ECONOMY TERMS

Budget Deficit- Expenses-Revenues à Part of Fiscal Deficità

shows borrowing requirement of the center.
 Fiscal DeficitàTotal Expenditure – {(Total Receipt-market
borrowings)}
Capital Budget:-Capital receipts and payments + loans and
advances granted by Union Govt to S & UT Govt, Govt. co,
corporations and other parties +market loans + borrowings
from RBI and other institutions through sale of Tr. Bills + loans
acquired from foreign govt.
Capital Expenditure: - On acquisition of assets - land and
building and machinery + investment in shares +loans and
advances sanctioned by the center to SG, UT and PSU.
Current Account Deficit- Export – Imports
Gross Domestic Product- Mkt. Value of goods and services
manufactured within the country during a financial year.
Gross National Product- GDP + Income earned from
investments abroad by residents – Income earned from
domestic mkt by foreign investors. It is made of three sectors
viz; Agl, Ind and Services.
Monetised Deficit- Level of support by RBI to Central Govt.
borrowings.
Peak Rate - Highest rate of Customs Duty on an item.
Plan Exp.- Revenue exp + Capital exp + Central Assistance of
S & UT
Primary Deficit- Fiscal Deficit – Interest Payment
Revenue Deficit- Revenue exp – Revenue Receipt
Revenue Budget- Revenue Receipt and Revenue Exp (Details)
Revenue Surplus- Opp of Revenue Deficit
Twin Deficit- Refers to Trade Deficit and Budget Deficit
Value Added Tax-
Tax levied on a firm as a percentage of its value added.
To avoid multiplying effect of taxes at different stages.
Tax is based on Value of output – Value of input.
Tax on value addition.
Balance of payment- Statement of- Net outstanding
receivable or payable of Trade and financial transactions (all
economic transactions) with other countries.
Current Account Deficit- Expenditure – Receipt in BOP if in
deficit
Current Account Surplus- As above if in excess.
Foreign Direct Investment- Investment of a Foreign co. or
its subsidiary
Foreign Institutional Investment- Inv.of a foreign
institution in the country. Unlike FDI, FIIs bring portfolio
investment i.e. investment in shares, debentures , bonds etc.
MODVAT- Way of giving relief of Excise duties borne by
 suppliers to final manufacturer of goods
CENVAT- Replacement of MODVAT. For reducing cascading
effect of indirect taxes on finished products. More extensive
with most goods brought under its purview.
Ad-valorem duties- Duties as a certain % on the price of the
product.
Consolidated Fund- Revenues from Govt. + Loans raised +
recoveries of loans.
Demand for grants- Estimate of expenditure from
Consolidated Fund. Requires approval of Lok Sabha.
Public Account- Account where money received through
transaction not related to Consolidated Fund is kept.
Contingency Fund- To meet urgent, unforeseen expenditures.
Can’t wait for authorization by Parliament.
Per Capita Income- Income of the country / population
Countervailing Duties- Levied on imports that may lead to
price in the domestic market. For discouraging unfair trade
practices by other countries.
Reserve Money- Money supplied by RBI AND Central Govt.
Indicates liability to public including banks.
MARGIN TRADING- Investor purchases securities by
borrowing a portion of the purchase value. Only Corporate
brokers with NET WORTH above Rs. 3 crores would be eligible
to participate.
MARKET VALUE ADDED (MVA)- Market value of debt and
equity- book value of debt and equity.
Book value is equity plus retained earnings.
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