Budget terms you must know


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If the Union Budget has got you confused, here's to following what the key terms indicate.... An article by Fundsupermart.com

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Budget terms you must know

  1. 1. Budget Terms You Must KnowIf the Union Budget has got you confused, heres to following what the key terms indicate....Author : iFast ContentIt’s Budget time. And if you are a bit confused with all the jargon flying around, read on.The Union Budget of India is the annual statement of central government’s accounts for theprevious fiscal year. Basically, the annual report of the country. It contains the government’srevenue and expenditure for a particular fiscal year which runs from April 1 to March 31. It is themost extensive account of the government’s finances.It is also a statement of next year’s tax and tariff provisions and a projection of the receipts anddisbursements in the next fiscal year.The Finance Bill, on the other hand, is that part of the Budget which is basically numbers. Itcontains the tax and tariff provisions that have to be approved and passed by the parliament.Once approved, the Finance Bill becomes the Finance Act.  Revenue & Capital ExpenditureRevenue Expenditure, such as subsidies and interest payments, does not create any asset.Capital Expenditure is what is spent on acquiring or creating an asset. It may include investmentin shares, machinery, building or land, or creation of a highway or dam. It also includesadvancements or loans that are approved or sanctioned by the central government to the stategovernments, union territories and public sector undertakings.  Plan & Non-Plan ExpenditureExpenditure incurred by the central government in consultation with the Planning Commissionis known as Plan Expenditure. It refers to the annual funds allocated to the PlanningCommission for development schemes outlined in the 5-year plans.Non-Plan Expenditure is what is incurred by the central government for the day-to-day runningof the country. It includes spending on defense, subsidies, administrative costs, interestpayments, salaries and pensions.  Revenue DeficitThe difference between the revenue expenditure and revenue receipts of the government duringthe year. It shows by how much the regular expenses are higher than the regular receipts.
  2. 2.  Fiscal DeficitThis is the difference between the total expenditure of the government in a year and the revenuereceipts and the recoveries of loans. What this means is that the government will have to borrowto bridge the gap between income and expenditure. The fiscal deficit for the current year hasbeen estimated at little more than 5% of GDP.  Primary DeficitThis is the amount arrived at when the Fiscal Deficit is reduced by the interest payments for theyear. It shows the amount of the deficit that arises on account of the activities other than theinterest payments. A large difference between the Fiscal Deficit and the Primary Deficit is a signthat interest payments have ballooned.  Gross Domestic Product (GDP)This is the total market value of the goods and services manufactured within the country in afinancial year, as measured by the Central Statistics Office.  Gross National Product (GNP)The total market value of the finished goods and services manufactured within the country in agiven financial year + income earned by the local residents from investments made abroad -minus income earned by foreigners in the domestic market.  Public DebtThe difference between borrowings and repayments during the year is the net accretion to thepublic debt. Public debt can be split into two heads, internal debt (money borrowed within thecountry) and external debt (funds borrowed from non-Indian sources).Debt servicing is the amount that is spent in managing the debt of the country.  Direct & Indirect TaxesDirect taxes are levied on the income of individuals (income tax, inheritance tax) ororganizations /companies / firms (corporate tax).Indirect taxes are paid on manufactured goods, whether produced locally or imported (exciseduty, customs duty).  Central Plan OutlayIt is the division of monetary resources among the different sectors in the economy and theministries of the government.
  3. 3.  Balance of TradeThis is the difference between the monetary value of exports and imports.  Current AccountA Current Account is the sum of a nations balance of trade, net factor income (interest,dividends), and net transfer payments (e.g: foreign aid).  Balance of Payments (BoP)The BOP records the country’s monetary transactions with the rest of the world. All tradesconducted by the private and public sector are accounted for in the BOP to determine how muchmoney is going in and out of a country.Within the BOP there are three separate categories:Current Account: Inflow and outflow of goods, services, income, current transferCapital Account: All international capital transfersFinancial Account: International monetary flows such as business or portfolio investmentsTo buy and sell mutual funds online, click hereContent Team,Fundsupermart.com | iFAST Financial India Pvt Ltd.DISCLAIMER iFAST and/or its content and research team’s licensed representatives may own or have positions in the mutual funds of any of theAsset Management Company mentioned or referred to in the article, and may from time to time add or dispose of, or be materiallyinterested in any such. This article is not to be construed as an offer or solicitation for the subscription, purchase or sale of anymutual fund. No investment decision should be taken without first viewing a mutual funds scheme information document includingstatement of additional information. Any advice herein is made on a general basis and does not take into account the specificinvestment objectives of the specific person or group of persons. Investors should seek for professional investment, tax, and legaladvice before making an investment or any other decision. Past performance and any forecast is not necessarily indicative of thefuture or likely performance of the mutual fund. The value of mutual funds and the income from them may fall as well as rise.Opinions expressed herein are subject to change without notice. Please read our disclaimer on the website .Please read ourdisclaimer in the website. Risk Factors: Mutual funds, like securities investments, are subject to market risks and there is noguarantee against loss in the Scheme or that the Scheme’s objectives will be achieved. As with any investment in securities, theNAV of the Units issued under the Scheme can go up or down depending on various factors and forces affecting capital markets.Past performance of the Sponsor/the AMC/the Mutual Fund does not indicate the future performance of the Scheme. The name ofthe Scheme does not in any manner indicate the quality of the Scheme, its future prospects or returns. Please read the Statement ofAdditional Information and Scheme Information Document carefully before investing.