A surplus budget is a precursor to the good financial health of a country. When incomes from the budget exceed the expenses of the government, the budget is called a surplus budget. The budgetary deficit is usually shown in terms of the percentage of GDP. Similarly, when the capital disbursements of the government go above the capital receipts, a capital account deficit occurs. The deficit happens when current expenses exceed the incomes generated via standard operations of the government. In a deficit budget, the expenses are more than the revenues collected. In other words, a government budget will be balanced when the economy of the nation is in a balanced position. Balanced budgets are aimed to provide the necessary cushion to the economy when there is no special need for extra inputs or when there is no need for any extra investment for the growth of the economy. This means that the government neither earns nor spends anything extra. In a balanced budget, the receipts and expenditures are equal. Types of Government Budget Balanced Budget The government budget aims to look after public enterprises, such as railways, energy services, etc. The government uses fiscal tools, such as taxes, public expenditure, and subsidies to do this. The intention is to stop the concentration of wealth among a select few. Income redistribution aims at distributing income equally among the citizens of the country. For this, governments may impose taxes and provide subsidies wherever necessary. The idea is to reduce the inequality of income and the growth of the citizens. The government budget aims to fill the gap in wealth creation and access to economic opportunities equally for every citizen. The budget aims to boost GDP and provide social welfare to the citizens. The government aims to promote the growth of the economy through various means by the budget. It is one of the major objectives of preparing a budget. Examples include the distribution of electricity and water in rural areas, offering healthcare and sanitation services, etc. The government budget aims to meet the resource allocation needs of the country, especially in sectors and areas where there is less or no private participation. The budget also aims to create employment and reduce poverty. Some of these requirements include food, clothing, housing, healthcare, and education. It aims to offer basic requirements to every citizen. The government budget is aimed to increase the social good of the country. Reducing poverty and generating employment.It includes both tax and non-tax revenues of the government. Revenue Budget: This refers to revenue receipts generated and expenditures met through the revenues. On the other hand, capital expenditure helps to create assets and reduce liabilities. It includes receipts that reduce assets and increase liabilities. The two components of the government budget are:Ĭapital Budget: The capital budget is an account of assets and liabilities that denote a change in capital. The fiscal year ends on the 31st of March and starts on April 1st every year. Usually, the finance ministry is responsible for the planning and preparation of the budget. These expenditures and revenue streams are kept in mind while creating a budget for the coming fiscal year. In turn, the government expenditures are made on three primary fronts:Īllocating goods and services to the citizens The revenues of a country are collected through tax and non-tax means, such as income and corporate taxes, interests on loans provided to states, fines, and levies on certain items, gifts and grants, and other means of earning revenues. The first is the foreseeable expenditure in the coming fiscal year and the revenue to be collected to meet this expenditure. The planning of a government budget requires two factors. The government budget shows the efficiency of the government in handling current and foreseeable economic issues of the future.
In order to achieve holistic economic growth, the government must prepare a good budget. Like a personal budget, the government budget notes the income and expenditures of the government for the coming financial year.Ī government budget is not just a note of government expenses and collections. It is presented in the Lok Sabha every year at the beginning of the fiscal year. Also known as the annual financial statement, the government budget is a financial statement of revenues and expenditures of the government on behalf of the nation.
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