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Understanding the budget - Views on News from Equitymaster
 
 
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  • Jul 1, 2004

    Understanding the budget

    The Union Budget is one of the most anticipated events for a common man and holds equal if not more relevance than the general elections. But the question is how many of us Indians truly understand the basics of the budget we hold so close to our wallet? Is the budget only a medium to understand how our wallets are being impacted or is there a need to understand the finer points of how the economy will be impacted as a whole? In this article, we look at the broad measures with respect to the budget, which are relevant to the common man and will be helpful in increasing the sensitivity of the public towards the fine balancing act that is called the ‘Union Budget'.

    Here are a few measures pertaining to the budget that are relevant to the common man but not fully understood by the same.

    Fiscal Deficit:  The excess of government's expenditure over its receipts in an accounting year. More simply, it equals the amount of borrowings made by the government in a year.

    Fiscal Deficit = Total Expenditure – Revenue Receipts – Disinvestment Receipts – Recovery of loans

    Direct Taxes:  Taxes imposed directly on the public/corporations such as the Income Tax and the Corporate Tax.

    Indirect Taxes:  Taxes such as excise duties, sales tax and custom duties imposed on goods manufactured, imported or exported.

    Non-Plan Expenditure:  Consists of expenditure on interest payments, defense, subsidies, police, pensions, economic services, loans to public sector enterprises and loans as well as grants to State governments, Union territories and foreign governments.

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

    While these are few basic measures that are highlighted in the budget, a larger glossary is available on our website. The Union Budget is a fine balancing act and there has to be an understanding of how this balance is maintained. Keep tuned to our analysis of the Union Budget 2004-05.

     

     

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