Modern economists argue that an unbalanced budget is very useful for achieving and maintaining economic stability. But it is not always helpful in achieving and sustaining economic growth. On the other hand, when there is an excess of expenditure over income, it is a case of deficit budget.Ĭlassical economists advocated balanced budget. When there is an excess of income over expenditure, it is called a surplus budget. In other words, the government's income or tax revenue and expenditure are not equal. Unbalanced Budget (Surplus or deficit) : An unbalanced budget is that, over a period of time, revenue exceeds expenditure or expenditure exceeds revenue. In other words government budget is said to be balanced when its tax revenue and expenditure are equal. It bridges the proposed revenue and proposed expenditure for the budget period.īalanced Budget : A balanced budget is that, over a period of time, revenue does not fall short of expenditure. Therefore, the budget is a document containing preliminary approval plan of public revenue and expenditures. To quote Gladstone, 'Budgets are not merely matters of arithmetic but in a thousand ways go to the root of prosperity of individuals and relation of classes and the strength of Kingdom'. In the hands of the administration, the budget is record of past performance, a method of current control and a projection of future plans'. Dimock says, 'A budget is a balanced estimate of expenditures and receipts for a given period of time. Government budget indicates the probable income and expenditure of the government, the financial policies, taxation measures, investment opportunities, extent of saving, utilization of resources, mobilization of capital etc.ĭefinition: Various definitions have been formulated for the concept of Budget. The governments, both Union and State, prepare their budget every financial year. As such, the Finance minister of a country carries a bag containing abstracts of budget papers while presenting the budget in the Parliament or a State Legislature. The term budget is derived from the French word 'Bougette'. Thus, 'budget' has been defined as the annual financial statement of the estimated receipts and proposed expenditure of the government in a financial year, usually April 1 to March 31 of the next year. They are necessary because income and expenditure do not occur simultaneously. Budget, being an essential and important element of planning and development, provide the specific development objectives to be pursued and the required policy direction. Meaning: Government's revenue and expenditure decisions are presented in the budget.
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