Some Important Terminologies Related to Budget you should know

By admin March 26, 2019 15:29

1:-Revenue Receipts – Revenue receipts are money received for a short period of time. The benefit of revenue receipts can only be enjoyed for one accounting year and not more. It neither creates liabilities nor reduces assets.

Revenue Receipts = Tax Revenue + Non­tax Revenue Proceeds of taxes

*Non Tax Revenues = Interest and dividend on government investment + receipts for services rendered by the government *Tax Revenue = Total Tax collection of Government including Cess and Surcharge

2:-Revenue Expenditure – Expenditure incurred in the ordinary conduct and administration of business, i.e. rent, carriage on saleable goods, salaries, wages manufacturing expenses, commission, legal expenses, insurance, advertisement, free samples, postage, printing charges etc.

Revenue Expenditure = Salaries of employees + Interest payment on past debt + Subsidies + Pension

3. Revenue Deficit – Revenue deficit in excess of total revenue expenditure of the government over its total revenue receipts.

Revenue deficit = Total revenue expenditure – Total revenue receipts

4. Effective Revenue Deficit – A narrower version of revenue deficit called “effective revenue deficit" (ERD), which measures the revenue deficit minus grants to states for the creation of capital assets.

Effective Revenue Deficit = Total revenue expenditure – Total revenue receipts – Total grant to states for the creation of capital

5. Capital Receipts – Capital receipts are non-recurring receipts that either increase a liability or decrease an asset.

Capital Receipts =

Loans (external + internal) + loans recovered by central govt.+ disinvestment income

Read Also:-Unemployment data in India – What, why and how? 6. Capital Expenditure – Capital expenditures would involve outlays of cash to acquire assets like buildings or equipment. These expenditures would be for assets intended to last for longer than one year.

Capital expenditure =

Expenditure on Purchase of capital assets/ capital goods + Loans given by central govt. +

Repayment of loan

7. Budget Deficit – Budgetary deficit is the excess of total expenditure (both revenue and capital) over total receipts (both revenue and capital).

Budget deficit = Total Expenditure – Total Income

8. Primary Deficit – Primary deficit is defined as a fiscal deficit of current year minus interest payments on previous borrowings.

Primary deficit = Fiscal deficit – Interest payments

9. Fiscal Deficit – It is the amount of borrowing the government has to resort to meet its expenses.

Fiscal deficit = Total expenditure – Total receipts excluding borrowings

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By admin March 26, 2019 15:29