As Union Finance Minister Nirmala Sitharaman is set to announce the Interim Union Budget for 2024 in Parliament on February 1, many citizens may find themselves grappling with complex financial jargon.
As the budget unfolds, these are some terms that may pop up, and understanding them can empower citizens to comprehend the government's financial decisions better. So, as you tune in to the budget presentation, fear not the financial jargon. We've got you covered with a simplified guide to help you navigate through the complexities and grasp the key aspects that shape India's fiscal landscape.
1. Vote on Account
A vote on account, despite its intimidating name, is a provision allowing the government to seek Parliament's approval for essential expenditures covering the initial months of the fiscal year. This ensures the smooth functioning of crucial government activities while the full budget is being formulated.
2. Direct Taxes and Indirect Taxes
Direct taxes are levied directly on individuals and businesses based on their income and profits, including income tax, corporate tax, and capital gains tax. In contrast, indirect taxes, such as the Goods and Services Tax (GST) and customs duties, affect consumers indirectly by being imposed on goods and services.
3. Corporate Taxes
Corporate taxes are imposed on the profits earned by businesses. The rate at which these taxes are applied can impact corporate behavior and, consequently, economic growth, making adjustments to corporate tax rates significant for businesses and the overall economy.
4. Fiscal Deficit
Fiscal deficit denotes the gap between the government's total expenditures and total revenues, excluding borrowings. A lower fiscal deficit is generally seen as positive for economic health.
5. Capital Expenditure
Capital expenditure involves the government's spending on long-term assets like infrastructure, machinery, and technology, serving as a key indicator of the government's commitment to enhancing the country's productive capacity.
6. Current Account Deficit (CAD)
The current account deficit represents the difference between a country's savings and its investment. If a country imports more goods and services than it exports, it results in a current account deficit.
7. Disinvestment and Privatization
Disinvestment is the government selling part or all of its shares in a public-sector undertaking, while privatization involves transferring ownership and control of public assets to private entities.
8. Subsidies
Subsidies refer to the financial assistance provided by the government to certain sectors or individuals to encourage specific economic activities, such as agricultural subsidies or those for essential goods.
9. Goods and Services Tax (GST) Compensation Cess
The GST Compensation Cess is a tax levied to compensate states for any revenue loss due to the implementation of the Goods and Services Tax (GST), offering insights into the financial health of states.
10. Direct Benefit Transfer (DBT)
Direct Benefit Transfer is a system where the government directly transfers subsidies and benefits to the bank accounts of eligible citizens, aiming to reduce leakages and ensure more efficient service delivery.
