Budget terminologies1
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Budget terminologies1

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Simple terminlogy used in union budget

Simple terminlogy used in union budget

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Budget terminologies1 Budget terminologies1 Presentation Transcript

  • Union Budget - Terminologies
  • Overview
    Introduction
    Budgetary Estimates
    Revised Estimates
    Budget Deficit
    Revenue Deficit
    Fiscal Deficit
    Current Account Deficit
    Fiscal Consolidation
    GDP growth vis-à-vis Credit Growth
    Questions
  • What is Budget?
    Is a list of all planned expenses and revenues.
    Is a plan of savings & spending.
    It is derived from French ‘bougote’ meaning purse.
    First General Budget was announced on November 26, 1947.
    Budget comprises data for three years
    Actual figures for the preceding year.
    Budget Estimates for the current year.
    Revised Estimates for the current year.
    Budget estimates for the following year
  • Budgetary Estimates
    Used for cost estimates at an early stage.
    When there is some limited information and or some info is not available.
    It is like an initial estimation to begin with.
  • Revised Estimates
    It is a change in the estimate of the budget, when the budget period is in force.
    Subject to both exogenous and endogenous factors.
    Includes information not available at the time of Budgetary Estimate.
    Subject to scrutiny and potential alteration.
  • Budget Deficit
    Difference between public spending (expenditure) and revenues(receipts).
    For a particular year, it is the total of fiscal deficit for the year plus the past debt accumulated.
    Debt is an accumulation of yearly deficits.
    It is the net sum of all past deficit/surplus if any over the years
  • Budget Deficit
    Government Expenditure
    Consumption exp
    Revenue Exp
    Interest Payments
    Total Govt Expenditure
    Transfer Payments
    Capital Exp
    Exp on Infrastructure
  • Budget Deficit
    Government Receipts
    Tax Revenues
    Rev Receipts
    Non Tax revenues
    Total Govt Receipts
    Recovery of loans
    Capital Receipts
    Pub Sec Disinvestments
  • Revenue Deficit
    What is revenue?
    Tax Revenue
    Non Tax Revenue
    What is Revenue Deficit?
    What is Revenue Surplus?
    What is Revenue Expenditure?
    Effective Revenue Deficit .
  • Revenue Deficit
  • Fiscal Deficit
    It is an economic phenomenon, where the Governments total expenditure surpasses the revenue generated.
    It is the difference between the Government’s total receipts excluding the borrowings and total expenditure, i.e. Total Gov. Exp – Revenue Receipts + Non Debt Capital Receipts.
    Revenue Receipts includes
    Tax Revenue receipts
    Non Tax Revenue receipts
    Non Debt Capital Receipt includes
    Disinvestment
    Dividends from PSEs.
  • Fiscal Deficit
  • Current Account Deficit
    Current Account is of two parts – Trade Account & Invisible Account.
    Trade Account – Balance from Import and Exports of Merchandise only.
    Invisible Account – Consists of 3 components – Services, Investment Income, Transfer Payments.
  • Current Account Deficit
    It is the difference between the components of the Current Account in exports and imports, where imports are more than exports.
    The Country becomes a debtor to other countries.
    More money is paid out, than what is being brought into the country.
  • Current Account Deficit
  • Current Account Deficit
    Ways to reduce Current Account Deficit
    Increase exports – Subsidise exports, incentives to exporters
    Decrease imports – Import restrictions, quotas or duties
    Devaluation of Currency
    Promoting investor friendly environment
    Adjusting Government spending to favour domestic suppliers
  • Current Account Deficit
  • Fiscal Consolidation
    A conscious policy of the Government to live within its means.
    It is a long term process, a road map and is not a single budget announcement.
    Efforts to raise revenues.
    Bring down wasteful expenditure.
    Fiscal Responsibility and Budget Management Act 2003 (FRBM Act)
    Target for states to eliminate revenue deficits and fiscal deficit 3% of State GDP for 2014-15, as per 13th Finance Commission.
    Public Debt Management Agency Bill to be introduced.
  • GDP
    GDP – Gross Domestic Product, refers to the market value of final goods and services produced in an economy in a given period of time.
    GDP measurement methods
    Expenditure method
    Production method
    Income method
    All should give the same results.
    It mainly depend upon on the Risk Apatite for Investment.
  • GDP vs GNP
    GDP
    Total value of products & Services produced within the territorial boundary of a country.
    GDP = consumption + investment + (government spending) + (exports − imports)
    GNP
    Total value of Goods and Services produced by all nationals of a country (whether within or outside the country).
    GNP = GDP + NFIA(Net Factor Income From Abroad)
  • Thank You!!!