Union Budget also called Annual Financial Statement is presented by the Union Finance Minister on 1st of February from the year 2016. It has the financial bill and the appropriation bill that are supposed to be passed in Indian Parliament before April 1. The Union Budget encompasses many economic terms that can be a bit difficult to understand for aspirants of IAS Exam.
This article will bring you such economic terms that are seen in Union Budget, the meaning of those UPSC candidates should know. Before that, a basic understanding of Union Budget will also be provided. Alongwith these important economic terms seen in Budget, candidates can also read about 15 terms quite frequently seen in news related to Indian economy.
The article will, therefore, help aspirants for UPSC Mains GS II (Political Science) and also for GS III ( Indian Economy.) Economic Terms PDF has also been provided which you may download for future revision for UPSC 2023.
|Aspirants should begin their preparation by solving UPSC Previous Year Question Papers now!!
To complement your preparation for the upcoming exam, check the following links:
What Union Budget means?
According to Article 112 of the Indian Constitution, the Union Budget of a year, also referred to as the annual financial statement, is a statement of the estimated receipts and expenditure of the government for that particular year.
Aspirants should know that there is a difference between Union Budget, Interim Budget and Vote on Account. Read how the interim budget is different from a regular budget and vote on account in the linked article.
Union Budget 2021-22
The Union Budget 2021 – 22 was recently presented by the Union FM. Please get the details of the Budget 2021 here.
Union Budget 2020-21
Union Budget 2020 was presented by the Finance Minister on 1st February 2020. For detailed insights into the Budget 2020, click on the linked article.
Union Budget 2019-20 emphasised on the points given in the table below:
Important Economic Terms Related Union Budget & Their Meanings
The table below will bring to you a list of all the important terms that are related to and also used in Union Budget:
|Annual Financial Statement||It encompasses the receipt and expenditure of the Indian government. The information on the Consolidated Fund of India, Contingency Fund of India and Public Accounts is provided. (Read about the types of funds in India here.)|
|Revenue – Receipt & Expenditure||
|Capital – Receipt & Expenditure||
|Gross Domestic Product (GDP)||Monetary value of all finished goods and services made within a country during a specific period|
15 Terms related to Indian Economy which UPSC Aspirants should know
Candidates find it difficult to understand economic terms seen in the news. These terms are quite frequently read in the newspapers too. We are providing a list of top 15 terms which are recurring in current affairs.
|Important Economic Terms Seen in News (Important for IAS Exam)|
|Statutory Liquid Ratio (SLR)||Reserve requirement that commercial banks are required to maintain in the form of cash, gold reserves, Reserve Bank of India- approved securities before providing credit to the customers|
|Cash Reserve Ratio (CRR)||Cash Reserve Ratio (CRR) is a specified minimum fraction of the total deposits of customers, which commercial banks have to hold as reserves either in cash or as deposits with the central bank. CRR is set according to the guidelines of the central bank of a country|
|Marginal Cost of Fund based Lending Rate (MCLR)||Marginal Cost of Funds based Lending Rate (MCLR) is the minimum lending rate below which a bank is not permitted to lend|
|Repo Rate (RR)||Repo rate is the rate at which the central bank of a country (Reserve Bank of India in case of India) lends money to commercial banks in the event of any shortfall of funds.|
|Reverse Repo Rate (RRR)||Reverse Repo rate is the rate at which the Reserve Bank of India borrows funds from the commercial banks in the country|
|Wholesale Price Index (WPI)||An index that measures and tracks the changes in the price of goods in the stages before the retail level – that is, goods that are sold in bulk and traded between entities or businesses instead of consumers. For more on WPI, click here.|
|Consumer Price Index (CPI)||Measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care. For more on CPI, click here.|
|Foreign Institutional Investor||An investor or investment fund registered in a country outside of the one in which it is investing|
|Manufacturing Activity||Manufacturing, processing, testing, packaging, storing and other activities undertaken or required to be undertaken by CRL or its suppliers in order to manufacture and supply Client with the Drug Product|
|Foreign Direct Investment||An investment in the form of a controlling ownership in a business in one country by an entity based in another country|
|Monetary Policy||Policy adopted by the monetary authority of a country that controls either the interest rate payable on very short-term borrowing or the money supply, often targeting inflation or the interest rate to ensure price stability and general trust in the currency|
|Base Effect||Distortion in a monthly inflation figure that results from abnormally high or low levels of inflation in the year-ago month|
|Liquidity Adjustment Facility (LAF)||A tool used in monetary policy, primarily by the Reserve Bank of India (RBI), that allows banks to borrow money through repurchase agreements (repos) or for banks to make loans to the RBI through reverse repo agreements.|
|Marginal Standing Facility (MSF)||The penal rate at which banks can borrow money from the central bank over and above what is available to them through the LAF window.|
|Index of Industrial Production (IIP)||Index for India which details out the growth of various sectors in an economy such as mineral mining, electricity and manufacturing.|
Important Economic Terms related to Union Budget – UPSC Notes:- Download PDF Here
|Economy Notes for UPSC||Syllabus and Strategy for Economics for UPSC|
|Difference between NITI Aayog and Planning Commission||7 Things every aspirant should know about Economic Survey|
|UPSC Mains General Studies Paper-III Strategy, Syllabus & Structure||Topic-Wise General Studies Paper – 3 Questions for UPSC Mains|
|Previous Years Economy Questions in UPSC Mains General Studies Paper – 3||Indian Polity Notes For UPSC|