Budget 2024: Frequently asked questions

The term "Union Budget" originates from India's constitutional structure as a union of states, comprising 28 states and 7 union territories. Officially called the Annual Financial Statement in Article 112, it serves not just as a financial plan but also as a medium for the government policies and financial reforms.

The main goal is fostering rapid and balanced economic growth, ensuring social justice, and reducing disparities in wealth and income. This involves efficiently allocating resources, reducing unemployment and poverty, controlling prices, and adjusting the tax structure.

Explore the FAQs given below for a more in-depth understanding of the budgetary process:

1. What is a Union Budget? The Union Budget is the annual financial statement presented by the Finance Minister in the Indian Parliament. It outlines the government's revenue and expenditure for the upcoming fiscal year, detailing allocations to various sectors. The budget plays a crucial role in shaping economic policies, fiscal priorities, and overall financial planning for the nation.

2. What is an Interim Budget? An interim budget is a temporary framework for managing provisional expenses over a short period, typically until a new government is formed. This year, the interim budget will be presented on 1 February. The full Budget 2024 is expected to be presented after the Lok Sabha elections results in May 2024.

3. When is the Budget Session of the Parliament held? The Budget Session of Parliament typically occurs in two phases. In the initial phase, Finance Minister Sitharaman will present the interim Budget for 2024-2025 on 1 February 2024, at 11:00 AM. The Post-Recess or Monsoon Session generally begins in July and extends until September.

4. What is Fiscal Deficit in the Budget? Fiscal Deficit refers to the shortfall when a government's total expenditure exceeds its total revenue, not including any funds raised through borrowings. It indicates the amount of borrowing needed by the government to cover this gap. Understanding fiscal deficit is important for assessing a country's economic health and fiscal policies.

5. How is Revenue Deficit different from Fiscal Deficit? Revenue Deficit arises when a government's revenue expenditure exceeds its revenue receipts. In contrast, Fiscal Deficit encompasses the gap between total expenditure and total revenue, including borrowings. Essentially, Revenue Deficit reflects a shortfall in the government's regular income, while Fiscal Deficit indicates its overall financial gap.

6. What is Capital Expenditure? Capital Expenditure refers to money spent by a company or government on acquiring, upgrading, or maintaining physical assets like buildings, machinery, or infrastructure. Unlike regular expenses, capital expenditures provide long-term benefits, contributing to the entity's growth and efficiency. They are essential for enhancing operational capabilities and ensuring sustained development.

7. What is Plan and Non-Plan Expenditure? Plan Expenditure involves spending on specific projects and programs outlined in government plans, contributing to development goals. Non-Plan Expenditure covers routine expenses like salaries and interest payments. The categorization helps governments allocate funds efficiently, emphasising development-oriented initiatives while addressing routine operational needs.

8. What are Revenue Receipts?
Revenue Receipts are funds earned by the government through routine operations, like taxes, fees, and fines. They also include grants and interest on loans. Unlike capital receipts, which involve debt or asset sales, revenue receipts are used to cover regular expenses and sustain day-to-day activities, ensuring fiscal stability.

9. What is the difference between Capital Receipts and Revenue Receipts? Capital Receipts involve money from debt or asset sales, contributing to long-term capital growth. Revenue Receipts are funds earned from routine operations like taxes and grants, sustaining day-to-day activities. The key difference lies in their impact: Capital Receipts shape long-term growth, while Revenue Receipts cover regular expenses for operational stability.

10. What is Gross Budgetary Support? Gross Budgetary Support (GBS) represents the total financial assistance provided by the central government to its entities and states for plan expenditures. It includes grants and loans, playing a pivotal role in funding development projects and fulfilling the financial needs outlined in the annual budget, fostering economic growth.

11. What is the role of the Finance Bill? The Finance Bill is a proposed law that outlines the government's taxation and financial policies. It presents changes to existing tax laws or introduces new ones, affecting revenue generation. Once approved by Parliament, the Finance Bill becomes an Act, shaping the country's fiscal landscape for the specified financial year.

12. What is disinvestment? Disinvestment involves the government selling or liquidating its assets, reducing ownership in public-sector enterprises. This strategic move aims to enhance efficiency, encourage private participation, and generate revenue. Disinvestment aligns with economic reforms, fostering a more dynamic and competitive business environment while mobilising funds for developmental initiatives.

13. What is the Consolidated Fund of India? The Consolidated Fund of India is a financial account that combines the government's revenue and expenses, excluding certain exceptional items. It includes tax collections and non-tax revenues, serving as the primary account for government transactions. Withdrawals from this fund require parliamentary approval, ensuring fiscal discipline and transparency in financial management.

14. What is the Contingency Fund of India? The Contingency Fund of India is a financial reserve maintained by the government to address unforeseen and urgent expenditures. It provides immediate funds for essential needs, subject to subsequent parliamentary approval. Typically containing ₹500 crore, this fund acts as a financial cushion for emergency situations, ensuring fiscal preparedness.

15. What is a public account in the budget? The Public Account in the budget includes transactions where the government acts as a banker. It holds funds of individuals, entities, and government departments. Examples include the Public Provident Fund and National Pension Scheme. The government manages these accounts, ensuring safekeeping of money and disbursement with assured interest returns.

16. What is the vote on account? Vote on account is a temporary approval from Parliament allowing the incumbent government to withdraw funds for routine expenditures before the full budget is passed. It facilitates uninterrupted functioning when a new government is expected, preventing financial disruptions and ensuring essential expenses are covered for a specified period.

17. What is the Revenue Budget? The Revenue Budget outlines the government's anticipated earnings and expenditures for ongoing operational needs. It includes income from taxes, grants, and non-debt capital receipts, along with expenses like salaries, interest payments, and subsidies. This budget emphasises sustaining daily activities, fostering growth, and addressing immediate financial requirements for effective fiscal management.

18. What is a Budgetary Deficit? Budgetary Deficit occurs when a government's total expenses exceed its revenue, excluding money from borrowings. It signifies a financial shortfall, indicating that the government is spending more than it earns. Managing and reducing Budgetary Deficits is crucial for maintaining fiscal discipline and sustainable economic growth.

19. What is the Appropriation Bill? The Appropriation Bill is a proposed law empowering the government to withdraw funds from the Consolidated Fund of India for its expenditures. It specifies the amounts allocated to various departments and purposes outlined in the budget. Parliament's approval is essential for the government to access funds and meet its financial commitments.

20. What are Direct Taxes? Direct Taxes are levies imposed directly on individuals and corporations by the government. Examples include income tax and corporate tax. These taxes are calculated based on the taxpayer's income and profits. Direct Taxes contribute significantly to government revenue and play a key role in redistributive fiscal policies.

21. What are Indirect Taxes? Indirect Taxes are levies imposed on goods and services, with the burden passed on to the final consumer. Examples include Goods and Services Tax (GST), Customs Duty, and Excise Duty. Indirect Taxes contribute to government revenue and are integral to regulating consumption patterns and ensuring equitable tax distribution.

22. What is Capital Gains Tax? Capital Gains Tax is a tax levied on the profit earned from the sale of capital assets like real estate or stocks. It applies to the positive difference between the selling price and the purchase cost. The rate varies based on the holding period, encouraging long-term investments and influencing capital market behaviour.

23. What is Zero-Based Budgeting? Zero-Based Budgeting is a budgeting approach where every expense must be justified for each new budget period, regardless of past budgets. Unlike traditional budgeting, which starts with existing expenses, Zero-Based Budgeting begins from zero, fostering cost efficiency, resource optimization, and strategic alignment with organisational goals.

24. What is the economic survey in the budget? The Economic Survey is a comprehensive report released before the Union Budget, presenting an in-depth analysis of the country's economic performance, challenges, and policy recommendations. It provides valuable insights to policymakers, guiding the formulation of budgetary proposals and offering a macroeconomic perspective to support informed decision-making.

25. What are Budgetary Reserves? Budgetary Reserves are funds set aside within a budget to address unforeseen or emergency expenditures. These reserves act as a financial buffer, ensuring the government's ability to manage unexpected financial needs without disrupting planned expenditures. Allocating budgetary reserves enhances fiscal flexibility and safeguards against financial uncertainties.

26. What is the Money Bill? The Money Bill is a proposed law exclusively related to taxation, public expenditure, or loans. It is introduced in the Lok Sabha and doesn't require approval from the Rajya Sabha but is sent for its recommendations. The Money Bill expedites financial matters, ensuring effective fiscal decision-making by the government.

27. What is the Supplementary Budget? The Supplementary Budget is an additional budget presented during the fiscal year to allocate funds for unforeseen expenses or changes in financial requirements. It seeks parliamentary approval for expenditures not covered by the original budget. The Supplementary Budget ensures flexibility in financial management, adapting to evolving circumstances and unplanned needs.

28. What is the Public Debt Management Cell? The Public Debt Management Cell (PDMC) is a specialised unit within the Department of Economic Affairs, Ministry of Finance, responsible for planning, coordinating, and managing India's public debt. It formulates debt management policies, monitors market conditions, and ensures efficient borrowing to meet government expenditure while minimising risks and costs.

29. What is Zero Hour in the budget? Zero Hour refers to a brief period during parliamentary sessions when Members of Parliament can raise impromptu issues without prior notice. It allows for immediate discussions on urgent matters, providing a platform for addressing time-sensitive concerns or seeking prompt responses from government officials.

30. What is the Finance Commission? The Finance Commission is a constitutional body in India responsible for recommending the distribution of financial resources between the central government and the states. It assesses fiscal needs, tax revenue sharing, and grants-in-aid principles, ensuring a fair and equitable allocation of funds to promote balanced regional development and fiscal autonomy.

31. What is GDP? Gross Domestic Product (GDP) is the total value of all goods and services produced within a country's borders in a specific time period. It serves as a key indicator of the nation's economic health, reflecting the overall economic output and contributing to assessing growth, productivity, and living standards.

32. What is the GST? Goods and Services Tax (GST) is a comprehensive indirect tax that subsumes various central and state taxes on the supply of goods and services. GST is levied at four rates: 5%, 12%, 18% and 28%, depending on the category of goods and services. GST has replaced taxes such as value added tax (VAT), service tax, central sales tax (CST), etc.

33. What is Cess? Cess is an additional tax that is levied by the government for a specific purpose. Cess is collected over and above the normal taxes, and is not shared with the states. Cess is used to fund various social welfare and development schemes of the government. Examples of cess are education cess, health cess, road cess, etc.

34. What are the key components of the Union Budget? The Union Budget comprises two main components: the Revenue Budget, covering day-to-day expenses and incomes, and the Capital Budget, focusing on long-term investments. Within these, key elements include taxes, subsidies, allocations for development projects, and planned expenditures. The budget reflects the government's financial strategy, priorities, and economic policies.