From fiscal policy to revenue expenditure - Here are all key financial terms to know ahead of Union Budget 2023 - Details!

Union Budget 2023: With almost a month left for the Union Budget 2023 to present in the Parliament by Finance Minister Nirmala Sitharaman, here are some terminologies that people should be aware of before heading to watch the Financial Bill of the next fiscal. 

The Financial Year 2023-24 (FY23) Union Budget shall be tabled in Parliament on February 1, 2023. 

Below are some key terms that everyone should know while watching Union Budget 2023

Fiscal Policy

The government uses spending and tax policies to control economic conditions and achieve sustainable growth under Fiscal Policy. A healthy fiscal policy is significant to control inflation and increase employment while maintaining the value of money. It plays a crucial role in managing the economy.

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Fiscal Deficit 

This can serve as an indicator of how well the government is able to manage its finances. It is the difference between the total revenue and total expenditure of the government in a fiscal year. A fiscal deficit is when the government's expenditure is more than its revenue in the given year.  

Disinvestment

Disinvestment is a policy of the government through which it liquidates (sells its investment or property to make them available in the form of money) an asset or subsidiary. 

Capital Expenditure

Capital Expenditure is the money spent on the acquisition of assets like land, buildings, machinery, and equipment, as well as investment in shares.

Under capital expenditure, government spending goes into the creation of assets like schools, colleges, hospitals, roads, bridges, dams, railway lines, airports, and seaports. It also covers the acquisition of equipment and machinery including those used for defense purposes and investment by the government that yields profits or dividends in the future are included in capital expenditure.

Revenue Expenditure 

Expenditures that do not lead to the creation of fixed assets are called revenue expenditures. The government spends money under various accounting heads, such as paying interest on loans, salaries & pensions, subsidies, and spending on different ministries and departments, among others. 

Grants made to state governments and other parties are also treated as revenue expenditures, even though these might be used for the creation of fixed assets.

Direct Tax 

As the name suggests direct tax is levied on taxpayers directly. Income tax, wealth tax, and corporate tax are some subcategories of direct tax. Direct taxes in India are overseen by the Central Board of Direct Taxes (CBDT). 

Current Account Deficit

Current Account deficit (CAD) is the difference between the export and import of a country. It calculates the difference between the money received and sent from a country on the trade of goods and services as well as the movement of capital from domestic production factors abroad.

Revenue Deficit

Revenue Deficit is when the government's net income is less than the projected net income. This occurs when the amount of revenue and expenditure does not correspond with the budgeted revenue and expenditure.

Revenue Surplus

Revenue surplus is the opposite of a revenue deficit, which is when the government's net realised income or revenue is more than the projected net income. The actual revenue and expenditure are more than the budget estimates.

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