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Budget FAQs
Published on Fri, Feb 01, 2008 at 13:26, Updated at Sat, Feb 02, 2008 in section
Tags: Union Budget 2008, Faqs
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Excise duty is a levy paid by the manufacturer on items manufactured within the country. Usually, these charges are passed on to the consumer.
What is plan and non-plan expenditure?
There are two components of expenditure - plan and non-plan.
Of these, plan expenditures are estimated after discussions between each of the ministries concerned and the Planning Commission.
Non-plan revenue expenditure is accounted for by interest payments, subsidies (mainly on food and fertilisers), wage and salary payments to government employees, grants to States and Union Territories governments, pensions, police, economic services in various sectors, other general services such as tax collection, social services, and grants to foreign governments.
Non-plan capital expenditure mainly includes defence, loans to public enterprises, loans to States, Union Territories and foreign governments.
What is the Central Plan Outlay?
It is the division of monetary resources among the different sectors in the economy and the ministries of the government.
What is fiscal policy?
Fiscal policy is a change in government spending or taxing designed to influence economic activity. These changes are designed to control the level of aggregate demand in the economy. Governments usually bring about changes in taxation, volume of spending, and size of the budget deficit or surplus to affect public expenditure.
What is a fiscal deficit?
This is the gap between the government's total spending and the sum of its revenue receipts and non-debt capital receipts. It represents the total amount of borrowed funds required by the government to completely meet its expenditure.
What is the Finance Bill?
The government proposals for the levy of new taxes, alterations in the present tax structure or continuance of the current tax structure beyond the period approved by Parliament, are laid down before Parliament in this bill.
The Parliament approves the Finance Bill for a period of one year at a time, which becomes the Finance Act.
What impact does the Budget have on the market and economy?
The Budget impacts the economy, the interest rate and the stock markets. How the finance minister spends and invests money affects the fiscal deficit. The extent of the deficit and the means of financing it influence the money supply and the interest rate in the economy. High interest rates mean higher cost of capital for the industry, lower profits and hence lower stock prices.
The fiscal measures undertaken by the government affect public expenditure. For instance, an increase in direct taxes would decrease disposable income, thus reducing demand for goods. This decrease in demand will translate into a decrease in production, therefore affecting economic growth.
Similarly, an increase in indirect taxes would also decrease demand. This is because indirect taxes are often partially or completely passed on to consumers in the form of higher prices. Higher prices imply a reduction in demand and this in turn would reduce profit margins of companies, thus slowing down production and growth.
Non-plan expenditure like subsidies and defence also affect the economy as limited government resources are used for non-productive purposes.
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The budget is very well balanced and it seems that it's a populist budget but it's a major relief to
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APPARENTLY VERY GOOD BUDGET. HOWEVER HOME LOAN SHOULD BECOME EASILY ACCESSIBLE FOR PERSONS INCOME BELOW 1.5 LAKH ANNUM.PM SHOULD HAVE
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