Budget Glossary :

Budget presentation is a grand affair only in India. Nowhere in the world, is so much importance
rendered to the presentation of a simple document, which details the government's receipts and
payments. The Budget is a detailed plan for a measured period, setting goals and outlining
resources to meet them. It also gives details of tax revenues and other receipts besides a general
break-up of expenditure, allocation of plan outlays by sectors as well as by various ministries. But
the complicated document has more technical words in it. Read on for explanations for some of
them that feature in the hefty document.
AD-VALOREM DUTIES: Are the duties determined as a certain percentage of the price of the
product.
APPROPRIATION BILL: A Bill that enables withdrawal of money from the Consolidated Fund to pay
off expenses. These are instruments that Parliament clears after the demand for grants has been
voted by the Lok Sabha.
BUDGET DEFICIT: A situation that arises when expenses exceed revenues. Here the entire
budgetary exercise falls short of allocating enough funds to a certain area.
BUDGET ESTIMATES: Are estimates of government spending on various sectors during the year,
together with an estimate of the income in the form of tax revenues. These estimates contain an
estimate of Fiscal Deficit and the Revenue Deficit for the year.
CAPITAL GOODS: Are goods that are used in the manufacturing of finished products.
CAPITAL BUDGET: Consists of capital receipts and payments, loans and advances granted by the
Union Government to State and Union Territory governments, government companies, corporations
and other parties. This also accounts for market loans, borrowings from the Reserve Bank of India
and other institutions through the sale of Treasury Bills and loans acquired from foreign
governments.
CAPITAL PAYMENTS: Are expenses incurred on acquisition of assets.
CAPITAL EXPENDITURE: Is the expenditure on acquisition of assets such as land, building and
machinery, and also investments in shares, etc. Other items that also fall under this category
include, loans and advances sanctioned by the Centre to State governments, union territories and
public sector undertakings.
CAPITAL RECEIPT: Are loans raised by the Government from the public (often referred to as
market loans); borrowings by the Government from the Reserve Bank of India (RBI) and other
parties through sale of Treasury Bills; loans received from foreign governments and bodies; and
recoveries of loans granted by the Union Government to State governments, Union Territories and
other parties. It can also include the proceeds from divestment of government equity in public
enterprises.
CENVAT: A replacement for the earlier MODVAT scheme and is meant for reducing the cascading
effect of indirect taxes on finished products. The scheme is a more extensive one with most goods
brought under its preview.
COUNTERVAILING DUTIES: Are levied on imports that may lead to price rise in the domestic
market. It is imposed with the intention of discouraging unfair trading practices by other countries.
CONSOLIDATED FUND: Comprises of all revenues received by Government, the loans raised by it,
and receipts from recoveries of loans granted by it.
CONTINGENCY FUND: Is the fund into which the Government utilises to meet emergencies or
unforeseen expenditures, especially when it cannot wait for authorisation by Parliament. The
Contingency Fund is placed at the disposal of the President for such financial exigencies. The
amount that is withdrawn from the fund is recouped from Consolidated Fund.
CURRENT ACCOUNT DEFICIT: Is the difference between the nation's exports and imports.
CUSTOM DUTIES: Levies on goods imported to or exported from the country.
CENTRAL PLAN: Centre's budgetary support to the Plan including the internal and extra budgetary
resources raised by the Public Sector Undertakings.
DIRECT TAXES: Taxes directly imposed on the customers such as Income Tax and Corporate Tax.
DISINVESTMENT: Dilution of the governments stake in Public Sector Undertakings.
DEMAND FOR GRANTS: A statement of expenditure estimate from the Consolidated Fund that
requires the approval of the Lok Sabha.
EXCISE DUTIES: Duties imposed on goods manufactured within the country.
FISCAL DEFICIT: Difference between the Revenue Receipts and Total Expenditure.
FINANCE BILL: Governments plans for imposing new taxes, modifying of the existing tax
structure or continuing the existing tax structure beyond the period approved by the Parliament.
GROSS DOMESTIC PRODUCT: Total market value of the goods and services manufactured within
the country in a financial year.
GROSS NATIONAL PRODUCT: Total market value of the finished goods and services
manufactured within the country in a given financial year along with income earned by the local
residents from investments made abroad, minus the income earned by foreigners in the domestic
market.
INDIRECT TAXES: Taxes imposed on goods that are manufactured, imported or exported. Eg.
Excise Duties, Custom Duties etc.
MODVAT: Modified Value Added Tax, introduced in 1986, is a tax for allowing relief to final
manufacturers on the excise duty borne by their suppliers for goods manufactured by them. It has
now been replaced by the CENVAT scheme.
MONETISED DEFICIT: Level of support provided by RBI to Centres borrowing programme.
NATIONAL DEBT: Debt owed by the government as a result of earlier borrowing to finance budget
deficits.
NON-PLAN EXPENDITURE: Consists of Revenue and Capital Expenditure on interest payments,
Defence Expenditure, subsidies, postal deficit, police, pensions, economic services, loans to public
sector enterprises and loans as well as grants to State governments, Union territories and foreign
governments.
PEAK RATE: Is the highest rate of Customs Duty applicable on an item.
PERFORMANCE BUDGET: Is a compilation of activities of different ministries and departments.
PLAN EXPENDITURE: Money given from the governments account for the Central Plan is called
Plan Expenditure. It consists of both Revenue Expenditure and Capital Expenditure, Central
Assistance to States and Union Territories.
PLAN OUTLAY: is the amount for expenditure on projects, schemes and programmes announced in
the Plan. The money for the Plan Outlay is raised through budgetary support and internal and extra-
budgetary resources. The budgetary support is also shown as plan expenditure in government
accounts.
PRIMARY DEFICIT: Fiscal Deficit minus Interest payments.
PROGRESSIVE TAX: is a tax where the rich pay a larger percentage of income than the poor.
PUBLIC ACCOUNT: Is an account where money received through transactions not relating to
consolidated fund is kept.
REGRESSIVE TAX: Is a tax in which the poor pay a larger percentage of income than the rich.
Progressive Tax is the exact opposite of regressive tax.
REVENUE DEFICIT: Is the difference between Revenue Expenditure and Revenue Receipts.
REVENUE BUDGET: Consists of Revenue Receipts and Revenue Expenditure of the government.
REVISED ESTIMATES: Is the difference between the Previous Budget Estimates and the actual
expenditure, which is usually presented in the following Budget.
REVENUE EXPENDITURE: Expenditure that does not result in the creation of assets. This refers to
the money spent on the normal functioning of the government departments and various other
services such as interest charges on debt incurred by the government.
REVENUE RECEIPT: consist of tax collected by the government and other receipts consisting of
interest and dividend on investments made by government, fees and other receipts for services
rendered by government.
REVENUE SURPLUS: Is the excess of Revenue Receipts over Revenue Expenditure. It is the
opposite of Revenue Deficit,
SUBSIDIES: Financial aid provided by the Center to individuals or a group of individuals to improve
their skills or businesses.
TARIFF: Tax on imports.
TWIN DEFICITS: refers to the trade deficit and the government budget deficit
VALUE-ADDED TAX: is a tax levied on a firm as a percentage of its value added, to avoid the
multiplying effect of taxes as the product passes through different stages of production. The tax is
based on the difference between the value of the output and the value of the inputs used to produce
it. The aim is to tax a firm only for the value added by it to the inputs it is using for manufacturing its
output.