8/14/2019 Budget Jargon

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Budget Jargon

Ad-valorem duties: This Latin term refers to duties or taxes that are imposed on commodities

based on their value.

Budgetary Deficit: When expenses exceed revenues, it leads to a situation of budgetary deficit.

The entire budgetary exercise falls short of allocating enough funds to a certain area.

Budget Estimates: These estimates contain an annual estimate of Fiscal Deficit and Revenue

Deficit and include the estimates of the Centre's spending during the financial year. It also contains

the income received as proceeds of tax revenues.

Balance of Payment: The annual overall statement of a country's economic transactions spending

and income with the rest of the world.

Bank Credit: This refers to the borrowing capacity advanced by a bank to an individual, firm or

organization in the form of loans, cash credit and overdrafts.

Bank Rate: This is the interest rate at which the Reserve Bank of India advances short-term loans

to commercial banks in the country. Changes in bank rate are reflected in the prime lending rates

(PLRs) offered by commercial banks to their best customers.

Borrowings: When commercial banks receive something of value from the RBI against refinance

schemes, like general refinance, and export credit refinance.

Cash Balances: Cash Balances with RBI indicate those maintained by scheduled banks with RBI

and include these balances under cash reserve ratio (CRR) requirements.

Capital Budget: This plan keeps track of the Centres capital receipts and payments and accounts

for market loans, borrowings from the Reserve Bank and other institutions through the sale of

Treasury Bills, loans from foreign governments and recoveries of loans granted by the Central

government to state governments and Union Territories.

Capital Payments: Refer to expenses incurred on acquisition of assets.

Cenvat: Central Value Added Tax (CENVAT) is a substitute for the earlier Modified Value Added

Tax (MODVAT) scheme and is aimed at reducing the spiraling effect of indirect taxes on finished

products.

Custom Duties: These taxes are imposed when goods are either imported or exported.

Countervailing Duties: Levied on imports that may lead to price rise in the domestic market. Seen

as a means of discouraging unfair trade practices by other countries.

Consolidated Fund: This is a big reservoir where the Government pools all its funds including

revenues, loans raised and recoveries of loans granted together.

Contingency Fund: As the name suggests, this is an emergency fund to help the Government tide

over when in dire straits. The fund is at the disposal of the President and requires Parliament

approval and the amount withdrawn from the fund is recouped.

Capital Expenditure: Capital expenditure (CAPEX) is the amount a company spends on buying

fixed assets like land, building, machinery and equipment. Loans and advances sanctioned by the

Centre to state governments, Union Territories and PSUs also fall in this category.

Capital Receipt: Loans raised by the Centre from the market, government borrowings from the

RBI, sale of Treasury Bills and loans received from foreign governments all form a part of Capital

Receipt. Other items in this category include recovery of loans granted by the Centre to states and

UTs and proceeds from the dilution of the government's stake in PSUs.