What is Government budget?
A government budget is a systemic statement of estimated receipts and estimated expenditures of the government for the next financial year. Financial year refers to the year which starts from the first day of April and ends on the last day of March.
The financial year is also known as fiscal year or accounting year.
Every government aims at maximizing economic development as well as the social welfare of the country with its limited resources. Hence, the government has to make a proper plan of receipts and expenditure of the next accounting year.
Objectives of government - A budget is a tool for financial planning. It helps the government in the formation and implementation of financial policies.
Following are the objectives of the government budget -
1. Reallocation of Resources - Private sectors always use their resources for maximization of profit and ignore the welfare needs of the society. Through the budget, the government plans to charge tax on profits earned by the private sector. The government then uses these taxes for the common interest of society. For example, building parks, roads etc.
2. Managing Public Enterprises - Proper management of government companies requires proper planning. Through the budget, the government prepares a roadmap for proper management of public sector companies like Railways, BSNL, etc.
3. Income Equality - Government uses a budget as a tool for reducing income inequality. Through the budget, the government charges higher tax from the rich class of the society and spends it on the poor section of the society. Thus through budget government tries to reduce income inequality in the nation. People with higher income have to pay higher taxes as compared to people with lower income.
4. Economic stability- Proper management of the economy is a must for economic stability. The budget helps the government to overcome problems like inflation, recession and other economic problems.
5. Proper utilization of resources - Government has scarce resources in comparison to the need of people in the economy. Through the budget, the government allocates resources in such a manner that it leads to optimum utilization of limited resources so that the maximum possible development can be done within the available limited resources.
6. Even development - Through budget government allocates resources in each and every sector of the economy & each and every region of the economy to ensure that equal and even development happens in each and every sector of the economy as well as each and every region of the economy.
A government budget is a systemic statement of estimated receipts and estimated expenditures of the government for the next financial year. Financial year refers to the year which starts from the first day of April and ends on the last day of March.
The financial year is also known as fiscal year or accounting year.
Every government aims at maximizing economic development as well as the social welfare of the country with its limited resources. Hence, the government has to make a proper plan of receipts and expenditure of the next accounting year.
Objectives of government - A budget is a tool for financial planning. It helps the government in the formation and implementation of financial policies.
Following are the objectives of the government budget -
1. Reallocation of Resources - Private sectors always use their resources for maximization of profit and ignore the welfare needs of the society. Through the budget, the government plans to charge tax on profits earned by the private sector. The government then uses these taxes for the common interest of society. For example, building parks, roads etc.
2. Managing Public Enterprises - Proper management of government companies requires proper planning. Through the budget, the government prepares a roadmap for proper management of public sector companies like Railways, BSNL, etc.
3. Income Equality - Government uses a budget as a tool for reducing income inequality. Through the budget, the government charges higher tax from the rich class of the society and spends it on the poor section of the society. Thus through budget government tries to reduce income inequality in the nation. People with higher income have to pay higher taxes as compared to people with lower income.
4. Economic stability- Proper management of the economy is a must for economic stability. The budget helps the government to overcome problems like inflation, recession and other economic problems.
5. Proper utilization of resources - Government has scarce resources in comparison to the need of people in the economy. Through the budget, the government allocates resources in such a manner that it leads to optimum utilization of limited resources so that the maximum possible development can be done within the available limited resources.
6. Even development - Through budget government allocates resources in each and every sector of the economy & each and every region of the economy to ensure that equal and even development happens in each and every sector of the economy as well as each and every region of the economy.
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