Budget: Glossary of terms

Ad-valorem duties: These are the duties determined as a certain percentage of the price of the product.

Appropriation bill: This bill is like a green signal enabling the 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.

Budgetary deficit: Such a situation arises when the expenses exceed the revenues. Here the entire budgetary exercise falls short of allocating enough funds to a certain area.

Budget estimates: These estimates contain an estimate of Fiscal Deficit and the Revenue Deficit for the year. The term is associated with the estimates of the Center's spending during the financial year and the income received as proceeds of tax revenues.

Capital goods: Capital Goods are those goods that are used in the manufacturing of finished products.

Capital budget: The word, capital, is long-term in nature. Capital Budget keeps track of the government's capital receipts and payments. This accounts for market loans, borrowings from the Reserve Bank and other institutions through the sale of Treasury Bills, loans acquired from foreign governments and recoveries of loans granted by the Central government to state governments and Union Territories.

Capital payments: Expenses incurred on acquisition of assets are termed capital payments.

Cenvat: This is a replacement for the earlier MODVAT scheme and is meant for reducing the cascade effect of indirect taxes on finished products. The scheme is a more extensive one with most goods brought under its preview.

Current account deficit: This deficit shows the difference between the nation's exports and imports.

Custom duties: These duties are levied on goods whenever they are either brought into the country or exported from the country. The importer or the exporter pays custom duties.

Countervailing duties: This is 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: This is one big reservoir where the government pools all its funds together. The fund includes all government revenues, loans raised and recoveries of loans granted.

Contingency fund: It is more or less similar to that extra little bit of savings that all mothers set aside in case of an emergency. Likewise, the government has created this fund to help it tide over difficult situations. The fund is at the disposal of the President to meet unforeseen and urgent expenditure, pending approval from Parliament. The amount that is withdrawn from the fund is recouped.

Capital expenditure: Long-term in nature they are used for acquiring fixed assets such as land, building, machinery and equipment. Other items that also fall under this category include loans and advances sanctioned by the Center to the State governments, union territories and public sector undertakings.

Capital receipt: Loans raised by the Center from the market, government borrowings from the RBI and other parties, sale of Treasury Bills and loans received from foreign governments all form a part of Capital Receipt. Other items that also fall under this category include recovery of loans granted by the Center to State governments & Union Territories and proceeds from the dilution of the government’s stake in Public Sector Undertakings.

Central plan: It refers to the government’s budgetary support to the Plan and, the internal and extra budgetary resources raised by the Public Sector Undertakings.

Direct taxes: Taxes imposed directly on the customers such as the Income Tax and the Corporate Tax fall under this category.
Disinvestment: The dilution of the government’s stake in Public Sector Undertakings is called as disinvestment.

Demand for grants: It is a statement of estimate of expenditure from the Consolidated Fund. This requires the approval of the Lok Sabha.

Excise duties: These duties refer to duties imposed on goods manufactured within the country.Fiscal deficit: It is the difference between the Revenue Receipts and Total Expenditure.

Finance bill: Consists the government’s proposals for the imposition of new taxes, modification of the existing tax structure or continuance of 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, plus 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 manufactured, imported or exported such as Excise Duties and Custom Duties.

Modvat: It stands for Modified Value Added Tax and is a way of giving some relief to the final manufacturers of goods on Excise Duties borne by their suppliers.

Monetized deficit: Measures the level of support the RBI provides to the Centre’s borrowing program.

Non-plan expenditure: Consists of Revenue and Capital Expenditure on interest payments, Defense 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: It is the highest rate of Custom Duty applicable on an item.

Performance budget: It is a compilation of programs and activities of different ministries and departments.

Public account: It is an account where money received through transactions not relating to consolidated fund is kept.

Plan expenditure: Consists of both Revenue Expenditure and Capital Expenditure of the Center on the Central Plan, Central Assistance to States and Union Territories.

Primary deficit: Fiscal Deficit minus Interest payments.

Revenue deficit: It is the difference between Revenue Expenditure and Revenue Receipts.

Revenue surplus: Opposite of Revenue Deficit, it is the excess of Revenue Receipts over Revenue Expenditure.

Revised estimates: Usually given in the following budget, it is the difference between the Budget Estimates and the actual figures.

Revenue budget: Consists of Revenue Receipts and Revenue Expenditure of the government.

Revenue receipt: Consists of duties imposed by the Centre, interest and dividend on investments made by the government.

Revenue expenditure: Expenditure incurred for the normal functioning of the government departments and various other services such as interest charges on debt incurred by the government.

Subsidies: Financial aid provided by the Center to individuals or a group of individuals to be competitive. The grant of subsidies is also aimed at improving their skills of those who benefit from the subsidies.