MEANING,OBJECTIVE AND TYPES OF GOVERNMENT BUDGET

•    PUBLIC BUDGET
MEANING,OBJECTIVE  AND TYPES OF GOVERNMENT BUDGET
PUBLIC FINANCE/MACRO ECONOMICS

v   MEANING OF GOVERNMENT BUDGET

•    A GOVT BUDGET IS AN ANNUAL FINANCIAL STATEMENT SHOWING ITEM WISE ESTIMATES OF EXPECTED REVENUE AND ANTICIPATED EXPENDITURE DURING A FISCAL YEAR. ALSO KNOWN AS ANNUAL FINANCIAL STATEMENT

•    IN THE BEGINNING OF THE EVERY YEAR,THE GOVERNMENT PRESENTS BEFORE LOK SABHA AN ESTIMATE OF ITS RECEIPTS AND EXPENDITURE FOR THE COMING FINANCIAL YEAR.CONSTITUTIONAL REQUIREMENT TO PRESENT BUDGET BEFORE PARLIAMENT FOR NEXT FINANCIAL YEAR.

•    THE GOVT PLANS EXPENDITURE ACCORDING TO ITS OBJECTIVES AND THEN TRIES TO RAISE RESOURCES TO MEET THE PROPOSED EXPENDITURE.

•    SOURCE OF REVENUE FOR THE GOVERNMENT:-

I.            TAXES

II.            FEES AND FINES

III.            INTEREST ON LOANS GIVEN TO STATES

IV.            DIVIDEND BY PUBLIC SECTOR

vGOVERNMENT EXPENDITURE:-

I.            SECURING AND PROVIDING GOODS AND SERVICES TO CITIZENS

II.            ON LAW AND ORDER

III.            INTERNAL SECURITY,DEFENSE AND STAFF SALARIES

•    FEATURES OF THE BUDGET

I.            STATEMENT OF ESTIMATES OF GOVERNMENT RECEIPTS AND EXPENDITURE

II.            BUDGET ESTIMATES ARE FOR FIXED PERIOD( YEAR)

III.            EXPENDITURE AND SOURCES OF FINANCE ARE PLANNED IN ACCORDANCE WITH THE OBJECTIVE OF THE GOVERNMENT

IV.            IT REQUIRES TO BE APPROVED BY PARLIAMENT/OR ASSEMBLY OR SOME OTHER AUTHORITY BEFORE ITS IMPLEMENTATION

v   OBJECTIVE

a)       ECONOMIC GROWTH: TO PROMOTE RAPID AND BALANCED ECONOMIC GROWTH.ECONOMIC GROWTH MEANS A SUSTAINED INCREASE IN REAL GROSS DOMESTIC PRODUCT OF THE ECONOMY.

b)       REDUCTION OF POVERTY AND UNEMPLOYMENT

c)        REDUCTION OF INEQUALITIES /REDISTRIBUTION OF INCOME

d)       REALLOCATION OF SOURCES: PROVIDE MORE RESOURCES INTO SOCIALLY PRODUCTIVE SECTOR

e)       PRICE STABILITY: CONTROL FLUCTUATION IN GENERAL PRICE LEVEL THROUGH TAXES,SUBSIDIES AND EXPENDITURE ETC

f)        FINANCING AND MANAGEMENT OF PUBLIC ENTERPRISES:

g)       INDEX OF GOVERNMENT’S FUNCTIONING

v   CLASSIFICATION  OF BUDGET

•    BALANCED BUDGET: A GOVERNMENT BUDGET IS SAID TO BE A BALANCED BUDGET IN WHICH GOVERNMENT ESTIMATED RECEIPTS( REVENUE AND CAPITAL ) ARE EQUAL TO GOVERNMENT ESTIMATED EXPENDITURE.

•    ESTIMATED GOVT RECEIPTS=ESTIMATED GOVERNMENT EXPENDITURE

•    BALANCED BUDGET: ENSURES FINANCIAL STABILITY AND AVOIDS WASTAGE OF RESOURCES

•    BUT ECONOMIC GROWTH IS HINDERED AND SCOPE OF WELFARE ACTIVITIES IS LIMITED

•    ADAM SMITH ADVOCATED THE BALANCED BUDGET BUT KEYNES AND MODERN ECONOMISTS ARGUED THAT IN BALANCED BUDGET TOTAL EXPENDITURE IS LESS THAN THE AMOUNT NECESSARY TO MAINTAIN FULL EMPLOYMENT

•    GOVERNMENT SHOULD INCREASE ITS EXPENDITURE TO THE CLOSE THE GAP BETWEEN THE EXPENDITURE ESSENTIAL FOR FULL EMPLOYMENT AND EXPENDITURE THAT TAKES PLACE

•    UNBALANCED BUDGET :WHEN GOVERNMENT ESTIMATED EXPENDITURE IS EITHER MORE OR LESS THAN GOVERNMENT ESTIMATED RECEIPTS THE BUDGET IS SAID TO BE AN UNBALANCED BUDGET.IT IS OF TWO TYPES

I.            SURPLUS BUDGET

II.            DEFICIT BUDGET

§     SURPLUS BUDGET

•    SURPLUS BUDGET MEANS WHERE GOVERNMENT RECEIPTS ARE MORE THAN GOVERNMENT EXPENDITURE IN THE BUDGET.

•    ESTIMATED GOVERNMENT RECEIPTS> ESTIMATED GOVERNMENT EXPENDITURE

•    SURPLUS BUDGET IS APPROPRIATE TIME DURING INFLATION BUT IN SITUATION OF  DEFLATION AND RECESSION IT SHOULD BE AVOIDED.

•    BALANCED BUDGET AND SURPLUS BUDGET ARE RARELY USED IN MODERN DAY WORLD

§     DEFICIT BUDGET

•    WHEN GOVERNMENT ESTIMATED EXPENDITURE EXCEEDS GOVERNMENT RECEIPT IN THE BUDGET,THE BUDGET IS SAID TO BE DEFICIT BUDGET.

•    DEFICIT BUDGET= ESTIMATED GOVT EXPENDITURE > ESTIMATED GOVT. RECEIPTS

•    KEYNES HAS ADVOCATED A DEFICIT BUDGET TO REMOVE THE UNEMPLOYMENT AND UNDEREMPLOYMENT

•    GOVERNMENT COVERS THE GAP EITHER THROUGH BORROWING OR THOROUGH ITS RESERVES

§     EVALUATION OF DEFICIT BUDGET

q MERITS

a)       ENHANCES ECONOMIC GROWTH

b)       MORE WELFARE PROGRAMMES

c)        BEST REMEDY FOR DEFLATION

q DEMERITS

I.            ENCOURAGES WASTEFUL EXPENDITURE

II.            LEAD TO FINANCIAL AND POLITICAL INSTABILITY

III.            SHAKES THE CONFIDENCE OF FOREIGN INVESTORS

v   TYPES OF GOVERNMENT BUDGET

1. UNION BUDGET: IS THE BUDGET PREPARED BY THE CENTRAL GOVERNMENT FOR THE COUNTRY AS WHOLE
2. STATE BUDGET: IN INDIA EVERY STATE ALSO PREPARE ITS OWN BUDGET
3. PLAN BUDGET: IT IS DOCUMENT SHOWING THE BUDGETARY PROVISIONS FOR IMPORTANT PROJECTS,PROGRAMMES AND SCHEMES INCLUDED IN THE CENTRAL PLAN OF THE COUNTRY. ALSO SHOWS CENTRAL ASSISTANCE TO STATES AND UNION TERRITORIES

4. PERFORMANCE BUDGET: THE CENTRAL MINISTRIES AND DEPARTMENTS DEALING WITH THE DEVELOPMENT ACTIVITIES PREPARE PERFORMANCE BUDGETS WHICH ARE CIRCULATED  TO THE MEMBERS OF PARLIAMENT.IT HIGH LIGHT THE MAIN PROJECTS,PROGRAMMES,AND ACTIVITIES OF THE GOVERNMENT IN THE LIGHT OF SPECIFIC OBJECTIVES AND PREVIOUS YEARS’ BUDGET AND ACHIEVEMENTS

4. SUPPLEMENTARY BUDGET:-FORECASTING THE BUDGET FOR THE COMING YEAR WITH REGARD TO REVENUE AND EXPENDITURE
5. ZERO BASE BUDGETING:-EACH MINISTRY/DEPARTMENT HAS TO JUSTIFY THE ENTIRE BUDGET IN DETAIL FOR EVERY NEW PERIOD