Before discussing what is meant by Government Budgeting, we need to understand the meaning of the word ‘budget.’ A budget can be defined as an estimate made including the expenditures and revenues to be spent in that particular financial period. A government budget, on the other hand, often termed as an Annual Financial Statement of a nation, gives an estimate about how much expenditure and revenue is planned for a particular financial year.
This kind of fiscal statement is presided over by the country’s finance minister. It is permitted or sanctioned by the Chief Executive or the President of the said nation.
Aspirants must also check out the details about Union Budget 2022 at the linked article.
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Objectives of Government Budget
In the studies of IAS Prelims, the aims and objectives of a government budget for a country as a whole are one of the most recurrent topics. The budget, presented in the Lok Sabha, is prepared to focus on the financial year that begins in India on 1st April and concludes on 31st March of the following year. The main objectives include:
- An integral part of the UPSC syllabus deals with the various methods employed to design and implement a budget. Having a set budget helps in having a structure to the forthcoming expenditure for any particular body. The government decides on the distribution of resources keeping in mind the expenditures and social and economic conditions. A few points that the government prioritizes while designing the budget include:
- The concessions are based on tax and allowances so that more and more manufacturers are motivated to invest.
- Distributing the taxes properly among the elite and the underprivileged helps minimize the gap between the two classes and leads to a proper and equal distribution of wealth.
- The budget also aims to bring economic stability. The budget is designed to bring economic stability during economic disparity, such as having a deficit budget during deflation and an excess budget during inflation.
- Having a proper budget also prepares proper resources so that more and more people invest in public sectors, thus increasing the investments.
- Another way of implementing a proper budget is to aim at underdeveloped regions so that the taxes and expenditures are levied so that the economic inequality goes down and the production of goods and services increases.
- Having a proper cash flow estimate is difficult. A proper budget helps judge the cash flow that allows the nation to prepare for any money-related economic crisis.
- Lastly, a country needs to plan its budget, considering certain possible scenarios that the country may face. However, the individuals in the budgetary planning need to be highly specific and not overly optimistic.
Components of Government Budget
The components of a government budget, widely studied under UPSC 2023, can be classified into two categories: capital and revenue budgets.
- Capital budget- The capital budget comprises all the assets and liabilities under the government. The capital budget can further be subdivided into two other categories which are:
- Capital Receipts: All the incoming debt or non-debt cash flows come under the capital receipts.
- Capital Expenditure: All expenditures undertaken to develop machinery, equipment, health services, and education come under the Capital Expenditure.
- Revenue Budget- Revenue Budget comprises all the expenditure met through the revenue and about the revenue receipts. All the sources that bring revenue to the government are accountable under the revenue budget.
As a topic of IAS, this one calls for in-depth attention and knowledge about the latest updates. Government budget changes every year. So, candidates should keep themselves updated.
Aspirants can visit the linked article and get details about the upcoming government exams that comprise current affairs and general awareness as an important topic in the syllabus.
Furthermore, competitive exam aspirants must visit BYJU’S for the latest exam updates, study material and preparation tips.
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