Union Budget 2026 decoded - The financial glossary you need this budget season

Finance Minister Nirmala Sitharaman is set to present the Union Budget 2026-27 on February 1, a key event for markets, businesses, and households for tracking tax changes, spending plans, and economic signals. The Union Budget sets the government’s economic direction for the year ahead. It answers how it plans to grow the economy, support citizens, and manage public finances.

Every Union Budget brings with it a flood of numbers, acronyms, and financial jargon. Terms like fiscal deficit, capital expenditure, and nominal GDP dominate headlines, often leaving readers wondering what they actually mean. This guide breaks down the most commonly used Budget terms in simple language, helping you understand what the Budget is really saying.

Key terms to know before Sitharaman presents the Budget document

Fiscal deficit

This is the gap between what the government spends and what it earns (excluding borrowings). A higher fiscal deficit means the government is borrowing more to fund its expenses.

Revenue and capital expenditure

Revenue expenditure includes routine spending such as salaries, subsidies, pensions, and interest payments. Capital expenditure, on the other hand, is spending on assets like roads, railways, ports, and infrastructure that support long-term growth.

Direct and indirect taxes

Direct taxes, such as income tax, are paid directly by individuals and companies. Indirect taxes, like GST, are paid when you buy goods and services. Both form a major part of the government’s revenue.

Primary deficit

This shows how much the government is borrowing apart from interest payments. A lower primary deficit indicates better fiscal discipline.

Nominal vs Real GDP

Nominal GDP measures economic output at current prices, while real GDP adjusts for inflation. Real GDP growth gives a clearer picture of actual economic progress.

Subsidy

A subsidy is financial support provided by the government to reduce the cost of essential goods or services, such as food, fertilisers, or fuel.

Disinvestment

This refers to the government selling its stake in public sector companies to raise funds and improve efficiency.

Significance of these terms in Budget 2026

These financial terms are not just technical jargon; they shape tax policies, spending decisions, and economic priorities. Understanding them helps citizens decode Budget announcements and see how government choices affect prices, jobs, savings, and growth.