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Government Budget

Check out the details about Government Budget

Introduction

  • It is an annual financial statement of income (receipts)  and spending (expenditure) of the government for a particular financial year.
  • The financial year starts from 1st April and ends on 31st March.
  • Article 112 of the Indian Constitution requires the annual financial statement to be laid before the Parliament. 
  • The budget is made through a consultative process involving the Ministry of Finance, NITI Aayog, and other ministries.
  • The Budget Division of the Department of Economic affairs under the Ministry of Finance is the nodal body for preparing the budget.

Objectives of Budget

  • To stimulate economic growth.
  • Redistribution of Income (Reducing inequalities).
  • Optimal allocation of resources.
  • Employment generation and poverty reduction

Budget Estimates

The general budget has three sets of figures which are:  

  • Actual Estimates: Estimates of expenditure and receipts of the preceding financial year.
  • Provisional Estimates: Estimates of revenue and expenditure of the current financial year. 
  • Budget Estimates: Estimates of the coming financial year.

The estimates are arrived at by one of the following three methods:

  • Advanced estimates: These estimates are made before the actual occurrence of economic activity.
  • Revised Estimates: Estimates which are revised in the mid-year, after the sex month’s actual economic trends. These estimates are based on changes in the economic scenario or actual occurrence of some economic activities.
  • Quick Estimates: These estimates are based on sample surveys. Information gathered from the sample is used to predict the overall economic activity.

Rationale of Budget

  • To ensure transparency in public finance.
  • To ensure accountability of the government.
  • To ensure advance planning. 
  • To ensure financial control of the legislation over the executive.