Budget 2024: Key terms you should know before the announcement

Budget 2024: Finance Minister Nirmala Sitharaman will present the Interim Budget 2024 on February 1, 2024, ahead of the upcoming general elections later in the year. The budget is expected to cover various financial indicators, including inflation, fiscal deficit, capital expenditure, revenue receipts, bad loans, and more.

The Union Budget, also known as the annual financial statement (AFS), is presented by the government to highlight its expenditures and receipts during the financial year, as per Article 112 of the Constitution. The budget outlines estimates for the government's accounts for the next fiscal year, known as budget estimates, which require parliamentary approval. The Economic Survey, presented ahead of the Union Budget, provides detailed information about the Indian economy for the past financial year and economic outlook.

Inflation

Inflation, expressed as a percentage, measures the rate at which products and services in an economy increase over time. Rising inflation leads to a decrease in the country's currency value and purchasing power.

Divestment

Divestment is the sale of existing assets, while capital expenditure (capex) refers to funds used by the government for physical asset acquisition, maintenance, or upgrades. Customs duty is a levy on imported or exported goods, and the Goods and Services Tax (GST) is managed by the GST Council and not announced in the budget.

Fiscal policy

Fiscal policy involves estimated taxation and government spending, influencing economic conditions like aggregate demand, employment, inflation, and economic growth.

Fiscal deficit

A fiscal deficit occurs when the government's total expenditure exceeds total revenue, excluding external borrowings, with an ideal limit not exceeding 4 per cent of the gross domestic product (GDP).

Revenue deficit

A revenue deficit occurs when the government's net income is less than projected, and a revenue surplus is the opposite. Plan and non-plan expenditures cover budget estimates determined through stakeholder discussions, with non-plan expenses involving significant government budgetary spending, such as debt servicing, defence, and interest payments.

Capital expenditure

Capital expenditure (capex) pertains to the funds utilised by the government in this context to acquire, maintain, or enhance physical assets like property, initiate new infrastructural projects, or purchase new equipment. Categorised as a long-term expenditure, capital expenditure typically covers costs incurred by the government for asset building, encompassing development and infrastructural projects. When the government allocates funds to substantial projects, the associated expenses are generally labelled as capital expenditures.

Customs Duty

Customs duty is a tariff imposed when specific goods are brought into or exported out of the country. Ultimately, these costs are transferred to the end consumer. As customs duty falls outside the scope of Goods and Services Tax (GST), the government has the flexibility to announce changes, if deemed necessary, in its budget presentation.

It constitutes a crucial element of the budget, and numerous sectors will be eagerly anticipating any announcements related to customs duty.

Goods and Services Tax

In contrast to customs duty, alterations to the Goods and Services Tax (GST) are not disclosed during the budget presentation. Decisions on changes to GST slabs and structures are made by the GST Council.