The government, in their budget, make some savings and investments in order to increase the Gross Domestic Product. Main objectives of government budget are: (A)Redistribution of income and wealth: It is one of the most important objective of the government budget. Ways and means to raise revenues. To analyse the meaning of government budget, it is first important to learn what the term “budget” denotes. When there is growth in GDP, there is economic growth. What is the Meaning of Government Budget? A budget is evaluated and compiled periodically. Repeaters, Vedantu b. THE MAIN OBJECTIVES OF A GOVERNMENT BUDGET: Economic growth: to promote rapid and balanced economic growth so as to improve living standard of the people. Till 2016 it was presented on the last working day of February. Meaning. The government makes use of fiscal instruments like taxes, public expenditure, subsidies, etc. 3. PSCNOTES.in is a free resource site for UPSC and PSC aspirants, founded by Sheshan Pradhan. Objectives of budgetary policy are the following: a) Reallocation of resources: Reallocation of Resources: Through the budgetary policy, the Government aims to reallocate resources in accordance with the economic and social priorities of the … Every year on 1st February the finance minister of India announces the budget. Economics Class 12 - Government Budget and the Economy. Vedantu academic counsellor will be calling you shortly for your Online Counselling session. The government budget is used to prevent business fluctuations of inflation and deflation from achieving the objective of economic stability. a. That is done by considering general public welfare. Introduction. Objectives of Government Budget. General objectives of a government budget are as under:(i) Economic growth. In this, the government increase the tax rate and decrease its expenditure. What are the Components of a Government Budget? Also Check: Objectives of Government Budget Components of Government Budget: There is a constitutional necessity in India according to the Article 112 to current before the Parliament passed a declaration statement of gauged receipts and expenditures of the government with respect of every financial year which functions from 1st of April to 31st March. Sorry!, This page is not available for now to bookmark. to ensure that the country’s wealth is not concentrated on the hands of a select few. OBJECTIVES OF BUDGET. Minimize inequalities in income and wealth –In an economic system, income and wealth inequality is an integral part. To reduce the disparities between developed areas and not developed area. Lesson 3 of 20 • 48 upvotes • 10:46 mins. Thus, the government budget is prepared by considering these objectives. The term “Annual Financial Statement” of a nation is often used to define government budget. Budget is a fiscal tool in the hands of the government which is effectively used for the accomplishment of various socio-economic objectives. Explain why the government's budget deficit might be in a large deficit. Resource mobilization for Public use through * Imposition of taxes, charging levies for goods and services. But, a government budget surplus could ironically lead to higher household debt. The private sector always tend to divert resources towards areas of high profit, while, ignoring areas of social welfare. The long-term sustainability of a deficit was a big problem in the days before global free movements of capital. Deficit budget: In this type of budget, the government’s estimate expenditure is more than the government’s estimates receipts. The government budget is used to prevent business fluctuations of inflation and deflation from achieving the objective of economic stability. The government also provides amenities and subsidies to those in need. OR Explain how the government budget can help in a fair distribution of income in the economy. The budget is a detailed schedule of the proposed combination of the various factors of production which is the most profitable for the ensuing period. It is concerned with the ways and means by which public (government) authorities raise funds to incur expenditure so as to achieve certain socio-economic objectives. We, at Vedantu, ensure that you can approach your exam preparation a more systematic manner with our guidance. If a public enterprise undergoes in loss, then the government can privatize them. One of the objectives of the government budget is to manage the public enterprise. Add your answer and earn points. Policies of the surplus budget during inflation and deficit budget during deflation helps to maintain the stability of prices in the economy. To promote rapid and balanced economic growth so as to improve living standard of the people. Government Budget And Its Related … “A government budget is an annual financial statement showing item wise estimates of expected revenue and anticipated expenditure during a fiscal year.”. The various objectives of the Government budget, etc. This budget is sanctioned by the chief executive or president and is presented by the country’s finance minister in the Parliament, at the onset of every financial year. In a sense programme budgeting emphasizes the need for overall programme management in terms of long term objectives set out, and attempts to relate the exercise of planning and programming with budgeting. The primary objective of the government budget is, thus, to boost GDP growth by promoting balanced economic development and improving people’s standard of living. Resource Allocation • In the face of scarcity of resources, priotisation and optimization are required. 1. Resource allocation based on public welfare and social priorities. Capital budget accounts for the assets and liabilities under the government. Main & Advanced Repeaters, Vedantu Download the Vedantu app today to make learning easier! When a country is in inflation, the government adopt the surplus budget policy. A common objective in creating a budget is to use it as the basis for judging employee performance, through the use of variances from the budget. 3. These refer to receipts that reduce assets for a government and create financial liabilities. The areas in which the government won’t increase the production of goods and services the government gives tax concession or subsidiaries while on the harmful products government impose the high taxes to discourage their production. It is not suitable during the inflation period. The main objective of the government is to maintain law and rules in the country. Revenue Budget – As its name suggests, the revenue budget refers to revenue receipts generated and expenses met through this revenue. A government budget is a document prepared by the government and/or other political entity presenting its anticipated tax revenues (Inheritance tax, income tax, corporation tax, import taxes) and proposed spending/expenditure (Health care, Education, Defence, Roads, State Benefit) for the coming financial year. Government budget is a statement of expected receipts and expenditure of the government during a fiscal year. Through the budget, the government tries to bring equal distributions of resources and wealth. Government budget is a financial statement that shows the expenditures and receipts of the government in the fiscal year during aa accounting period. It is not useful in inflation and deflation condition. Government accounting facilitates budgetary control. Production of goods and services by the government itself (Direct producing goods and services). Discuss briefly how the Government budget can be used as an effective tool in the process of employment generation. The Indian constitution mandates this budget for an ensuing financial year to be presented before the Parliament. Lessen the inequalities of income and wealth. Revenue budget, on the other hand, accounts for the total revenue generated and the expenses met through this revenue. A country’s government generates revenue primarily through tax collection, interest on loans provided to states, from fines and fees, alongside dividends collected from public sector enterprises. Government budget is a statement of expected receipts and expenditure of the government during a fiscal year. Revenue budget, on the other hand, accounts for the total revenue generated and the expenses met through this revenue. Budget and Spending: Problems in Accomplishing Objectives of the Work Incentive Program (Win): B-164031(3): U S Government Accountability Office (G, U S Government Accountability Office (: Amazon.com.au: Books Jun 02,2020 - explain objectives of government budget Related: Long Answer Questions - Chapter 8 - Government Budget and the Economy, Class 12, Economics | EduRev Commerce Question is disucussed on EduRev Study Group by 182 Commerce Students. Income redistribution is one of the measures undertaken to reduce the income inequality between the country’s affluent and the poor. Reduction of poverty and unemployment: to eradicate mass poverty and unemployment by creating employment opportunities and providing maximum social benefits to the poor. The first step in planning is defining a company’s broad aims and objectives. Further, a budget is also set by keeping in consideration goals like eradication of poverty by generating employment. Through taxes and concessions, the government tries to maintain equality in the country. In the 1960s, the Balance of Payments was considered very important. To implement this, the government makes use of fiscal instruments like subsidies, taxation, public expenditure, etc. Explain the “Reallocation of resources” objective of a government budget. Each year, the government allocates more resources to the socially productive sector where there is a shortage of private initiatives, like – providing electricity to rural areas, health, education, public sanitation, etc. Sheshan Pradhan is a blogger and author at pscnotes.in. Hope It Helps.
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