Key Budget Terms You Should Know !!
As Budget 2024 approaches, discussions and analyses of the upcoming fiscal plan are becoming more prominent across media, financial commentaries, and social media platforms. To comprehend these discussions effectively, it's essential to grasp key terms related to budgetary matters. The Expenditure Budget, the first half of the Budget, delineates the government's spending in the current fiscal year and outlines its expenditure plan for the next. It categorizes spending into capital (future investments like infrastructure), revenue (immediate expenses like salaries), and interest. On the other hand, the Revenue Budget explains how the government generates or has generated the funds it intends to spend, covering sources such as taxes, asset sales, and debt.
One critical aspect is the Fiscal Deficit, which occurs when government spending exceeds its earnings. This gap is funded through debt, commonly expressed as a percentage of GDP. While running deficits may seem concerning, governments strategically use borrowing for economic growth. Governments typically target a fiscal deficit within the range of 3-5% of GDP. Additionally, understanding terms like Budgeted Estimates (BE) and Revised Estimates (RE) is crucial. BE represents the forecasted figures in the initial budget, while RE reflects the actual figures after the fiscal year, allowing analysts to identify significant differences and inquire about their reasons. Finally, the Budget is not just a financial statement but also a policy document, leading to legislative changes outlined in the Finance Bill presented during the Budget Session of Parliament to realize the government's future plans.
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