The budget jargon simplified for you
budget is a financial statement which carries niche terminology common people may not fully be familiar with. Without understanding these terms, the budget can be difficult to comprehend or evaluate. Below are the key budget terms that are crucial for understanding the budget.
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Fiscal deficit
When the government's receipts fall short of its entire expenditure, it has to borrow money from the public to meet the shortfall. Borrowings not only increase debt burden but also add to the interest the government has to pay every year on its debt. Fiscal deficits are unmanageable beyond an extent. The government had aimed in FY 2017 to reduce the fiscal deficit to 2.5% of the GDP. However, the pandemic disrupted that. The fiscal deficit for the current year is pegged at 5.9% and is likely to be lower next year.
Primary deficit
The revenue expenditure includes interest payments on government's earlier borrowings. The primary deficit is the fiscal deficit less interest payments. A shrinking primary deficit indicates progress towards fiscal health. The Budget document also mentions deficit as a percentage of GDP. This is to facilitate comparison and also get a proper perspective. Prudent fiscal management requires that the government does not borrow to consume in the normal course.
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FRBM Act
Enacted in 2003, Fiscal Responsibility and Budget Management Act require the elimination of revenue deficit by
