The overall economic growth of a nation relies on savings and investments. (b) Nor cause any reduction in assets of the government, are called revenue receipts. Capital budget- Just like the former one, Capital revenue is classified into capital receipts and expenditure. This is the value of special assessment. (c) Stabilising activities: Objectives of Government Budget. It brings economic stability in a country by cutting down wasteful expenses. 3. However, capital expenditure is long-term investments that the government makes by creating assets like building roads, hospitals etc. II. In this case, imposed taxes surpass the expenses. This is a dangerous practice, though very convenient for the government. (b) Revenue and capital expenditure: (iv) Production of goods which are injurious to health (like cigarettes and whisky) is discouraged through heavy taxation. For example, The Government of India may give Rs. It means that the Government is taking more money under its control which leads to fall in prices. Thus, it refers to expenditure that leads to creation of assets and reduction in liabilities. A Government Deficit is the amount of money in the set budget by which the government expenditure exceeds the government income amount. Primarily the budget is divided into 3 types. CBSE Class 12 Economics Sample Paper 2020: The Central Board of Secondary Education (CBSE) will release the datesheet of the Class 10 and Class 12 Board Exams 2020 soon. To reduce inequalities in income and wealth-: Through budget government tries to reduce the gap … 10:46 mins. 2. (iii) Industries which are potential natural monopolies are railways etc. Note: Fiscal year is the year in which country’s budgets are prepared. 8:03 mins . This objective organically strengthens the economic structure of a nation. (a) Balanced Budget: If the government revenue is just equal to the government expenditure made by the general government, then it is known as balanced budget. Gender budget aims at gender equality, specifically by introducing new schemes and policies to empower women. (a) Revenue receipts (b) Revenue and capital expenditure They achieve so by installing manufacturing facilities in the economically weaker section of the society. For example, if value of a property near a metro station has increased, then a part of developmental expenditure made by government is recovered from owners of such property. Between 1999 to 2016, the General Budget was presented at 11 A.M. on the last working day of February. Foreign borrowing is often associated with economic and political interference by the lender countries. Capital Receipts: Government receipts that either creates liabilities (of payment of loan) or reduce assets (on disinvestment) are called capital receipts. • Borrowing (Domestic and External): Borrowings are made to meet the financial requirement of the country. government is the expenditure on the essential general services of the government. (a) Revenue Budget and (b) Capital Budget. (i) Meaning: 2. A government budget is an annual financial statement showing item wise estimates of 1. Objectives of Government Budget. Capital receipts include items, which are non-repetitive and non-routine in nature. 1. Government can also levy hefty taxes upon production of harmful products like cigarettes and alcohol to discourage the production of those. (a) Meaning: 1. 4. A government budget is said to be a deficit budget if the estimated government expenditure exceeds the expected government revenue in a particular financial year. In the form of an equation: for the coming fiscal or financial year. Thus, a vicious circle is set wherein the government takes more loans to repay earlier loans, which is called Debt Trap. Original and Final Budget 11. Higher tax rates on a certain group of nationals and organisations can have a severe impact on the overall economy. However, capital expenditure is long-term investments that the government makes by creating assets like building roads, hospitals etc. Balanced Budget- Government’s budget is assumed to be balanced where anticipated expenditure is equal to the expected recipients in a financial year. (a) Revenue Budget: Revenue Budget contains both types of the revenue receipts of the government, i.e., Tax revenue and Non tax revenue ; and the Revenue expenditure. This includes: What is a Government Budget. Budgetary deficit: It refers to the excess of total budgeted expenditure (both revenue (iv) It reduces income of the rich and raises the living standard of the poor, thus, leads to equitable distribution of income. This includes expenditure on education, health, agriculture, transport, roads, rural development etc. (i) Budget of a government shows its comprehensive exercise on the taxation and subsidies. Save. 2. This may include professionals working in financial planning and analysis (FP&A), accounting, treasury, financial reporting, corporate development, etc. Budgetary Deficit = Total Expenditure – Total Receipts 2. A direct tax is paid directly by the same person on whom it has been levied. 3,00,000 per annum, then the tax liability will rise to Rs. In short, expenditure other than expenditure related to current Five-year plan is treated as non-plan expenditure. It is essential for any government to plan a budget as it allocates various resources across the nation to ensure economic progress and stability. For instance, no government can escape from its basic function of protecting the lives and properties of the people. are its examples. As a result, primary deficit is 1,77,894 crore, which is 1.8% of GDP. This is possible only when you have the best CBSE Class 12 Business Studies study material and a smart preparation plan. (ii) Redistribution of income and wealth (i) Revenue deficit indicates dis-savings on government account because the government has to make up uncovered gap. Tax: A tax is a legally compulsory payment imposed by the government on income and In this way budget is the most important instrument in hands of governments to achieve their objectives and there lies the importance of the government budget. 1. 20. Revenue Expenditure: An expenditure that (a) Neither creates any assets (b) nor causes any reduction of liability. It increases our economic slavery. Thus, it forms the basis for planning what to do next. This online budgeting class is designed for those who are responsible for financial management, budgeting, and forecasting within their organizations. Outcome budget evaluates the progress of each ministry and department and prepares a report on how the specific ministry has implemented the budget layout. 28. The government accounting helps to provide financial information and data for budget preparation. Repeaters, Vedantu Also by producing goods and supply directly. Reallocation of resources -:It means managed and proper distribution of resources. Let us discuss them in detail: In other words, indirect taxes are the taxes of whose burden can be shifted to others. (i) Revenue deficit refers to the excess of revenue expenditure of the government over its revenue receipts. 1. Once the budget … Budget focuses on the advancement of defence capabilities. Non-developmental expenditure: Non-developmental expenditure of the government is the expenditure on the essential general services of the government. 23. Economic growth- The overall economic growth of a nation relies on savings and investments. Based on budget, the government makes precautionary measures. The mechanics of this process, and the relative roles of the two parts of government, differ considerably among countries. (v) Fiscal deficit for the year 2012-2013 is 4,89,890 crore which is 4.9% of GDP. (ii) In other words, when sum of revenue receipts and capital receipts fall short of the sum of revenue expenditure and capital expenditure, budgetary deficit is said to occur. Pro Lite, Vedantu Some of the important objectives of government budget are as follows: 1. It brings economic stability in a country by cutting down wasteful expenses. Objectives of a Government Budget: It should be kept in mind that rapid and balanced economic growth with equality and social justice has been the general objective of all our policies and plans. Its duration is from 1st April to 31st March. In general, the four government macroeconomic objectives can be split into two pairs of two that go together. Reducing inequalities in income and wealth 3. Symbolically, Deficit budget = estimated expenditure > estimated revenues. 4. Also by producing goods and supply directly. Direct Tax: When (a) liability to pay a tax (Impact of Tax), and (b) the burden of that tax (Incidence of tax), falls on the same person, it is termed as direct tax. (i) Meaning: These plans s the objectives of the company and the proposed way of accomplishing them. (iii) A government reduces the inequality in the distribution of income and wealth by imposing taxes on the rich and giving subsidies to the poor, or spending more on welfare of the poor. 2. 15. (b) Implications of revenue deficit: Government can also levy hefty taxes upon production of harmful products like cigarettes and alcohol to discourage the production of those. By the end of this budgeting 101 class … Apart from that, a few other important points of the government budget are listed below. are effectively used to achieve this goal. A surplus budget occurs when the estimated revenues exceed the expected expenditure. (iii) Financial Burden for Future Generation: Borrowing implies accumulation of financial burdens for the future generations. (ii) Capital Expenditure: An expenditure that either create assets for the government [equity or shares) of the domestic, or multinational corporations purchased by the government), or cause reduction in liabilities of the government, [repayment of loans reduces liability of the government). Pro Subscription, JEE Allocates money for improving educational facilities. (v) Economic stability leads to more investment and increases the rate of growth and development. 5,00,000; 20% on incomes between Rs. -> Externally: Rest of the world (foreign government and international institutions) 2. (iv) By doing it the government tries to achieve the state of economic stability. These receipts are again classified into two segments: tax revenue (income, excise, corporate, custom taxes) and non-tax revenue (income and profits earned by government other than taxes). Pro Lite, CBSE Previous Year Question Paper for Class 10, CBSE Previous Year Question Paper for Class 12. (i) Surplus Budget: If the revenue received by the general government is more in comparison to expenditure, it is known as surplus budget. If a budget is not approved prior to the beginning of the budget period, the original budget is the budget that was first approved for application in the budget year. 9. 10. 20 lessons • 3h 8m . So, it is the payment made by owners of those properties whose value has appreciated. Developmental Expenditure: Developmental expenditure is the expenditure on activities which are directly related to economic and social development of the country. In other words, in deficit budget, government expenditure is in excess of government income. Do you know who presented the first Union Budget of independent India? General objectives of a government budget are as under: This type of budget is best suited for developing economies, such as India. For example: Expenditure on construction of a hospital building is capital expenditure, but expenditure on medicines, salaries of doctors etc. expenditure and capital expenditure) over total budgetary receipts (both revenue receipt and capital receipt). This includes both consumption and investment expenditure by the government or Planning Commission of a country. It includes recovery of loans granted by the central government to state and union territory governments. Symbolically, Objectives of Government Budget. Addressing Regional Disparity- One of the chief aims of the Government budget is to alleviate social disproportion. In revenue expenditure both the conditions should be satisfied. Several public sector industries are established for the social welfare of the public. Investment and sources of finance are prepared with the objectives of the government. Follow the given link and scroll down to the topic 'Objectives of Budget' to view the same. objectives of government budget reallocation of resources management of public enterprises economic stability reducing inequalities in income and wealth 3. (i) Private enterprises always desire to allocate resources to those areas of production where profits are high. 14. Government … (a) Balanced Budget (b) Unbalanced Budget Economic Stability 4. CBSE Class 12 Economics Sample Paper 2020: Time allowed: 3 hours Non-tax revenue: It refers to government revenue from all sources other than taxes called non-tax revenue. A government may borrow money: This budget keeps records of each ministry of country and their functions, activities during a financial year. assist in the redistribution of revenues based on social priorities. They encourage small industries like “Khadi” to flourish by allowing subsidised loans and reduced taxes on raw material, needed for production. This includes expenditure on defence, payment of old age pension, collection of taxes, interest on loans, subsidies etc. 2,00,000, then he will have to pay Rs. 19. • Tax Revenue: (b) Unbalanced Budget: If the government expenditure is either more or less than a government receipts, the budget is known as Unbalanced budget. 3. Meaning: Budget expenditure refers to the estimated expenditure of the government on its “development and non-development programmes or “plan and non-plan programmes during the fiscal year. In other words, burden of a direct tax is borne by the person on whom it is imposed which means the burden cannot be shifted to others. Deficit Budget- A budget is in deficit if the expenditure of the government is higher than that revenue generated in a fiscal year. 10,00,000. Fiscal instruments like subsidies, taxations, etc. It is 10% on incomes between Rs. Revenue Deficit: Revenue deficit refers to the excess of revenue expenditure of the government over its revenue receipts. 5. (i) Surplus budget (ii) Deficit budget They do so by imposing taxes on the affluent classes of society and spending them for welfare of the economically weaker section of the community. In the beginning of every year, the Government of India prepares a document and presents it before Lok Sabha. 900 crore. Reserve Bank of India. 27. Revenue Receipts: Government receipts, which (ii) Fiscal deficit is a measure of total borrowings required by the government. (i) A government undertakes commercial activities that are of the nature of natural monopolies; and which are established and managed for social welfare of the public. 5. For example, in India income tax is considered a progressive tax because its rate goes on increasing with the increase in annual income. Federal, state and local governments make laws and budgets— completely independently—and fulfill completely different responsibilities.

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