Today the Finance Minister will walk into the Parliament with the epic Budget Briefcase, and present the Annual Budget to the people. It is a crucial moment for the country, as they will be given the answer as to what has happened to their taxes, what has the government done for them, what it plans to do, and what new policy initiative it plans for the coming year.

Especially so, as it is the last full budget by the present NDA government. To understand Arun Jaitley, the FinMin better when he delivers the budget speech, here is some budget jargon.

FRBM Act

Fiscal Responsibility and Budget Management Actis an attempt to make the Government adhere to a phased plan to reduce fiscal deficit, which denotes an excess of expenditure over revenue. That means, the government should control its expenses, so that they do not cross the limit over what is added to the government funds every year.

Fiscal Policy

It is what a Government does to influence the course of an economy through decisions on taxes and spending.

Monetary Policy

It is what the RBI does to influence the course of an economy through decisions on money supply and interest rate.

Consolidated Fund

All revenues raised by the governmentflows into the consolidated fund of India. All government expenditure is made from this fund. This means all the taxes people pay, interest earned by government on the loans it gives, all these are added to this Fund. And no money can be taken out of this Fund without the approval of Parliament. A budget is means to tell the Parliament why the government needs money from the Fund.

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WPI

Wholesale Price Index (WPI)is a measure of inflation, or price change, arrived at after regularly measuring the prices of a slew of wholesale goods.

CPI

Consumer Price Index (CPI)is a measure of inflation, or price change, arrived at after regularly measuring the prices of a slew of household goods and services. This criterion has been the new benchmark to measure inflation.

VAT

Value-Added Tax (VAT)is a tax on the value added to a product at each stage of distribution, so that inputs that go into making the product aren’t taxed more than once. This means, when you pay tax to buy a product, it is redeemed by the shopkeeper. When the shopkeeper pays tax, it is redeemed by the wholesaler. That means tax is only paid on the value added to a product at each stage.

Goods and Services Tax (GST)

This is the new tax rolled out last year.It seeks to make the indirect tax structure simpler and efficient by replacing a group of levies such as octroi, central sales tax, State sales tax, entry tax and so on.

These are some basic Budgeting terms that will help us to understand the Budget speech better.

Read Also: The Significance Of Finance Minister’s Budget Briefcase

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