Primary Deficit = Fiscal Deficit - Interest Payments. It shows the gap between the government's spending and receipts for the current year alone, removing the legacy cost of past borrowings.

Recovery of Loans is a Capital Receipt because it reduces the government's financial assets (the outstanding loan). The others are Revenue Receipts (Taxes, Dividends, Fees) as they are recurring and create no liability/asset change.

The Fiscal Responsibility and Budget Management (FRBM) Act requires the government to present three policy statements: Medium-term Fiscal Policy, Fiscal Policy Strategy, and Macro-economic Framework.

Automatic stabilizers cushion the economy without direct government intervention. In a boom, progressive taxes rise (cooling demand). In a recession, taxes fall and benefits rise (boosting demand), automatically countering the cycle.

Direct monetization involves printing new money (High Powered Money) to fund government spending. This increases the monetary base and money supply, often fueling demand-pull inflation.

Primary Deficit = Fiscal Deficit - Interest Payments. If PD = 0, then Fiscal Deficit = Interest Payments. This means new borrowing is used solely to service old debt, not for new expenditure.

It is not a separate budget but a tool to translate gender commitments into budgetary commitments by inspecting inflows/outflows through a gender lens.

Due to the pandemic stimulus, the original target of 3% was relaxed. The Union Budget 2021-22 announced a glide path to reduce fiscal deficit to below 4.5% by 2025-26.

Under Article 267, the Contingency Fund is held by the Finance Secretary on behalf of the President. It is used for unforeseen expenditure (like disasters) pending parliamentary authorization.

Expenditures charged on the Consolidated Fund of India (Article 112(3)) include emoluments of the President, Judges of SC/HC, CAG, and debt service charges (interest + sinking fund) of the government. These are not subject to the vote of Parliament.

The Laffer Curve shows that as tax rates increase, tax revenue increases up to an optimal point, after which further increases in tax rates actually decrease total revenue due to disincentives to work/produce.

Vote on Account (Article 116) enables the government to meet essential expenses (like salaries) for the first few months of the new fiscal year until the full Appropriation Bill is passed.

Borrowings create debt. Disinvestment (selling government assets) is a capital receipt because it reduces assets, but it does not create any future repayment obligation, hence it is non-debt creating.

A Money Bill deals with taxes, borrowing, etc., and can only be introduced in the Lok Sabha with the President's recommendation. Rajya Sabha has limited powers over it.

The Fiscal Responsibility and Budget Management (FRBM) Act, 2003, originally targeted limiting the Fiscal Deficit to 3% of GDP by 2008. While this target has been amended and relaxed multiple times due to economic crises, the 3% figure remains the benchmark for long-term fiscal prudence.

The Budget is divided into Revenue and Capital. Capital Budget deals with assets and liabilities. Loans given to States create an asset (receivable) for the Central Government, so they fall under Capital Expenditure. Interest, salaries, and subsidies are recurring expenses (Revenue Expenditure).

Deficit financing increases the money supply in the hands of the public without a corresponding increase in goods supply. This excess money chases limited goods, leading to a rise in aggregate demand and causing Demand-Pull Inflation.