For the past two years, the world has been confined to houses. Everyday activities that couldn’t be done without going outside all came in at once – from the office to grocery shopping and school. As the world accepts the new normal, News18 is launching weekly lessons for schoolchildren, explaining key chapters with examples of events around the world. While we try to simplify your topics, a request to split a topic can be tweeted @news18dotcom.
Finance Minister Nirmala Sitharaman presented the Union budget in the Lok Sabha on February 1, 2023. The budget was submitted to parliament at a time when India’s economic recovery is facing hurdles due to a worsening global slowdown, rising geopolitical tensions and increased inflation.
With the introduction of the 2023 Union budget, a lot of budget-related jargon is being thrown around, which makes people confused and has no idea what the meaning of a word is on the internet. In today’s Classes With News18, we’ll help you understand the budget and associated financial terms so you can get a better understanding of it.
What is the Union budget?
According to Article 112 of the Constitution of India, the budget of the Union of a year, also known as the annual financial statement, is a statement of the estimated revenues and expenditures of the government for that particular year.
Why does the government draw up a budget every year?
The government draws up an annual budget because:
1.Government of India estimates projected expenditure on development work in various sectors of the economy such as industry, manufacturing, education, health, transportation, etc.
2. In order to cover the expenses for the coming budget year, the government tries to find out the sources of income. (i.e. by imposing new taxes or raising or lowering previous tax rates, or eliminating or imposing subsidies on goods.
In other words, the governments decide what expenditures are made on which goods mainly and how the money for these expenditures is arranged. The details of such income and expense statements are called ‘budget’.
Read | Education budget 2023: focus on teaching reading habits, education for Indigenous children, key points from the Union budget
Types of budgets
Income budget- The estimated amount required for the growth, development and infrastructure of the country is called the revenue budget. The revenue budget comprises government revenue and expenditure. There are two types of revenue receipts: tax revenue and non-tax revenue. Revenue expenditure is the expenditure incurred for the day-to-day functioning of the government and for various services provided to the citizen. If revenue expenditures exceed revenue receipts, the government runs into a revenue shortfall.
capital budget- This includes capital receipts and payments from government. Loans from the public, foreign governments and RBI make up a significant portion of government capital receipts. Capital expenditure is the expenditure on the development of machinery, equipment, buildings, health facilities, education, etc. A budget deficit arises when the total expenditure of the government exceeds the total revenue.
Summary 2023 budget of the Union
– Budget of the Union 2023-24 presents vision for Amrit Kaal – Blueprint for an empowered and inclusive economy
– Capital investment increased by 33 percent to Rs 10 lakh crore
– Effective capital expenditure at 4.5 percent of GDP
– Fiscal deficit estimated at 5.9 percent of GDP in BE 2023-24
– Real GDP will grow by 7 percent in FY2022-23
– Exports grow by 12.5% in fiscal year 2023
– Atmanirbhar Clean Plant Program with an expenditure of Rs 2,200 Crore to increase the availability of high quality plant material for high value horticultural crops.
– 157 new nursing schools are established
– Spending for Prime Minister Awas Yojana improved by 66 percent to over Rs 79,000 crore
– Highest ever investment of Rs 2.40 lakh crore for railways
– Fund for the development of urban infrastructure (UIDF), to be created by using the credit deficit of the priority sector.
– 500 new ‘Waste to wealth’ factories under the Gobardhan scheme to be established for a total investment of Rs 10,000 crore.
– Creation of 1000 bio-input information centers, creating a nationally distributed network for the production of micro-fertilizers and pesticides.
– Mantri Kaushal Vikas Yojana 4.0 is launched.
– The 2023-2024 Union budget provided significant income tax relief.
– New plates announced under the new tax regime
– Residents with a total income of up to Rs 7 lakh will not be required to pay income tax under the new tax regime
– Standard deduction of Rs 50,000 will be available for salaried employees under the new tax regime
– Limit for tax exemption on leave redemption on retirement of non-government salaried workers increased to Rs 25 lakh.
– Whole series of proposals announced for the cooperative sector.
– Indirect tax proposals aim to promote exports, boost domestic production, increase domestic value added and encourage green energy and mobility.
– The number of base rates for customs duties on goods other than textiles and agriculture has been reduced from 21 to 13.
Important financial terms
economic research- The Economic Survey is a flagship document of the Ministry of Finance. It is presented in both chambers of parliament a day before the Union’s budget is presented. The Economic Survey provides detailed information on the Indian economy in the past financial year. Together with the current state of the economy, the Economic Survey gives the economic outlook. A team led by the Chief Economic Advisor is preparing the document. For common people, the Economic Survey is a useful document to understand the state of economic affairs in India and the impact of the Union government’s decisions.
Inflation- Inflation, usually expressed in percentages, is a quantitative measure of the rate at which products and services increase in an economy over a period of time. When the price of a particular basket of commodities rises due to internal or external economic factors, it can be referred to as an increase in inflation. An increase in inflation indicates a decrease in the country’s currency value and purchasing power.
Read | Education budget 2023: Teacher education a welcome step, more needs to be done for higher education, experts say
Tax policy- Fiscal policy essentially outlines projected taxes and government spending and serves as an important tool to monitor the country’s economic position. Fiscal policy refers to adjustments in spending levels and tax rates and also refers to the use of government spending and tax policies to influence economic conditions, especially aggregate demand for goods and services, employment, inflation and economic growth. It goes hand in hand with monetary policy, through which the Reserve Bank of India (RBI) influences the country’s money supply. In the event of a protracted recession, the government can pursue an expansionary fiscal policy by cutting taxes to increase aggregate demand.
Fiscal Deficit- The difference between the total government expenditure and the total revenue excluding money generated from borrowings is known as budget deficit. It indicates the borrowing requirement of the government during the budget year, where the non-debt capital receipts + loan recovery + divestment proceeds from the government are.
Income shortfall- The difference between revenue expenditure and revenue receipt, which indicates the shortfall or “deficit” of the government’s current revenue relative to current expenditure. In terms of formula, Revenue Deficit + RE-RR, where RE = Revenue Expenses and RR= Revenue Receipts.
Divestment- Divestment is a process of selling existing assets. It is the opposite of investing. The government has attempted to divest many of its assets, which have soured over the years.
Capital Expenditure- This refers to funds used by the government in this case – to acquire, maintain or upgrade physical assets such as real estate, new infrastructure projects or buying new equipment. Capital expenditures are classified as long-term expenditures and usually include government spending on building assets, including development and infrastructure projects.
Expenditure- It is the distribution of money or resources in different sectors or ministries. Expenditure can also be called the basic framework of the Union budget.
Surplus Budget- The condition when the income or receipts exceed the expenses or expenses.
Tax- It is a legally required payment imposed by the government on the population. Direct taxes include income tax and corporate tax.
Customs duty- Customs duties are charges levied when certain goods are imported into/exported from the country. Ultimately, these costs are passed on to the end customer.
For more information on other topics taught in school explained by News18, here is a list of other classes with News18: Questions Related to Election Chapters | Gender vs Gender | cryptocurrency | Economy & Banks | How To Become President Of India | Struggle after independence | How India Adopted Its Flag | Formation of States & United India | Tipu Sultan | Indian Teachers Day different from the rest of the world | Queen Elizabeth and Colonialism | Challenges of Democracy | Print Culture | Partition India and Pakistan |
Read all the latest education news here