Union Budget 101: Key Things to Know!
Where Government Earns From & Spends
Source: Budget Documents, HDFC Tru
Fiscal Deficit and Why It Matters
Fiscal Deficit (FD) equals total expenditure minus total receipts. It is the amount the government must borrow to fund its shortfall. It is measured as a percentage of nominal GDP.
FD = Total Expenditure – (Tax Revenue + Non-Tax Revenue + Non-Debt Capital Receipts)
Source: Budget Documents, HDFC Tru; Note: BE – Budget Estimate
High fiscal deficits signal expansionary fiscal policy but raise debt sustainability risks, impacting private investment and consumption via higher yields in the economy.
FRBM Framework and Its Importance
Fiscal Responsibility and Budget Management Act (2003): It is a legal framework which mandates fiscal prudence via fiscal deficit/debt targets and transparent reporting.
FRBM curbs excessive borrowing, stabilizes debt/GDP (critical for sovereign credit rating), and frees RBI monetary space by lowering G-sec supply pressures. Escape clauses allow flexibility for crises (such as Covid period).
FY27 Budget Expectations (to be presented on 1st Feb)
Source: HDFC Tru ; Note: FY26 and FY27 figures are based on internal estimates
2024 HDFC TRU