Budget 2024: Key Terms To Know Before Nirmala Sitharaman Takes The Stage

As the nation prepares itself for the Union Budget 2024, to be presented by Finance Minister Nirmala Sitharaman on July 23, there is an increasing focus on the financial terminologies and policies that will shape India's economic landscape in the coming fiscal year.

This budget marks a pivotal moment for the Narendra Modi-led NDA coalition government, as it presents its first comprehensive budget since returning to power in May 2024.

The Union Budget is not merely a financial statement but a roadmap that outlines the government's anticipated revenues and expenditures for the upcoming fiscal year. This crucial document is presented annually in the Lok Sabha, as mandated by Article 112 of the Constitution, and once approved, sets the tone for India's economic policies.

Gross Domestic Product

GDP represents the total market value of all goods and services produced within the country in a specified period. It serves as a crucial indicator of the country's economic health and standard of living.

Inflation

Inflation denotes the rate at which the general price level of goods and services rises, leading to a decrease in the purchasing power of a nation's currency. It is closely monitored by policymakers to ensure economic stability.

Fiscal Consolidation

This policy aims at reducing government deficits and controlling the accumulation of debt, thereby fostering fiscal discipline.

Fiscal Deficit

When a government's expenditures exceed its revenues, excluding borrowings, it results in a fiscal deficit. This deficit, if not managed effectively, can lead to economic instability.

Revenue Deficit

A situation where actual revenues fall short of expected revenues, leading to a deficit when expenditures exceed the available revenue.

Government Borrowing

The funds borrowed by the government to finance its expenditures and investments in public services and infrastructure.

Disinvestment

The strategic sale or liquidation of government assets or subsidiaries, aimed at optimizing returns on investments.

Gross Fixed Capital Formation

The total value of investments in fixed assets such as buildings, machinery, and infrastructure, excluding land sales.

Monetary Policy

Controlled by the Reserve Bank of India, it regulates the money supply and interest rates to achieve economic stability and growth.

Fiscal Policy

The government's use of taxation and spending to influence economic conditions, often working in conjunction with monetary policy.

Purchasing Power Parity

A theory that adjusts exchange rates between countries to account for differences in purchasing power, ensuring fair comparisons of living standards.

Value Added Tax

A consumption tax levied on the value added to a product at each stage of its production and distribution.

Goods and Services Tax

An upcoming comprehensive indirect tax that aims to replace multiple state and central taxes to streamline the taxation system.