An annual budget provides financial aid to such businesses to grow. 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.ĭo you know – Higher tax rates on a certain group of nationals and organisations can have a severe impact on the overall economy.įinancing Public Enterprises- Several public sector industries are established for the social welfare of the public. Policies like Deficit budget during deflation and Surplus budget during inflation thrive on bringing stability within the economy.īringing down economic inequality- The Government tries to bring economic equality of society. are effectively used to achieve this goal.įinancial stability- Budget keenly focuses on lowering the price fluctuations in the market. Fiscal instruments like subsidies, taxations, etc. Redistribution of income- To close the income gap between rich and poor, several budgetary schemes are launched from the government's end. Government can also levy hefty taxes upon production of harmful products like cigarettes and alcohol to discourage the production of those. They encourage small industries like “Khadi” to flourish by allowing subsidised loans and reduced taxes on raw material, needed for production. Reallocation of resources- Through a budget, the government endeavours to equally allocate resources and wealth. Government makes provision to boost the rate of savings and investments made within the economy. Budgetary policies are hence introduced to infuse enough recourse in different public sectors. Task for you: Can a strong budget help reduce income inequality? If so, how?Įconomic growth- The overall economic growth of a nation relies on savings and investments. These include spending programs, taxation upgradation, and proposals of new projects or government schemes. It estimates capital receipts and revenues.Įxplains actual receipts and expenditure of the closing year and reasons for deficit or surplus in that year.Īnnounces financial and economic policies for the upcoming year.
It contains anticipated revenues and proposed spending for the upcoming financial year (which starts from 1st April and extends till 31st March of following year). Government budget primarily addresses monetary needs and problems of a country and how to resolve it.īudget is a crucial activity as it shapes economic development and progress of a nation.ĭo you know who presented the first Union Budget of independent India?Ī few significant aspects of the Union Budget are In the beginning of every year, the Government of India prepares a document and presents it before Lok Sabha. Government budget is an annual financial statement of estimated receipts and expenditure of the government during a fiscal year, as recorded in Article 112 of the Indian Constitution.