Complete guide to understanding Budget promises & policies

Nithya Dilip 
on 16 July 2019


GDP - Gross Domestic Product

Gross Domestic Product (GDP) is the final value of all Goods and Services produced by a country in a particular period. GDP is widely used to measure any Country's economic growth.

A GDP always measures the value of all goods and services at their Market Prices and not at Cost Prices.GDP takes into consideration the value of all finished goods and services. It never counts on the intermediary uses of goods and services.

For example, a car manufacturer uses many intermediary products in the car, however only the final value of the car will be taken for GDP calculation. Anything produced within India is taken for GDP whether produced by and Indian Company or not.

India has adopted gross value added (GVA)-based approach as compared to a volume-based calculation previously.

Old Method

New Method

Data Source

Index of Industrial Production(IIP)

MCA 21 (Corporate Affairs Ministry)

Basis

Only Volume

Volume and Value

Companies Considered

Only Firms registered under Factories Act

Data from a wide range of Companies

Ancillary activities

Not considered

Value additions from activities like marketing are Considered

Labour

All labour treated as equal

Different weights based for different levels

Terms and Definitions

Term

Definition

Fiscal Consolidation

policies undertaken by Governments to reduce their deficits and accumulation of debt stock. Key deficits of government are the revenue deficit and the fiscal deficit

Revenue Deficit

Revenue Receipts fall short of Revenue expenditure of the Government. Receipts which neither create asset nor reduce any liability are called Revenue Receipts. Revenue Receipts are further classified into tax revenue and non-tax revenue. Revenue Expenditure is the maintenance expenditure which the government makes towards the assets which it owns in order to keep them functioning.

Fiscal Deficit

The amount by which the government’s total budget outlays exceeds its total receipts for a fiscal year. Formula=Revenue receipts- Expenditure including capital expenditure

Recapitalisation

Recapitalization is the restructuring of a company's debt and equity ratio. The purpose of recapitalization is to stabilize a company's capital structure.

FII

The term is used most commonly in India and refers to outside companies investing in the financial markets of India.

FDI

The key feature of foreign direct investment is that it establishes either effective control of, or at least substantial influence over, the decision-making of a foreign business.

Fund Allocation in the budget for some welfare schemes

The overall size (amount government proposes to spend) of Budget 2019-20 is estimated to be Rs. 27,86,349 crore, which is 13 per cent more than the budget presented last year.

Scheme

Allocation

Purpose

MGNREGA

60000 crores

It aims to enhance livelihood security in rural areas by providing at least 100 days of wage employment in a financial year to every household whose adult members volunteer to do unskilled manual work

Pradhan Mantri KisanSamman Nidhi

75000 Crores

Minimum Income Support for Small farmers

PM Awaz Yojana

25853 crores

Initiative in which affordable housing will be provided to Urban and Rural Poor

National Livelihood Mission

9024 crores

promoting self-employment and organization of rural poor

PM Gram Sadak Yojana

19000 Crores

provide good all-weather road connectivity to unconnected villages

Shyama Prasad Mukherjee Rurban Mission

800 Crores

to deliver integrated project based infrastructure in the rural areas, which will also include development of economic activities and skill development

SamagraShikhya Abhiyan

36322 Crores

equal opportunities for schooling and equitable learning outcomes. It subsumes the three Schemes of Sarva Shiksha Abhiyan (SSA), Rashtriya Madhyamik Shiksha Abhiyan (RMSA) and Teacher Education (TE)

Mid Day Meal Programme

11000 Crores

supplies free nutritional lunches on working days for children in primary and upper primary classes in government, government aided, local body, Education Guarantee Scheme, and alternate innovative education centres, Madarsa and Maqtabs supported under Sarva Shiksha Abhiyan, and National Child Labour Project schools run by the ministry of labour

PM Employment Generation Scheme

2327.10 Crores

The scheme is implemented by Khadi and Village Industries Commission (KVIC) functioning as the nodal agency at the national level. At the state level, the scheme is implemented through State KVIC Directorates, State Khadi and Village Industries Boards (KVIBs), District Industries Centres (DICs) and banks. In such cases KVIC routes government subsidy through designated banks for eventual disbursal to the beneficiaries / entrepreneurs directly into their bank accounts.

ASPIRE Scheme

50 Crores

promoting innovation in rural entrepreneurship

National Health Mission

33651 Crores

Swachh Bharat Mission

12644 Crores

 

Steps taken by government for Fiscal Consolidation:

• Minimizing tax avoidance by increased digital transactions, Bank penetration in villages and small towns, Audit trail for all transactions, war on black money, introduction of GST

• Better management of government subsidies and ensuring they reach the target audience through Direct Benefit Transfer Scheme


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