The Union Budget — Direct vs Indirect Tax and the Four Deficits, Untangled

The Budget Is Just Two Boxes

The Union Budget is the Annual Financial Statement laid before Parliament under Article 112. Since 2017 it is presented on 1 February, and the separate Railway Budget was merged into it the same year. The Economic Survey, prepared under the Chief Economic Adviser, is tabled a day earlier.

Everything inside it fits into two boxes:

• ›Revenue Budget — revenue receipts and revenue expenditure. Day-to-day running of the government: salaries, subsidies, interest payments, tax collections.
• ›Capital Budget — capital receipts and capital expenditure. Anything that changes what the government owns or owes: borrowings, disinvestment, loans given, roads and buildings created.

Nearly every confusing budget question is solved by asking one thing about an item: does it change assets or liabilities? If yes, it is capital. If it merely comes in and goes out this year, it is revenue.

1. Fiscal deficit is best defined as:

2. Primary deficit is obtained by subtracting which item from the fiscal deficit?

3. Which of the following is a direct tax?

4. The Union Budget is presented in Parliament as the Annual Financial Statement under which Article of the Constitution?

5. The GST Council is a constitutional body established under which Article?

6. Which of the following is a capital receipt of the Government of India?

7. GST was introduced in India through which Constitutional Amendment Act?

8. The Contingency Fund of India, placed at the disposal of the President, is provided for under: