Important budget terms you should know

What does a Populist Budget mean?

A populist Budget typically spends on schemes that are just handouts to please people and don't have any enduring positive impact on the economy. Examples of such spending are waiving off farm loans, giving higher procurement prices for different crops to farmers and cutting income tax above the low slabs. Such spending can push up inflation and weighs down on the government's balance sheets, making it difficult to meet the fiscal deficit target.

What is fiscal deficit?

It's plain to everyone that if one lives beyond one's means, splurges more money than one earns, it can ruin one's financial condition. Same is true for a country too. When a country remains within the means, more or less, it is called fiscal discipline.

There is a school of thought that says public spending is more important than meeting the fiscal deficit target. More spending creates demand and boosts business which are good for the economy when the GDP has gone down due to demonetisation and the GST.

What is Economic Survey and how is it related to the Budget?

The Economic Survey is released a day before the Budget. It summarises the annual economic development in the country and sketches out short- and medium-term prospects of the economy. It is prepared by the chief economic adviser in the finance ministry. The flagship document of the finance ministry, the Economic Survey provides detailed statistical data covering all aspects of the economy. It is the authoritative guide to the Indian economy. It is usually seen to provide policy perspective for the Union Budget.

What is Subvention?

Subvention literally means grant of money by the government. In the context of the Budget, it is interest subvention, the government paying part of the interest on a loan. The government offers subvention mostly on home, crop and education loans.

Difference between a Full Budget and a Vote on Account

A Full Budget is not just the presentation of annual finances of the government but an occasion to change existing tax slabs, announce new schemes and sops for different sectors of the economy. A Full Budget includes the passage of a finance bill to get Parliament's approval for any tax related changes.

In the absence of presentation of a Full Budget, the outgoing government seeks a vote on account from the Parliament for proposed expenditure to be incurred in the next few months till the new government takes over. There are no major announcements related to any new schemes or sops during a vote on account as the new government's stance could differ from that of the outgoing government.

Source :-The Economic times

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