Union Budget 2024: Key Financial Terms You Should Know Before the Budget Session

Union Budget 2024: Finance Minister Nirmala Sitharaman is preparing to present the 2024 Union Budget on February 1, 2024. Under the Modi government, the finance minister will present the budget for the sixth year in a row. Sitharaman will unveil the interim budget rather than the full-year budget because the Lok Sabha elections are due early this year. The budget is set aside for the upcoming fiscal year, which begins on April 1 and ends on March 31 of the following year. Ahead of the interim budget, there are some common and important terms that one must know to understand the significance of the budget completely. 

Economic Survey

In many countries, the Finance Ministry or a related government department presents the Economic Survey annually. In addition to offering insights into current economic trends, it offers a thorough analysis of the country’s economic performance during the previous year. Data from multiple sectors, policy recommendations, and macroeconomic indicators are frequently included in the survey. It acts as a prelude to the budget and helps decision-makers make well-informed choices given the state of the economy.

Financial Bill

A financial bill is a proposed law that specifies the government’s revenue and outlays for a given time frame, usually a fiscal year. It is an essential part of the budgetary process and has clauses about taxes, spending, and other money-related issues. Before becoming law, the Financial Bill must be approved by the legislative body. This approval is essential for carrying out the budget’s financial policies.

Capital Expenditure

Government spending on purchasing, renovating, or maintaining tangible assets like buildings, machinery, and infrastructure is referred to as capital expenditure. Capital expenditures are long-term investments that help to build and enhance the country’s productive capacity, in contrast to current expenditures, which pay for ongoing operating costs. Capital projects are essential for promoting economic growth and frequently yield long-term benefits.

Fiscal Deficit

The difference between the government’s total outlays and total receipts, less money from borrowing, is known as the fiscal deficit. It is a crucial sign of a government's financial stability and shows the amount of borrowing required to cover its spending commitments. While a sustainable deficit level is required for economic growth and development, a high fiscal deficit may raise questions about a government's capacity to manage its finances.

Budget Expectations

The term “budget expectations” describes the projected outcomes or expected results that different stakeholders—including people, companies, and interest groups—have for the government budget. These expectations are influenced by various factors, including the state of the economy, prior budgetary announcements, and the government’s overall policy direction. Expectations from stakeholders about spending priorities, tax reforms, and general economic policies that may affect them may exist.