Glossary of terms to know ahead of Union Budget 2025
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As the Union Budget approaches, here’s a quick guide to essential financial terms often mentioned during the Budget presentation:
Vote on account
Under Article 116 of the Indian Constitution, a vote on account is a temporary grant provided to the Central government to meet short-term expenses until the new financial year begins. It is also referred to as the Interim Budget.
Capital expenditure
Capital expenditure refers to the government's spending on developing machinery, equipment, buildings, healthcare facilities, education and similar infrastructure. It also includes expenses for acquiring fixed assets such as land and government investments that generate future profits or dividends.
Revenue expenditure
Revenue expenditure refers to the money the government spends on the daily operations of its departments and services. This also includes interest payments on debt and the provision of subsidies.
Fiscal deficit
A fiscal deficit occurs when the government’s expenditure exceeds its total income. The gap is usually filled by borrowing.
Revenue account
A revenue account contains records of the income or revenue received through business or government transactions.
Capital account
Also known as the capital and financial account, this records the net inflow or outflow of investments in an economy.
GDP (Gross Domestic Product)
GDP is the standard measure of the total value of goods and services produced in a country over a specific period, reflecting the health of its economy.
Central plan outlay
This refers to the allocation of funds among various sectors and ministries to achieve planned development objectives.
Plan expenditure
Funds allocated for developmental purposes such as electricity generation, infrastructure projects, education, and other productive areas fall under plan expenditure.
Non-plan expenditure
This includes spending on essential services such as interest payments, debt servicing, defence, and subsidies.
BOP (Balance of Payments)
The BOP measures the difference between the money received by a country and the money that flows out. It includes transactions related to trade, investments, and financial transfers.
Consolidated fund
This is the Central government’s main account, where all revenue it receives is deposited and all expenditures are withdrawn.
Contingency fund
A reserve account used by the Central government to meet unforeseen and emergency expenses.