Is the budget all Latin and Greek to your ears? The following list will help you understand the budget, and the economy, better.

Ad-valorem duties: These are the duties determined as a certain percentage of the price of the product.

Appropriation bill: This Bill is like a green signal enabling the withdrawal of money from the Consolidated Fund to pay off expenses. These are instruments that Parliament clears after the demand for grants has been voted by the Lok Sabha.

Aggregate demand: It is the sum of all demand in an economy. This can be computed by adding the expenditure on consumer goods and services, investment, and not exports (total exports minus total imports).

Aggregate supply: It is the total value of the goods and services produced in a country, plus the value of imported goods less the value of exports.

Budget: Just what is this annual rigmarole called the Union Budget? Put simply, the annual Union Budget is an estimate of the Government of India's revenue and expenditure for the end of a particular fiscal year, which usually runs from April 1 to March 31. The Union Budget is the most comprehensive exhibit of the government's finances, in which revenues from all sources and outlays to all activities are consolidated. The budget also contains estimates of government's accounts for the next fiscal, called budgeted estimates. Ironically enough, you won't find the term "budget" anywhere in the Constitution! Under Article 112, a statement of estimated receipts and expenditure, called the "Annual Financial Statement", has to be laid before Parliament for each financial year. This Annual Financial Statement is the main budget document, not the eagerly awaited Finance Minister's budget speech, however laced with poetic wit and literary flourishes it may be!

Balance of payments: Balance of payments is the difference between the demand for and supply of a country's currency on the foreign exchange market.

Balanced budget: The Union Budget is in balance when current receipts are equal to current expenditure. That means taxes on income and expenditure are sufficient to meet payments for goods and services and interest on the national debt. A balanced budget is, however, not an ideal one because, as economist John Maynard Keynes showed, budget surpluses and deficits can be used to stimulate or regulate the economy, by affecting the levels of demand and prices.

Budgetary deficit: Such a situation arises when the expenses exceed the revenues. Here the entire budgetary exercise falls short of allocating enough funds to a certain area.

Budget estimates: These estimates contain an estimate of fiscal deficit and the revenue deficit for the year. The term is associated with the estimates of the Centre's spending during the financial year and the income received as proceeds of tax revenues.

Bond: A certificate of debt (usually interest-bearing or discounted) that is issued by a government or corporation in order to raise money; the issuer is required to pay a fixed sum annually until maturity and then a fixed sum to repay the principal.

Bear: An investor with a pessimistic market outlook; an investor who expects prices to fall and so sells now in order to buy later at a lower price.

Bull: An investor with an optimistic market outlook; an investor who expects prices to rise and so buys now for resale later.

Capital budget: The word, capital, is long-term in nature. Capital budget keeps track of the government's capital receipts and payments. This accounts for market loans, borrowings from the Reserve Bank of India (RBI) and other institutions through the sale of Treasury Bills, loans acquired from foreign governments and recoveries of loans granted by the Centre to state governments and Union Territories.

Capital expenditure: Capital expenditure or payments comprise: expenditure on acquisition of assets like land, building and machinery, investments in shares, loans and advances granted by the Centre to State and Union Territory governments, government companies, corporations and other parties.

Capital receipt: Loans raised by the Centre from the market, government borrowings from the RBI & other parties, sale of Treasury Bills and loans received from foreign governments all form a part of capital receipt. Other items that also fall under this category include recovery of loans granted by the Centre to state governments & Union Territories and proceeds from disinvestments of government's stake in public sector undertakings.

CENVAT: Central Value Added Tax (CENVAT) is an excise duty levied on manufacturers. It was introduced in the Budget 2000-01, with a single rate of 16 per cent across the board with special excise duty (SED) on various goods. It is designed to reduce the cascading effect of indirect taxes on final products. As a scheme, CENVAT is more liberal and extensive than the erstwhile MODVAT, with most goods being brought within its ambit and no declarations or statutory records needed.

Central plan: It refers to the government's budgetary support to the plan and, the internal and extra budgetary resources raised by the public sector undertakings.

Consolidated fund: This is one big reservoir where the government pools all its funds together. The fund includes all government revenues, loans raised and recoveries of loans granted. All expenditure of government is incurred from the consolidated fund and no amount can be withdrawn from the fund without authorisation from Parliament.

Contingency fund: It is more or less similar to that extra little bit of savings that all mothers set aside in case of an emergency. As the name itself suggests, this is the fund into which the government dips its hands in emergencies, to meet urgent, unforeseen expenditures and can't wait for authorisation by Parliament. The contingency fund is an impress placed at the disposal of the President for such financial exigencies. The government subsequently obtains Parliamentary approval for such expenditure and for the withdrawal of an equivalent amount from the consolidated fund. The amount spent from the contingency fund is recouped to the fund.

Corporate tax: This is the tax paid by corporates or firms on the incomes they earn.

Countervailing duties: This is levied on imports that may lead to price rise in the domestic market. It is imposed with the intention of discouraging unfair trading practices by other countries.

Customs duties: These duties are levied on goods whenever they are either brought into the country or exported from the country. The importer or the exporter pays customs duties.

Current account deficit: This deficit shows the difference between the nation's exports and imports.

Currency appreciation: An increase in the value of one currency relative to another currency. Appreciation occurs when, because of a change in exchange rates, a unit of one currency buys more units of another currency. Opposite is the case with currency depreciation.

Currency substitution: The use of foreign currency (like US dollars) as a medium of exchange in place of or along with the local currency (like Rupees).

Direct taxes: These are the taxes that are levied on the income and resources of individuals or organizations. Normally they are levied on wealth or income through income tax, corporate tax, capital gains tax or inheritance tax.

Disinvestment: In the Indian context, disinvestment or divestment is the liquidation or sale of part or the whole of government's stake in public sector undertakings. It is generally done to bring in private management to improve the company's performance and to add to the government's revenue. (Note that the term, as used contemporarily in India, has no connection with the economist's definition of disinvestments as the negative investment that occurs when part of the capital stock is destroyed or where gross investment is less than capital consumption.)

Double taxation: Corporate earnings taxed at both the corporate level and again as a stockholder dividend.

Economic growth: Quantitative measure of the change in size/volume of economic activity, usually calculated in terms of gross national product (GNP) or gross domestic product(GDP).

Excise duties: These are levies paid by manufacturers on items manufactured within the country. Usually, these are passed on to the consumer.

Externalities: A cost or benefit not accounted for in the price of goods or services. Often "externality" refers to the cost of pollution and other environmental impacts.

Export incentives: Public subsidies, tax rebates, and other kinds of financial and nonfinancial measures designed to promote a greater level of economic activity in export industries.

Fiscal deficit: Fiscal deficit 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.

Fiscal policy: Fiscal policy is a change in government spending or taxing designed to influence economic activity. By fine-tuning the level and pattern of budgetary surpluses and how they are financed, government can control the level of aggregate demand in the economy. Government usually focus on three areas to manage public expenditure and raise the revenue to pay for it: forms of taxation; the volume of spending; and the size of the budget deficit or surplus. If the budget shows an overall deficit, it will add to aggregate demand; conversely, a surplus subtracts from aggregate demand. Furthermore, if the government seeks to finance the deficit by printing more money, it will only add to the money supply and fuel inflation. If, however, the government resorts to borrowing to meet the deficit, it would be competing with the private sector for savings, often pushing private borrowers out of the market. Such government activity would thus increase the demand for a given supply of credit, pushing up the cost of credit, i.e. interest rates.

Finance bill: Consists of the government's proposals for the imposition of new taxes, modification of the existing tax structure or continuance of the existing tax structure beyond the period approved by the Parliament.

Fringe benefit: A benefit in addition to salary offered to employees such as use of company's car, house, lunch coupons, health care subscriptions etc.

Gross Domestic Product (GDP): Total market value of the goods and services manufactured within the country in a financial year.

Gross National Product (GNP): Total market value of the finished goods and services manufactured within the country in a given financial year, plus income earned by the local residents from investments made abroad, minus the income earned by foreigners in the domestic market.

Income tax: This is the tax levied on individual income from various sources like salaries, investments or interest.

Indirect taxes: Taxes imposed on goods manufactured, imported or exported such as excise duties and custom duties.

Inflation: Inflation is a sustained increase in the general price level. The inflation rate is the percentage rate of change in the price level.

MAT: This is the minimum alternative tax, a minimum tax that a company must pay, even if it is under zero tax limits.

Monetary policy: This comprises actions taken by the central bank to change the supply of money and the interest rate and thereby affct economic activity. Government hope that by regulating the level of money or liquidity in the economy, they will achieve policy objectives like controlling inflation, improving the balance of payments, raising the growth of the gross national product or maintaining a certain level of employment.

Market mechanism: The system whereby prices of commodities or services freely rise or fall when the buyer's demand for them rises or falls or the seller's supply of them decreases or increases.

National debt: The total outstanding borrowings of the central government exchequer. It is the debt owed by the government as a result of earlier borrowing to finance budget deficits. That part of the debt not held by RBI is the publicly held national debt.

Non-plan expenditure: Non-Plan Expenditure covers all expenditure of government not included in the plan. It includes both development and non-development expenditure. Part of the expenditure is obligatory in nature, e.g. interest payments, pensionary charges, defence and internal security or transfers to states. Expenditure on maintaining the assets created in previous plans is also treated as non-plan expenditure.

Overvalued exchange rate: An official exchange rate set at a level higher than its real or shadow value - for example, seven Kenyan shillings per dollar instead of, say, 10 shillings per dollar. Overvalued rates cheapen the real cost of imports while raising the real cost of exports. They often lead to a need for exchange control.

Official exchange rate: Rate at which the central bank will buy and sell the domestic currency in terms of a foreign currency such as the US dollar.

Plan expenditure: Money given from the government's account for the central plan is called plan expenditure. This is developmental in nature and is spent on schemes detailed in the plan.

Plan outlay: Plan outlay is the amount for expenditure on projects, schemes and programmes announced in the plan. The money for the plan outlay is raised through budgetary support and internal and extra-budgetary resources. The budgetary support is also shown as plan expenditure in government accounts.

Primary deficit: The primary deficit is the fiscal deficit minus interest payments. It tells us how much of the government's borrowings are going towards meeting expenses other than interest payments.

Progressive tax: A tax in which the rich pay a larger percentage of income than the poor, in contrast to regressive tax.

Proportional tax: A tax taking the same percentage of income regardless of the level of income.

Public account: There are occasions when the government acts more like a banker, for instance, in transactions relating to provident funds, small savings collections and other similar deposits. These are unlike the normal receipts and expenditure of government that relate to the consolidated fund. The funds that the government thus receives from its bank-like operations are kept in the public account, from which also the related disbursements are made. These funds do not belong to the government and have to be paid back, some time in the future, to the persons and authorities who deposited them. Since these funds do not technically belong to government, Parliamentary authorisation for payments from the public account is not needed. Sometimes, with the approval of Parliament, the government withdraws money from the consolidated fund and deposits it in the public account to set up separate fund for expenditure on specific purposes like sugar development or replacement of depreciated assets of commercial undertakings. However, the actual expenditure for these specific purposes must be voted in by Parliament.

Pump priming: A stimulating monetary or fiscal policy to set in motion an expansionary multiplier process.

Regressive tax: A tax in which the poor pay a larger percentage of income than the rich. Contrast with progressive tax.

Revenue budget: The revenue budget consists of revenue receipts of government (revenues from tax and other sources) and the expenditure met from these revenues. Tax revenues are made up of taxes and other duties that the Union government levies. The other receipts consist mainly of interest and dividend on investments made by government, fees and other receipts for services rendered by government. Revenue expenditure is the for the normal day-to-day running of government departments and various services servicing interest charges on debt incurred by government, and subsidies. Usually, revenue expenditure covers all the expenditure that does not create assets. However, all grants given to state governments and other parties are also clubbed under revenue expenditure, although some of them may go into the creation of assets.

Revenue receipts: Revenue receipts consist of tax collected by the government and other receipts consisting of interest and dividend on investments made by government, fees and other receipts for services rendered by government.

Revenue expenditure: Revenue expenditure is for the normal running of the government's department and various services, interest charged on debt incurred by government, and subsidies. Broadly speaking, expenditure that does not result in the creation of assets is treated as revenue expenditure. All grants given to state governments and other parties are also treated as revenue expenditure, even though some of the grants may be for creation of assets.

Revenue deficit: The difference between revenue expenditure and revenue receipt is known as revenue deficit. It shows the shortfall of government's current receipts over current expenditure. If the capital expenditure and capital receipts are taken into account too, there will be a gap between the receipts and expenditure of a year. This gap constitutes the overall budgetary deficit, and it is covered by the issue of 91-day Treasury Bills, mostly held by the RBI.

Revenue surplus: Opposite of revenue deficit, it is the excess of revenue receipts over revenue expenditure.

Revised estimates: Usually given in the following budget, it is the difference between the budget estimates and the actual figures.

Subsidies: Financial aid provided by the Centre to individuals or a group of individuals to be competitive. The grant of subsidies is also aimed at improving their skills of those who benefit from the subsidies.

Sales tax: A tax levied as a percentage of retail sales.

Tariff: A tax applied to imports.

Twin deficits: The trade deficit and the government budget deficit.

Treasury bill: A short-term debt issued by a national government with a maximum maturity of one year. Treasury bills are sold at discount, such that the difference between purchase price and the value at maturity is the amount of interest.

Value-Added Tax (VAT): This is a tax levied on a firm as a percentage of its value added, to avoid the multiplying effect of taxes as the product passes through different stages of production. The tax is based on the difference between the value of the output and the value of the inputs used to produce it. The aim is to tax a firm only for the value added by it to the inputs it is using for manufacturing its output. In principle, although the tax is levied on the value added at each stage of production, it is intended to tax only the final consumer. For producers, the VAT they pay on the inputs they buy from other companies is recouped when they sell their own output.