Introduction

In this article you will learn about " Government Budget Class 12 " in simple language so that you can understand it well. Before knowing about the government budget you should know what the budget is and why it is made. Budget is a document which contains detailed information about  programmes and policies for the given fiscal year. In simple language, we can say that budget is a plan in which we write how much money we will spend this year and how much money we will save. Anyone can make a budget to control their expenses and to know their financial activities. But in this article we will discuss only the topic of government budget that is the budget of Central Government. 

Meaning Of Government Budget

Government budget is a country's annual financial report that outlines estimated expenditures and revenues for the coming Fiscal year. The receipts and expenditures, shown in the budget, are not the actual  figures , but the estimated values for the coming fiscal year. Fiscal year is taken from 1st April to 31st March. 
  • Budget is prepared by governments at all levels that is,Central Government,State Government and Local Government. Each level of government prepares its respective annual budget. 
  • In India, budget is presented in the parliament . Finance Minister presents the annual budget of the government on the first day of February each year. 
  • It is required to be approved by the parliament, before it can be implemented. 
  • The budget shows the financial performance of the government in the last year and financial policies for the coming fiscal year. 


Objectives Of Government Budget

1. Reallocation of Resources

With the help of budget, Government aims to reallocate resources according to the priorities of the country. Reallocation of resources means redistribution of resources from less useful towards more useful. With the help of budget, Government reallocates the resources so that the country can get maximum profit or the resources are used in a way which leads to social and economical development in the country. 

2. Reducing Income Inequalities

Income inequality is a major reason for poverty and unemployment in the country. Government aims to reduce such inequalities of income and wealth, through its budgetary policy. Government reduce inequalities of income by imposing taxes on the rich and spending more on the welfare of the poor. 

3. Economic Stability

Economic stability means absence of large-scale fluctuation in prices. Such fluctuations create uncertainties in the economy. Government can exercise control over these fluctuations through taxes and expenditure. 

4. Economic Growth

Economic growth implies a sustainable increase in the real GDP of an economy, i.e. an increase in volume vof goods and services produced in an economy. Budget can be an effective tool to ensure the economic growth in a country. 

5. Reducing Regional Disparities

The government budget aims to reduce regional disparities through its taxation and expenditure policy for encouraging setting up of production units in economically backward regions. For example, establishment of Special Economic Zones (SEZs) in the backward regions for promoting their economic development. 

6. Employment Generation

Government Budget is used as an effective tool in the process of employment generation in various ways. Investment in Infrastructural projects like construction of flyovers, bridges, expansion of roads, etc. created jobs for different sections of the workforce. 

Frequently Asked Questions

Question 1. What is Government Budget? 
Government Budget is an annual statement that outlines estimated expenditures and revenues during a fiscal year. 

Question 2. What are the types of budget? 
Budget can be classified into three types:-
  1. Balanced Budget
  2. Surplus Budget
  3. Deficit Budget
Question 3. What are the two components of Government budget? 
The two important components of Government budget are:-
  1. Capital Budget
  2. Revenue Budget
Question 4. What are the main objective of Government budget? 
The main objective of Government budget is to reduce income inequalities or bring growth in the economy. It also helps in employment generation through various employment generation schemes like MGNREGA, PMRY, SJSRY etc.