UNDERSTANDING REGULAR TERMS USED IN THE BUDGET

UNDERSTANDING REGULAR TERMS USED IN THE BUDGET

Public spending: Public spending is expenditure incurred by the public sector in the course of its activities. 

Public debt: Government debt (also known as public debt, national debt) is money (or credit) owed by any level of government; either central government, municipal government or local government. 

Revenue deficit: Revenue deficit is the difference between revenue expenditure and revenue receipts of the government. To use a household analogy, it is the gap between your salary and grocery and other routine bills. It does not take into account spending on creating assets. 

Fiscal deficit: Fiscal deficit is the gap between total expenditure and all receipts that do not create a debt for the future. It indicates how much the government will have to borrow to fund its spending. It is expressed as a percentage of GDP. 

Gross domestic product (GDP): It refers to the market value of all goods and services produced within a country in a given period. It is often considered an indicator of a country's standard of living. 

Inflation: Inflation is a rise in the general level of prices of goods and services in an economy over a period of time. 

Plan and non plan expenditures: Plan expenditure is spending on programmes under the Five-Year Plan, be it for creation of assets or payment of salaries. Once a plan scheme completes its duration, the spending towards maintenance of the assets created and the salaries is not treated as plan expenditure. For instance, building a new school may be a part of Plan expenditure, but once construction is over paying for the teachers and amenities will be Non-Plan expenditure. Non-Plan expenditure includes spending on defence, interest payments and subsidies, among others. 

Foreign direct investment (FDI): FDI or foreign investment refers to long term participation by one country into another. It usually involves participation in management, joint-venture, transfer of technology and expertise. Direct investment excludes investment through purchase of shares. 

Recapitalization: Recapitalization allows one to sell part of his/her business and generate personal cash while still maintaining significant ownership in the business. While the aim of a recapitalization is normally to improve a company's debt/equity ratio, it can also be used to fend off a hostile takeover.