Budget Headlines

India Budget Terminologies: Finance Minister Nirmala Sitharaman will present the Union Budget 2025 on February 1. This will be her eighth budget presentation. The article lists key budget terms and their definitions, helping readers understand the components like fiscal deficit, revenue expenditure, direct taxes, etc. It serves as a guide for grasping budget-related concepts.

India's Union Budget, a meticulously planned financial statement, accounts for revenues and expenditures while addressing the nation's diverse needs. It considers past events, future requirements, and stakeholder input, impacting millions across various socioeconomic backgrounds. The budget aims to ensure public welfare and economic growth through prudent forecasting, resource allocation, and efficient fund utilization.

Government deficits signal financial challenges. A fiscal deficit happens when spending surpasses revenue. Revenue deficit arises when regular income can't cover daily expenses. Primary deficit excludes interest payments from fiscal deficit. Governments can address deficits by cutting spending and raising revenue. Understanding deficits is crucial for economic stability.

India Budget 2025: India's fiscal deficit reached 46.5% of its budget estimates in the first seven months of FY2025, amounting to Rs 7.51 lakh crore. While direct tax collections showed robust growth, capital expenditure lagged behind at 42% of the target. FY24's fiscal deficit was lower than projected, with net tax receipts exceeding targets and total expenditure slightly below.

Budget: There is a reason why people demand standard deduction before every Budget. If you are a businessperson, you can bring down your taxable income by deducting all provable business-related expenses. Some people push the limits with these deductions, including expenses that may not directly relate to their business. Salaried people have fewer tax-free allowances compared to business owners.

Budget: India's direct tax collections surged by 16.45% to over Rs 15.82 lakh crore by mid-December, fueled by growth in both corporate and individual tax payments. This positive fiscal outlook sparks anticipation of a potential corporate tax cut in the upcoming 2025 budget.

Dividend taxation in India underwent a significant change starting in FY21. Previously, companies paid a dividend distribution tax, exempting individual investors earning up to ₹10 lakh in dividends annually. Now, dividends are fully taxable for investors, with companies deducting a 10% TDS if dividend income exceeds ₹5,000 in a financial year.

India's Goods and Services Tax (GST), implemented in 2017, is a crucial revenue source for the government. Strong GST collections, like the ₹1.82 lakh crore in November 2024, indicate a healthy economy. These collections directly impact government spending and budget planning, influencing development and welfare programs. Meeting or exceeding collection targets is vital for funding national growth initiatives.

The government provides financial aid called subvention to reduce loan interest. This helps farmers access affordable loans. The Interest Subvention Scheme assists farmers with short-term loans at lower rates. This scheme supports rural livelihoods. It covers the Kharif season from 2006-07 through 2024-25. The government also helps farmers after natural disasters by covering interest on restructured loans.

The Indian government held steady on sin taxes for tobacco in the latest budget. Cigarette taxes remained unchanged. A proposed 35% GST on sin goods like tobacco and aerated drinks is under consideration. This could hike prices. India's tobacco taxes are below the WHO's recommended 75% of retail price.

India's healthcare budget for 2024-25 saw a 2% rise to Rs 90,958 crore, prioritizing infrastructure, existing programs, and maternal/child health. The National Health Mission, AB-PMJAY, and health infrastructure received significant funding boosts. However, human resources and medical education faced budget cuts, while pharmaceuticals and traditional medicine saw increased support.

India's economy, once burdened by a "Four Balance Sheet Challenge" involving banks, infrastructure companies, NBFCs, and real estate firms, has seen a remarkable turnaround. The initial "Twin Balance Sheet Problem" stemming from stressed bank loans and struggling infrastructure projects expanded to include the NBFC and real estate sectors.

Governments use Budget and Vote on Account for financial planning. A full budget is a comprehensive yearly financial plan. It details past income and expenses, and sets future goals. A vote on account is a temporary measure. It covers essential expenses during transitions, like elections. It ensures government operations continue without major financial changes.

The Fiscal Responsibility and Budget Management Act, 2003, enacted to maintain fiscal discipline in India, faced challenges and amendments. Introduced in 2000 and implemented in 2004, the act aimed to reduce fiscal deficit and promote transparency. The COVID-19 pandemic disrupted fiscal targets, leading to a revised consolidation plan aiming for deficit reduction by 2025-26.

Fiscal policy, the government's revenue and spending plan, aims to maintain a healthy economy. Deficits, addressed through borrowing or reserves, can arise from increased spending during economic downturns. The government uses fiscal policy to control inflation, generate employment, boost investments, collect revenue, encourage savings, and reduce income inequality, contributing significantly to India's economic growth and development.

Government budgets, categorized as balanced, surplus, or deficit, serve as financial roadmaps for resource allocation. Balanced budgets promote stability but lack flexibility. Surplus budgets indicate strong fiscal health but may lead to higher taxes. Deficit budgets, common in developing nations, can stimulate growth during recessions but risk increasing debt.

Governments use deficit financing, borrowing or printing money, to cover budget shortfalls and stimulate economic growth. While crucial for development, particularly in countries like India, it carries risks. Excessive deficit financing can fuel inflation, impacting investments and widening socioeconomic disparities, potentially harming long-term stability.

India's public debt, a mix of internal and external borrowing, is used to fund developmental projects when government revenue falls short. The debt-to-GDP ratio, a key indicator of economic health, decreased to 18.7% in March 2025. The government continues efforts to manage this ratio, aiming for a target of 60% as recommended by the NK Singh Committee.

India's annual budget is a major financial plan. It outlines the government's expected spending and income. The budget-making process involves many groups. It considers public welfare, defense, and salaries. Taxes and borrowing fund government programs. A good budget predicts costs carefully. It also adapts to changes. The budget aims for efficient use of resources.

The Indian government borrows money by issuing securities to fund expenses when tax revenues fall short. This borrowing, a part of the fiscal deficit, is managed by the Finance Ministry and RBI, with a bi-annual borrowing schedule revealed in the Union Budget. Increased borrowing leads to higher interest payments, impacting budgetary goals.