Fiscal deficit, cut motion, guillotine: Terms to know for Budget

The presentation of Union Budget 2019 is just days away. The Budget, which will be presented on February 1, is going to be Modi government's last Budget of the current tenure and is expected to be an interim one.

As the government gets ready to present its financial plan for the coming months, we highlight some critical details related to a few significant terms like 'GST', 'Fiscal Deficit', 'Revenue Deficit', ‘Primary Deficit', 'Capital Expenditure', Direct & Indirect Taxes etc, used in the annual financial statement.

These definitions are provided by the Finance Ministry.

Budget estimates: Amount of money allocated in the Budget to any ministry or scheme for the coming financial year.

Fiscal deficit: When the government's non-borrowed receipts fall short of its entire expenditure, it has to borrow money from the public to meet the shortfall. The excess of total expenditure over total non-borrowed receipts is called a fiscal deficit.

Revenue Deficit: The difference between revenue expenditure and revenue receipt is known as revenue deficit. It shows the shortfall of government's current receipts over current expenditure.

Primary deficit: The primary deficit is the fiscal deficit minus interest payments. It tells how much of the government's borrowings are going towards meeting expenses other than interest payments.

Goods and Services Tax: The Constitution defines Goods and Services Tax as any tax on the supply of goods or services or both except taxes on the supply of alcoholic liquor for human consumption. 'Goods' means every kind of movable property other than money and securities but includes the actionable claim, growing crops, grass and things attached to or forming part of the land which is agreed to be severed before supply or under a contract of supply. 'Services' means anything other than goods, money and securities but includes activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination for which a separate consideration is charged.

Direct and indirect taxes: Direct taxes are the one that falls directly on individuals and corporations. For example, income tax, corporate tax etc. Indirect taxes are imposed on goods and services They are paid by consumers when they buy goods and services. These include excise duty, customs duty etc.

Customs duty: These are levies charged when goods are imported into, or exported from, the country, and they are paid by the importer or exporter. Usually, these are also passed on to the consumer.

Monetary policy: This comprises actions taken by the central bank (RBI) to regulate the level of money or liquidity in the economy, or change the interest rates.

Fiscal policy: It is the government actions with respect to aggregate levels of revenue and spending. Fiscal policy is implemented through the Budget and is the primary means by which the government can influence the economy.

Inflation: A sustained increase in the general price level. The inflation rate is the percentage rate of change in the price level.

Finance bill: The bill produced immediately after presentation of the Union Budget detailing the imposition, abolition, alteration or regulation of taxes proposed in the Budget.

Excess grants: If the total expenditure under a grant exceeds the provision allowed through its original grant and supplementary grant, then the access requires regularisation by obtaining the excess grant from Parliament under Article 115 of the Constitution of India. It will have to go through the whole process as in the case of the annual Budget i.e. through a presentation of demands for grants and passing of appropriation bills.

Re-appropriations: Re-appropriations allow the government to re-appropriate provisions from one sub-head to another within the same grant. Re-appropriation provisions may be sanctioned by a competent authority at any time before the close of the financial year to which such grant or appropriation relates. The Comptroller and Auditor General and the Public Accounts Committee review these re-appropriations and comments on them for taking corrective actions.

Cut motions: Motions for reduction to various demands for grants are made in the form of cut motions seeking to reduce the sums sought by the government on grounds of economy or difference of opinion on matters of policy or just in order to voice a grievance.

Guillotine: Parliament, unfortunately, has very limited time for scrutinising expenditure demands of all the ministries. So, once the prescribed period for discussion on demands for grants is over, the Speaker of Lok Sabha puts all the outstanding demands for grants, whether discussed or not, to the vote of the House. This process is popularly known as 'Guillotine'.