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    Govt. Budgeconomy Budget: It Is An Annual Financial Statement of The

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    Tirsha Biswas
    The document discusses key aspects of government budgets, including objectives like resource allocation, economic stability, and growth. It outlines revenue and capital budget components, sources like taxes and borrowing, and expenditure types such as recurring salaries and infrastructure. Finally, it defines measures of budget deficits, including revenue deficit from regular costs exceeding income, fiscal deficit as total spending over receipts minus borrowing, and primary deficit as fiscal deficit minus interest payments. Managing these deficits and priorities like public welfare are important objectives of annual budget planning.

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    Govt. Budgeconomy Budget: It Is An Annual Financial Statement of The

    Uploaded by

    Tirsha Biswas
    40 views8 pages
    The document discusses key aspects of government budgets, including objectives like resource allocation, economic stability, and growth. It outlines revenue and capital budget components, sources like taxes and borrowing, and expenditure types such as recurring salaries and infrastructure. Finally, it defines measures of budget deficits, including revenue deficit from regular costs exceeding income, fiscal deficit as total spending over receipts minus borrowing, and primary deficit as fiscal deficit minus interest payments. Managing these deficits and priorities like public welfare are important objectives of annual budget planning.

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    BUDGET

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    The document discusses key aspects of government budgets, including objectives like resource allocation, economic stability, and growth. It outlines revenue and capital budget components, sources like taxes and borrowing, and expenditure types such as recurring salaries and infrastructure. Finally, it defines measures of budget deficits, including revenue deficit from regular costs exceeding income, fiscal deficit as total spending over receipts minus borrowing, and primary deficit as fiscal deficit minus interest payments. Managing these deficits and priorities like public welfare are important objectives of annual budget planning.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    40 views8 pages

    Govt. Budgeconomy Budget: It Is An Annual Financial Statement of The

    Uploaded by

    Tirsha Biswas
    The document discusses key aspects of government budgets, including objectives like resource allocation, economic stability, and growth. It outlines revenue and capital budget components, sources like taxes and borrowing, and expenditure types such as recurring salaries and infrastructure. Finally, it defines measures of budget deficits, including revenue deficit from regular costs exceeding income, fiscal deficit as total spending over receipts minus borrowing, and primary deficit as fiscal deficit minus interest payments. Managing these deficits and priorities like public welfare are important objectives of annual budget planning.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 8

    GOVT.

    BUDGECONOMY
    Budget: It is an annual financial statement of the
    govt.showing anticipated revenue and
    expenditure during a fiscal year.
    Objectives of Budget:
    I.Resource allocation:The government allocates
    resources to achieve definite socio-economic
    objectives . It gives tax concession and subsidies
    to the producers to encourage investment. It also
    imposes tax on production of harmful goods and
    gives subsidies to encourage production of useful
    goods. It undertakes various activities in the
    public interest.
    II.Reduction of economic inequality: Govt. aims
    to reduce inequality in the distribution of income
    and wealth through it’s budgetary policy. It
    influences distribution of income by imposing
    progressively higher taxes on rich section and
    spending more on the welfare of the weaker
    sections of the society.This will automatically
    reduce the gap between the haves and have nots.
    III.Economic stability:It refers to maintaining price
    stability in the economy. Large scale fluctuation in
    the price level cause obstacle in the economic
    development. The govt. exercises control over
    these fluctuations through revenue and
    expenditure. During inflationary tendencies, it
    reduces public expenditure and in deflation ,
    expenditure is raised and subsidies are also given.
    IV.Management of Public enterprises: There are
    large number of public sector enterprises like
    Railways, post offices etc in the country.These are
    established and managed for social welfare of the
    public.The govt. makes provision in the budget for
    managing such enterprises by providing financial
    help.
    V.Economic growth:The govt. ensures economic
    growth in a country through budget.It provides
    tax rebates and other incentives to stimulate
    saving and investment in the economy.It lays a
    solid foundation of the economy by making huge
    expenditure on infrastructural development like
    roadways, railways etc.These basic services
    directly help in raising the productive capacity of
    the economy as well as in the economic growth.

    COMPONENTS OF BUDGET

    REVENUE BUDGET CAPITAL


    BUDGET
    REVENUE REVENUE CAPITAL CAPITAL
    RECEIPTS EXPENDITUR RECEIPTS EXPENDITURE
    E

    Budget receipts:It refers to the estimated money


    receipts of the govt. from all sources during a
    given fiscal year. It is further classified into
    Revenue receipts and Capital receipts. Revenue
    receipts: It refers to those receipts which neither
    create any liability nor reduces any assets of the
    govt.
    Revenue receipts of the govt. are generally
    classified under two heads: Tax revenue and Non-
    tax revenue.
    Tax Revenue: It refers to the sum total of receipts
    from taxes and other duties imposed by the govt.
    Tax revenue can further be classified into Direct
    tax and Indirect tax. Difference
    between:
    Direct tax Indirect tax
    It refers to the taxes It refers to the taxes
    whose burden can not whose burden can be
    be shifted to others. shifted to others.
    It is levied on individuals It is levied on goods
    and companies. and services. It is
    It is progressive in regressive in nature.
    nature. For ex.goods and
    For ex.Income tax, services tax etc(GST)
    corporate tax etc.

    Non-tax revenue: It refers to the receipts of the


    govt. from all sources other than tax receipts like
    interest, profits and dividends, fees, fines and
    penalties, escheats, gifts and grants etc.
    Capital receipts: It refers to those receipts which
    either create a liability or cause a reduction in the
    assets of the govt.
    Sources of capital receipts:
    I.Borrowings:Borrowings are capital receipts as
    they create a liability for the govt. II.Recovery of
    loans:It is a capital receipt as reduces the assets of
    the govt. III.Disinvestment:It is a process of selling
    a part or whole of shares of public sector
    enterprises held by the govt. It is capital receipt as
    it reduces assets of the govt.
    Budget expenditure: It can be broadly divided
    into two types.
    They are: Revenue expenditure and Capital
    expenditure:
    Revenue expenditure Capital expenditure:
    It refers to the It refers to the
    expenditure which expenditure which
    neither creates any either creates an asset
    asset nor causes or causes a reduction in
    reduction in any liability the liabilities of the
    of the govt. govt.
    It adds to the capital
    It is incurred on normal
    stock of the country..
    functioning of the govt.
    It is recurring in nature
    It is non-recurring in
    like payment of salaries,
    nature like expenditure
    expenditure on defence,
    on roads purchase of
    health etc.
    machinery, repayment
    of borrowing etc.

    Measures of budget deficit: When the govt.


    spends more than it collects, then it incurs a
    budgetary deficit. Budgetary deficit is of three
    types:
    I.Revenue deficit II.Fiscal deficit
    III.Primary deficit
    I.Revenue deficit:It refers to excess of revenue
    expenditure over revenue receipts during the
    given fiscal year.
    Revenue deficit=(revenue expenditure-revenue
    receipts)
    Implications:
    I.It indicates the inability of the govt.to meet it’s
    regular and recurring expenditure.
    II.It leads to dis-saving by the govt.
    III.It creates an inflationary situation in the
    economy. Revenue deficit can be reduced by
    curtailing unproductive expenditure and
    increasing revenue.
    II.Fiscal deficit:It refers to the excess of total
    expenditure over total receipts excluding
    borrowings during the fiscal year.
    Fiscal deficit=(Total expenditure- total receipts
    excluding borrowings)
    Implications:I.It compels the govt. to take more
    loans to repay the earlier loans, which
    automatically lands the country in debt trap.
    II.It increases money supply in the economy and
    creates inflationary pressure.
    III.Govt. borrows from the rest of the world,which
    raises its foreign dependence.It can be financed
    by borrowing and deficit financing or printing of
    more new currency.
    III.Primary deficit:It refers to the difference
    between fiscal deficit and interest payment.
    Primary deficit= (fiscal deficit -interest payment)
    Implications:
    It shows the amount of interest payments on the
    borrowings made in the past.

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