Breaking down some key terms used in budget -Governance Now

Breaking down some key terms used in budget

The government will present a comprehensive report of its revenues and expenditures comprising of significant elements on Feb 1

GN Bureau | January 21, 2019

#Budget 2019 #budget session #finance ministry #PM Modi #Arun Jaitley #parliament #key terms #BJP #NDA

The central government is set to present a complex and comprehensive report of its revenues and expenditures throughout the financial year in the budget address on February 1. Modi led NDA government will present the interim budget this year as elections are set to take place in April.

The interim budget comprises of significant elements such as where the government is getting money from and where it is being spent, along with forecasts of growth and fiscal position.

We break down some key terms used in budget:

Actual expenditure: The total amount spent under each head that may exceed or fall short of the revised expenditure. They are presented for the earlier financial year.

Budget estimate: It is the amount allocated to any ministry of scheme in the budget paper for the following year.

Budgetary deficit: It is when the government has spent more than it earned in the year i.e. difference between the all receipts and expenses in both revenue and capital account.

Capital expenditure: Expenditure used to build assets or to reduce liabilities. For example, long-term expenditures such as building a road, or paying back a loan. They may not be recurring in nature.

Charged expenditure: This include items which are not voted in the parliament but are still charged directly to the government revenues. For example, interest paid by the government on its debt, salaries and allowances of the president, judges of the supreme court, etc.

Disinvestment: It is when the government decided to sell existing assets.

Finance bill: It is a money bill through which the government presents new taxes, an altercation of existing taxes or continuation of the ongoing taxes to the parliament.

Plan expenditure: Expenditure on schemes and projects covered by the five-year plans. These plans are established by the Planning Commission after conferring individual ministries.

Non-plan expenditure: Ongoing expenditure by the government not covered by the plans. These include interest payments on government debt, expenditure on organs of the state such as the judiciary and the police and expenditure on the maintenance of existing government establishments such as schools and hospitals.

Revenue expenditure: Expenditure which is not used to create assets e.g. expenses on salaries or other administrative costs.

Zero-based budgeting: Zero-based budgeting starts from a zero base where all expenditures and revenues begin from scratch. Budget estimates for each ministry or heads are provided on the basis of what is needed for the upcoming period, regardless of the budget activity of the previous years.

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