Budget 2026: The day of 1st February, 2026 is going to be recorded in golden letters in the pages of Indian economy. On Sunday, when Finance Minister Nirmala Sitharaman will open her accounts in the Parliament House, not only the eyes of the country but the entire world will be on her. This budget is also coming at a very critical juncture because America has recently imposed a huge tariff of 50% on Indian shipments. Striking a balance between global pressure and domestic expectations will be no less than a litmus test for the government. While listening to the budget speech on TV, many times the common man gets confused by the heavy economic terminology. To understand the budget deeply, it is important to understand its dictionary.
Words like 'inflation' and 'GDP' echo again and again in the budget speech. For the common man, inflation simply means price rise. When the value of the notes in your pocket decreases and the prices of goods increase in the market, then understand that inflation has increased. In simple words, if today you are able to buy less goods for the same money than yesterday, then it is the impact of inflation.
At the same time, GDP i.e. 'Gross Domestic Product' is the report card of the economic health of the country. GDP is the total market value of all the goods manufactured and services provided in a year within the country's borders. If this figure is going up, it means that the size of the country's economy is increasing and progress is being made.
To understand how the government's treasury runs, one has to know 'Fiscal Deficit' and 'Capital Expenditure'. Often the government's earnings are less and expenses are more. What the government borrows from the market to fill this gap is called fiscal deficit. The lower this figure is, the stronger the economy is considered.
Talking about expenses, 'Capital Expenditure' (Capex) is most important. This is the money that the government spends on building roads, bridges or schools. It is considered 'good expenditure' because it creates wealth for the country in the future. On the other hand, 'Revenue Expenditure' is the everyday expenditure of the government, such as salaries and pensions of employees. This does not create any new wealth, it just keeps the government machinery running.
The most discussed part of the budget is tax. 'Direct tax' is what you pay directly to the government, like your income tax. You cannot put this burden on anyone else. At the same time, 'indirect tax' (like GST) is what you pay to the shopkeeper, but it actually goes to the government. Whenever you buy any product, you are unknowingly paying this tax. Apart from this, the tax imposed on import-export is called 'custom duty', which decides the prices of foreign goods.
The 'fiscal policy' of the government is decided through the budget, through which it controls taxes and expenditure. Whereas the work of printing notes and setting interest rates (Repo Rate) is part of the 'Monetary Policy' of RBI. Finally, when the government is in dire need of money, it sells stake in its companies (PSUs), which is called 'disinvestment'. In simple language, this can also be understood as meeting the expenses by selling the household gold.
