GOVERNMENT BUDGET-Meaning, Elements, Objectives.

  • A government budget is a statement of expected expenditure of the government and the sources of financing the expenditure during a financial year.
  • Such an exercise is undertaken much before the financial year starts.
  • The statement details all expenditures to be incurred during the coming financial year and the sources of meeting this expenditure.
  • In India, government budget is normally presented in the Parliament in the month of February every year.
  • The budget of a government is a summary of the item-wise intended/expected revenues and anticipated expenditures of the government during a fiscal year/financial year.
  • Government at all levels, whether central, state or a local level, prepare the budget. Budget is prepared, keeping in view the general policy of government towards the welfare of people.


Main elements of the budget:

(i) It is a statement of estimates of government receipts and expenditure.

(ii) Budget estimates pertain to a fixed period, generally a year.

(iii) Expenditure and sources of finance are planned in accordance with the objectives of the government.

(iv) It requires to be approved (passed) by Parliament or Assembly or some other authority before its implementation.


Objectives of a Government Budget:

In a mixed economy like ours, the government plays a significant role along with the private sector. The three major functions served by this presentation of estimates.

 Allocation function: Public goods (national defense, roads, government administration, measures of lower air pollution, etc.) can’t be provided by Market Mechanism (transaction between individuals).

  Distribution function: Government can alter income distribution by making transfer payments and collecting taxes, therefore affecting personal disposable income of households. Thus, through its tax and expenditure policy government tries to achieve a fair income distribution in society.

Stabilization function: Fluctuations in economy may lead to inflation and unemployment. Government policy measures to stabilize domestic economy.

 513 total views,  2 views today

Please follow and like us:

Leave a Reply

Your email address will not be published. Required fields are marked *

error: Content is protected !!