How to understand key terms used in Budget 2023: The budget speech of the Finance Minister is included in the most important economic documents of the year. But many such words are used in this speech, whose meaning is sometimes not understood. If you know the meaning of some such keywords then it will be easy to understand the budget speech.
Annual Financial Statement
Union Budget is also known as Annual Financial Statement (AFS). It means accounting expenditures and receipts during a particular financial year. Under Article 112 of the Constitution, it is mandatory for the Central Government to present its AFS before the Parliament. In the budget, along with the details of the current financial year, the estimate for the next financial year is also given, which is called Budget Estimates (BE or budget estimates).
Fiscal policy or fiscal policy includes the tax policy of the government, details, and estimates of tax income and expenses. It is a major means of indicating the economic condition of the country. The government does work by planning its expenses and adjustment in tax rates only under the fiscal policy. Fiscal policy has a direct impact on the total demand for goods and services, employment, inflation, and economic growth in the country.
Another important policy affecting important aspects of the economy like growth rate, demand, and the inflation rate is the monetary policy, the main responsibility of which is determined by the Reserve Bank of India (RBI). Through monetary policy, the Reserve Bank affects the money supply and interest rates in the country.
If the total expenditure of the government exceeds the total revenue, then it has to bear the loss. This negative difference between expenditure and revenue is called Fiscal Deficit. While calculating the fiscal deficit, the external borrowings of the government are not added.
Current Account Deficit
Current Account Deficit is also called current account deficit in Hindi. It indicates the condition of the country's international trade i.e. Export-Import. Generally, the value of total exports in India is more than the value of total imports. This difference is the reason for the trade deficit and current account deficit.
The government faces a revenue deficit when its actual net income or revenue generation is less than the projected net income. This happens when the amount of actual revenue and expenditure of the government does not match the amount of revenue and expenditure estimated in the budget. The revenue deficit also shows how much the government is spending more than its regular income.
Capital Expenditure or Capital Expenditure refers to the expenses that the government spends on works such as creating new infrastructure, and buying or upgrading new physical assets or equipment. These are long-term expenses, whose benefits are available in the long run. Works like construction of roads, railways, ports, dams and powerhouses are prime examples of capital expenditure of the government.
Goods and Services Tax (GST)
The Finance Minister can mention the Goods and Services Tax (GST) while giving details of the government's income in her budget speech, but no changes are made in it through the budget. This is because all the decisions related to the slab and structure of GST are taken in the meetings of the GST Council, in which the representatives of the state governments play an important role.
Customs duty is levied on export or import of goods. Its burden ultimately falls on the end user of these items. Custom duty has so far been kept out of the purview of GST. Therefore, the government can make changes in these through the budget.