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Introduction
The government carries out economic policy and achieves its defined goals. The utilization of cash from abridged versions is in the government’s hands, ministries, and other organizations after the budget is approved. Taxes, customs charges, fees, and other sources of revenue make up the majority of the state budget’s revenue. State budget expenditures encompass state operations that are either mandated by law or mandated by the constitution. The budget does not allocate cash for government initiatives on its own, necessitating extra legislative steps.
Sir Robert Walpole, in his capacity as Chancellor of the Exchequer, pioneered the practice of presenting budgets and fiscal policy to parliament in an effort to restore public trust following the devastation wreaked by the South Sea Bubble’s collapse in 1720. Thirteen years later, Walpole unveiled his budgetary intentions to levy an excise tax on the use of a number of products and services, such as wine and tobacco, in order to relieve the landed aristocracy of their financial load. This sparked widespread uproar, with Whig peer William Pulteney writing a pamphlet called The Budget Opened, Or an Answer to a Pamphlet in response.
Government Budget 2021
On February 1, 2021, India’s Minister of Finance delivered the Union Budget for the year 2021. Due to the ongoing COVID outbreak, this is the first budget to be delivered verbally. The Union Budget is India’s yearly financial report; it is a forecast of the government’s income and spending on a regular basis. According to Article 112 of the Indian Constitution, the government is required to propose a budget.
There was widespread anticipation that the government would raise tax rates to reduce its budget deficit, prompting a drop in the BSE Sensex when it crossed the 50,000 mark. In addition, numerous economic journals advised imposing a new tax on high-net-worth individuals. The Indian market had low demand and a high unemployment rate, thus the budget required to boost both demand and employment creation.
Highlights Of The Government Budget 2021
Here are some of the highlights of the budget 2021:
- Expenditure- In 2021-22, the government plans to spend Rs 34,83,236 crore. The government spent Rs 34,50,305 crore in 2020-21, a 13 percent increase over the budget forecast, according to updated calculations.
- Revenues- In 2021-22, receipts (excluding borrowings) are estimated to be Rs 19,76,424 crore, up 23% from the revised forecasts for 2020-21. Revisions to revenue forecasts for 2020-21 were 29% lower than budget predictions. Given the impact of COVID-19, it’s interesting to look at the growth projections for 2019-20, which show a 6% yearly raise.
- GDP growth: In 2021-22, nominal GDP is predicted to rise at a rate of 14.4% (i.e., real growth + inflation).
- Revenue deficits are expected to be 5.1 percent of GDP in 2021-22, down from the revised forecast of 7.5 percent in 2020-21. (3.3 percent in 2019-20). In 2021-22, the fiscal deficit is expected to be 6.8% of GDP, down from the revised forecast of 9.5 percent in 2020-21. (4.6 percent in 2019-20). By 2025-26, the government wants to decrease the budget deficit to 4.5 percent of GDP.
- Ministry allocations: The Ministry of Jal Shakti (64 percent) has the highest annual increase among the top 13 ministries with the highest allocations for 2019-20, followed by the Ministry of Consumer Affairs, Food and Public Distribution (48 percent), and the Ministry of Communications (47 percent) (31 percent ).
Conclusion
Budgets have economic, political, and technical foundations. They are not designed to distribute scarce resources for optimal economic use, unlike a pure economic budget. Government budgets also have a political foundation, with various interests pushing and pulling for advantages and avoiding responsibilities. The technical element is a projection of expected revenue and spending levels.
Revenues and costs are the two most important components of any budget. Revenues are largely obtained through taxes in case of the government. Spending on services and current goods is referred to as government consumption by economists; government investment expenditures, such as research expenditure, infrastructure investment; and payments for transfer, such as retirement benefits or unemployment, are all examples of government expenditures.
