and expenditures for the upcoming financial year.

Budget Estimates (BE): Budget Estimates are the proposed estimates of government revenue and expenditure for the next financial year.

Revised Estimates (RE): Revised Estimates are updated projections of revenue and expenditure for the current financial year, adjusted based on actual trends.

Revenue Budget: The revenue budget includes revenue receipts and revenue expenditure related to the government’s routine operations.

Capital Budget: The capital budget consists of capital receipts and capital expenditure, such as borrowings, loans, and investments in infrastructure.

Revenue Receipts: Revenue receipts are income earned by the government through taxes and non-tax sources that do not create liabilities.

Capital Receipts: Capital receipts include borrowings, disinvestment proceeds, and loan recoveries that either create liabilities or reduce assets.

Tax Revenue: Tax revenue refers to income earned by the government through direct and indirect taxes.

Non-Tax Revenue: Non-tax revenue includes income from dividends, interest receipts, fees, and other non-tax sources.

Direct Taxes: Direct taxes are paid directly by individuals or entities to the government, such as income tax and corporate tax.

Indirect Taxes: Indirect taxes are levied on goods and services and collected from consumers through intermediaries, such as GST.

Corporate Tax: Corporate tax is the tax levied on the profits earned by companies and firms.

Minimum Alternate Tax (MAT): MAT is a minimum tax payable by companies even if their taxable income is low under normal tax provisions.

Customs Duty: Customs duty is a tax imposed on goods imported into or exported from the country.

Excise Duty: Excise duty was an indirect tax levied on goods manufactured domestically, now largely subsumed under GST.

Fiscal Deficit: Fiscal deficit is the excess of the government’s total expenditure over its total non-borrowed receipts in a financial year.

Gross Fiscal Deficit: Gross fiscal deficit represents the total borrowing requirement of the government during a financial year.

Net Fiscal Deficit: Net fiscal deficit is the fiscal deficit reduced by net lending by the government.

Revenue Deficit: Revenue deficit arises when revenue expenditure exceeds revenue receipts.

Primary Deficit: Primary deficit is the fiscal deficit minus interest payments, indicating current fiscal operations excluding past debt obligations.

Interest Payments: Interest payments refer to the amount paid by the government on its accumulated borrowings.

Borrowings: Borrowings are funds raised by the government through market loans, treasury bills, and other instruments.

Subsidies: Subsidies are financial assistance provided by the government to support specific sectors or reduce costs for consumers.

Fiscal Policy: Fiscal policy involves government decisions related to taxation and public spending to influence economic growth and stability.

Monetary Policy: Monetary policy refers to actions taken by the central bank to regulate money supply and credit conditions in the economy.

Gross Domestic Product (GDP): GDP represents the total value of goods and services produced within the country and is often used as a reference point in budget targets.

FRBM Act: The Fiscal Responsibility and Budget Management (FRBM) Act aims to promote fiscal discipline by setting targets for deficits and debt levels.

Finance Bill: The Finance Bill gives legal effect to taxation proposals announced in the Union Budget.

Appropriation Bill: The Appropriation Bill authorizes the government to withdraw funds from the Consolidated Fund of India to meet expenditure.

Vote on Account: A Vote on Account allows the government to meet essential expenditures for a short period until the full budget is approved.

Demands for Grants: Demands for Grants are detailed expenditure proposals presented by ministries for parliamentary approval.

Supplementary Grants: Supplementary Grants are additional funds sought when allocated amounts prove insufficient.

Disinvestment: Disinvestment refers to the sale of the government’s stake in public sector enterprises.

Consolidated Fund of India: The Consolidated Fund of India includes all government revenues, borrowings, and loan recoveries.

Contingency Fund of India: The Contingency Fund of India is used to meet unforeseen expenditure pending parliamentary approval.

Public Account: The Public Account records funds where the government acts as a trustee, such as provident funds and small savings.

Outcome Budget: The Outcome Budget outlines the expected results and performance indicators of government spending programs.

Plan Expenditure: Plan expenditure relates to spending on government development programs and schemes.

Non-Plan Expenditure: Non-plan expenditure includes routine expenses such as salaries, pensions, and interest payments.

Cut Motions: Cut Motions are proposals moved by Members of Parliament to reduce demands for grants during budget discussions.

Guillotine: Guillotine refers to the process of voting on outstanding demands for grants without discussion due to time constraints.

Why Understanding Budget Terms Is Important: Understanding Union Budget terminology helps individuals, investors, and businesses better interpret policy announcements, assess fiscal priorities, and follow economic developments more effectively.

Track the Latest Union Budget Updates: While this glossary explains commonly used budget terms and definitions, the Union Budget continues to evolve each year with new announcements and policy measures.