Decoding the Budget lexicon

Finance Minister Pranab Mukherjee is slated to announce the Union Budget for fiscal year 2011-12 on February 28. Here's the list of terms that will help in understading the intricacies of the FM's speech and simplify the economic jargons.

Budget: A comprehensive statement of the government's revenue and expenditure for a given fiscal year. The fiscal year runs from April 1 to March 31. The Union Budget is presented on the last working day of February by the Finance Minister.

GDP: or the Gross Domestic Product. It is the total market value of all final goods and services produced within the country for a given year. It acts as a measure of how well the economy is doing.

Revenue deficit: When the government's revenue expenditure exceeds its revenue receipts in a year, it is referred to as a revenue deficit.

Fiscal Deficit: When the government's total expenditure exceeds its total receipts (excluding borrowings) in a given year, it results in a fiscal deficit. It indicates the total amount of borrowings needed by the government to meet its expenditure for the year.

Plan expenditure: All expenditures planned after discussions with concerned ministries of the government and the Planning Commission come under plan expenditure. The demands for grants by various ministries form a large part of this expenditure.

Non-Plan expenditure: Non-Plan expenditure covers all expenditure of the government not included in the plan. It may either be revenue expenditure or capital expenditure. Non plan revenue expenditure includes all interest payments, subsidies, wage and salary payments, grants to states, union territories and foreign governments, pensions, police, economic services in various sectors, other general services such as tax collection and social services. Non plan capital expenditure includes defence, loans to public enterprises, and loans to states, Union Territories and foreign governments.

Direct Tax: This refers to taxes levied on the income of individuals or organisations. For instance, income tax, corporate tax, inheritance tax etc.

Indirect Tax: This refers to taxes levied on the purchase of goods and services. For instance, custom duties, excise duties etc.

GST: or Goods and Services Tax is a consumption tax (VAT) levied on the value added to goods and services at every stage of the transaction. If introduced, it will replace all other indirect/sales taxes levied on goods and services in the country.

VAT or the Value Added Tax is a sales tax/consumption tax levied only on the value added to a product. The "value added" to a product is its sale price minus the cost of materials and other inputs used in its production.

Fiscal Policy: It refers to a change in the government's spending or taxation to influence economic activity.

Public Debt to GDP Ratio: is the amount of public debt as a percentage of the country's GDP. Public debt refers to the government's borrowings from within the country i.e. loans raised from the public, RBI and other parties. The ratio indicates the country's ability to pay back its debts. The higher the debt-to-GDP ratio, the less likely the country will pay its debt back, and higher is the risk of default.

Unorganized sector: consists of causal workers, self employed persons and others employed in enterprises that are not registered with the national legislative bodies. It accounts for a large part of the GDP of India.