The Budget, presented by Finance Minister Nirmala Sitharaman, outlines the government's spending, taxes, and economic transactions affecting citizens.
Major Components of the Budget
Expenditure: Divided into capital (building assets like schools, hospitals) and revenue (wages, subsidies) expenditures.
Receipts: Classified into revenue receipts (taxes, non-tax), non-debt capital receipts (loan repayments, disinvestment), and debt-creating capital receipts (raising liabilities).
Deficit Indicators: Includes fiscal deficit (spending beyond revenue and non-debt receipts) and primary deficit (fiscal deficit minus interest payments).
Revenue deficit is the difference between fiscal deficit and capital expenditure.
Implications of the Budget on the Economy
Aggregate Demand: Government spending boosts demand; taxes reduce private sector demand.
GDP and Growth Rates: Analysis of expenditure and receipts is based on GDP growth and inflation.
Income Distribution: Budget policies, like employment schemes or corporate tax cuts, affect different income groups.
Fiscal Rules and Their Effect on Policy
Based on the N.K. Singh Committee's recommendations, India follows rules on debt-GDP ratio, fiscal deficit-GDP ratio, and revenue deficit-GDP ratio.
Expenditure is adjusted to meet fiscal targets, which may limit government spending despite economic needs.
Current fiscal rules might need re-assessment, given the challenges of unemployment and slow economic growth.
COMMENTS