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Glossary Terms
| Term (EN) | Definition | Exam Relevance |
|---|---|---|
| Annual Financial Statement | Constitutional name of the Union Budget under Art. 112 | Budget basics 2-mark |
| Revenue Receipts | Tax + non-tax income; creates no liability | Receipts classification |
| Capital Receipts | Borrowings, disinvestment, loan recoveries; creates liability or reduces assets | Receipts classification |
| Revenue Expenditure | Expenditure that creates no asset — salaries, interest, subsidies | Expenditure PYQ 2021 |
| Capital Expenditure | Expenditure that creates assets — infrastructure, equity investments | Capex multiplier |
| Fiscal Deficit | Total expenditure minus non-borrowing receipts; the government's borrowing requirement | Most tested concept |
| Revenue Deficit | Revenue expenditure minus revenue receipts — measures current account imbalance | Deficit types |
| Primary Deficit | Fiscal deficit minus interest payments — measures current fiscal effort | Deficit types |
| Effective Revenue Deficit | Revenue deficit minus grants for capital asset creation | Deficit refinement |
| Consolidated Fund | All government revenues and expenditures — Art. 266; no withdrawal without Parliament | Constitutional finance |
| Contingency Fund | Rs 500 crore emergency fund — Art. 267; President's disposal; post-facto Parliament approval | Constitutional finance |
| FRBM Act | Fiscal Responsibility and Budget Management Act 2003 — mandates fiscal discipline | Fiscal consolidation |
| Escape Clause | Provision in FRBM allowing FD to exceed target by 0.5% during emergencies | FRBM exception |
| Finance Commission | Constitutional body (Art. 280) recommending Centre-State revenue distribution | Key institution |
| Vertical Devolution | Centre-to-States share allocation from divisible pool | FC horizontal/vertical |
| Horizontal Devolution | Distribution of states' share among individual states based on criteria | FC mechanics |
| Divisible Pool | Gross tax revenue minus cesses/surcharges — shared 41% with states | Centre-State finance |
| GST Council | Art. 279A body — Centre + States; cooperative tax governance | GST governance |
| Input Tax Credit (ITC) | Credit for GST paid on business inputs — eliminates cascading | GST mechanism |
| Fiscal Multiplier | Ratio of GDP change to change in fiscal stimulus — capex multiplier 2.5–3x | Capex justification |
| Crowding Out | Government borrowing raising interest rates and reducing private investment | Fiscal deficit impact |
| Ways and Means Advance | Short-term RBI credit to government for within-year cash flow mismatches | Debt management |
| Charged Expenditure | Expenditure not subject to Parliament's vote — President's salary, debt charges | Budget procedure |
| Sinking Fund | Government fund for debt repayment — Consolidated Sinking Fund | Debt management |
| Fiscal Consolidation | Process of reducing fiscal deficit over time — India from 9.2% (2020-21) to 4.4% (2025-26) | Budget 2025-26 |