The Public Finance Dictionary

The law that authorises the government to withdraw and spend money from the Consolidated Fund for the amounts approved in the budget.

Example Until the Appropriation Bill is passed, departments cannot draw their budgeted funds.

Spending that creates a lasting asset or reduces a liability — building roads, hospitals, and buildings, or repaying loans. Often called 'capex'.

Example Constructing a national highway is capital expenditure.

Money that creates a liability or reduces an asset — mainly borrowing, recoveries of loans, and disinvestment (selling government stakes).

Example Issuing government bonds (G-secs) is a capital receipt because it creates debt.

India's supreme audit institution, a constitutional authority that independently audits government receipts and spending and reports to the legislature.

Example CAG audit reports are examined by the Public Accounts Committee.

The government's principal account, into which nearly all receipts flow and out of which nearly all spending is made. No money can be withdrawn without the legislature's approval.

Example Salaries and scheme payments are drawn from the Consolidated Fund via appropriations.

An emergency fund at the disposal of the President to meet urgent, unforeseen expenditure before Parliament authorises it. It is recouped afterwards from the Consolidated Fund.

Example Immediate disaster-relief spending can be met from the Contingency Fund.

Transferring subsidies and welfare payments directly into beneficiaries' bank accounts to cut leakage and eliminate intermediaries.

Example LPG subsidy and PM-KISAN payments are made through DBT.

A tax paid directly to the government by the person or entity on whom it is levied, and which cannot be passed on to someone else.

Example Income tax and corporate tax are direct taxes.

The bill that gives legal effect to the government's taxation proposals for the year — new taxes, rate changes, and amendments.

Example Changes to income-tax slabs are enacted through the Finance Bill.

The total amount a government must borrow in a year — its total expenditure minus all receipts other than borrowing. It is the headline measure of a government's borrowing need.

Example If a government spends ₹40 lakh crore and earns ₹24 lakh crore (excluding borrowing), the fiscal deficit is ₹16 lakh crore.

The Fiscal Responsibility and Budget Management Act, 2003 — legislation that sets targets to keep the government's fiscal deficit and debt within prudent limits and improve transparency.

Example The FRBM framework guides the government's medium-term fiscal deficit targets.

A tax on goods and services that is collected by an intermediary (a seller) but ultimately borne by the consumer.

Example GST and customs duty are indirect taxes.

The Public Financial Management System — a Government of India platform that tracks fund flows from the centre to implementing agencies and beneficiaries, enabling real-time monitoring and Direct Benefit Transfer.

Example Scheme funds released to states can be tracked end-to-end in PFMS.

The fiscal deficit minus interest payments. It shows the borrowing pressure created by current-year decisions, stripping out the cost of servicing past debt.

Example Fiscal deficit ₹16 L cr − interest ₹10 L cr = primary deficit of ₹6 L cr.

The total borrowing of the government that it is liable to repay — internal (within the country) and external (from abroad). Managing it sustainably is a core PFM goal.

Example Government bonds (G-secs) form the bulk of India's internal public debt.

The shortfall when revenue expenditure exceeds revenue receipts — i.e. the government is borrowing to fund day-to-day running costs, not asset creation.

Example Paying salaries and subsidies from borrowed money shows up as a revenue deficit.

Recurring government spending that neither creates an asset nor reduces a liability — salaries, pensions, subsidies, and interest payments.

Example Monthly salaries of government staff are revenue expenditure.

Government income that creates no liability and reduces no asset — tax revenue (GST, income tax, corporate tax) and non-tax revenue (interest, dividends, fees).

Example GST collections and dividends from public sector companies are revenue receipts.