ECONOMICS PROJECT

(SESSION:2021-2022)

GOVERNMENT BUDGET

SUBMITTED TO: SUBMITTED BY: MS. NEETU KHEECHEE SHALINI SINGH (PGT ECONOMICS) CLASS – XI
SCIENCE
ECONOMICS
ECONOMICS IS A BRANCH OF SOCIAL SCIENCE THAT HAS A GREAT INFLUENCE ON THE SOCIETY. ONE
OF THE FAST CHANGING FIELD , ECONOMICS DEMANDS A DEEPER STUDY OF CURRENT ECONOMIC
TRENDS THAT INFLUENCE THE FINANCIAL STABILITY OF A COUNTRY.
Economics is the social science that studies how people interact with value; in
particular, the production, distribution, and consumption of goods and services.
Economics focuses on the behaviour and interactions of economic agents and how
economies work.
ACKNOWLEDGEMENT

I WISH TO THANK CBSE FOR PROVIDING US WITH THE OPPORTUNITY TO

ENHANCE OUR SKILLS AND UNDERSTANDING THE SUBJECT IN A BETTER WAY
THROUGH THE MEANS OF THIS PROJECT.

I AM EQUALLY THANKFUL TO MS. NEETU KHEECHEE (PGT ECONOMICS) FOR

HELPING ME RIGHT FROM THE INCEPTION TILL THE SUCCESSFUL COMPLETION
OF THIS PROJECT.

I SINCERELY ACKNOWLEDGE THEM FOR EXTENDING THEIR VALUABLE GUIDANCE

, SUPPORT FOR LITERATURE , CRITICAL REVIEWS AND ABOVE ALL THE MORAL
SUPPORT THEY HAD PROVIDED TO ME AT ALL STAGES OF THIS PROJECT.
GOVERNMENT BUDGET
Government budget is an annual statement, showing item wise estimates of receipts and
expenditures during a fiscal year. Fiscal year is taken from 1st april to 31st march.
It reveals fiscal policy of the government, focusing on growth and stability of the economy.
BUDGET HAS TWO PARTS (a)

Receipts and (b) Expenditure.

IMPORTANT POINTS OF
GOVERNMENT BUDGET
• BUDGET IS PREPARED BY GOVERNMENT AT ALL LEVELS ,i.e. CENTRAL GOVERNMENT ,STATE GOVERNMENT AND
LOCAL GOVERNMENT ,PREPARES ITS RESPECTIVE ANNUAL BUDGET. HOWEVER, WE WILL RESTRICT OUR STUDIES
TO BUDGET OF CENTRAL GOVERNMENT ,KNOWN AS "UNION BUDGET".
• ESTIMATED EXPENDITURES AND RECEIPTS ARE PLANNED AS PER THE OBJECTIVES OF THE GOVERNMENT.
• IN INDIA, BUDGET IS PRESENTED IN THE PARLIAMENT ON SUCH A DAY , AS THE PRESIDENT MAY DIRECT.

• ##BY CONVENTION ,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 REVEALS THE FINANCIAL PERFORMANCE OF THE GOVERNMENT IN THE LAST YEAR AND FINANCIAL
POLICIES FOR COMING FISCAL YEAR.

TYPES OF BUDGET
• (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.

• (b) Unbalanced Budget: If the government expenditure is either more or less than a government receipts, the budget is known as
Unbalanced budget.
It may be of two types:
(i) Surplus budget (ii) Deficit budget

(i) Surplus Budget: If the revenue received by the general government is more in comparison to expenditure, it is known as surplus
budget.
In other words, surplus budget implies a situation where government income is in excess of government expenditure.

ii) Deficit Budget: If the

expenditure made by the general government is more than the revenue received, then it is known as deficit budget.
In other words, in deficit budget, government expenditure is in excess of government income.

TYPES OF BUDGET
• Balanced Budget: when estimated receipts are equal to the government estimated expenditures.
• Surplus Budget: when government estimated receipts are shown more than the government estimated
expenditures.
• Deficit Budget: when government estimated receipts are shown less than the government estimated
expenditures. This implies an increase in the government liabilities and fall in the reserves.
OBJECTIVES OF GOVERNMENT BUDGET
• First bullet point here
• Second bullet point here
• Third bullet point here
Components of a government
budget: Government budget,
comprises of two parts— (a)
Revenue Budget and (b)
Capital Budget.
COMPONENTS OF GOVERNMENT BUDGET
 •O
•O
Budget Expenditure & Its Related Concepts
1. 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.
MEASURES OF GOVERNMENT DEFICIT

• BUDGETARY DEFICIT IS DEFINED AS THE EXCESS OF TOTAL ESTIMATED EXPENDITURE OVER TOTAL ESTIMATED
RENUE .
• WHEN REFERENCE TO BUDGET OF INDIAN GOVERNMENT ,BUDETARY DEFICIT CAN BE OF THREE TYPES:- • 1. RENUE
DEFICIT
• 2. FISCAL DEFICIT
• 3.PRIMARY DEFICIT
RENUE DEFICIT

• RENUE DEFICIT IS CONCERNED WITH THE RENUE EXPENDITURE AND RENUE RECEIPTS OF THE
GOVERNMENT .
• IT REFERS TO EXCESS OF RENUE EXPENDITURE OVER RENUE RECEIPTS DURING THE GIVEN FISCAL
YEAR.
• RENUE DEFICIT =RENUE EXPENDITURE - RENUE RECEIPTS
FISCAL DEFICIT

• FISCAL DEFICIT PRESENTS A MORE COMPREHENSIVE VIEW OF BUDGETARY IMBALANCES.IT IS WIDELY USED AS
BUDGETARY YOOL FOR EXPLAINING AND UNDERSTANDING THE BUDGETARY DEVELOPMENTS IN INDIA.
• FISCAL DEFICIT REFERS TO THE EXCESS OF TOTAL EXPENDITURE OVER TOTAL RECEIPTS DURING THE GIVEN
FISCAL YEAR .

FISCAL DEFICIT =TOTAL EXPENDITURE –TOTAL RECEIPTS EXCLUDING BORROWINGS

Revenue Deficits (Total revenue expenditure > Total revenue receipts)
Fiscal Deficits (Total expenditures > Total Receipts excluding borrowing)
A high revenue deficit shows fiscal indiscipline It leads to inflationary pressure

It implies that government is using up savings of other sectors of the

economy to finance its consumption expenditure

It further reduces future growth and development of the country and

economy
It shows wasteful expenditures of the government on administration

It reduces the assets of the government due to disinvestment It increases foreign dependence

A high revenue deficit gives a warning signal to the government to either

reduce or decrease its expenditures or increase its revenues It increases liability of the government
A country facing fiscal deficit has to face a situation of the debt trap.
PRIMARY DEFICIT

• PRIMARY DEFICIT REFERS TO DIFFERENCE BETWEEN FISCAL DEFICIT OF THE CURRENT YEAR AND
INTEREST PAYMENTS ON THE PREVIOUS BORROWINGS .

• PRIMARY DEFICIT = FISCAL DEFICIT – INTEREST PAYMENTS

IMPORTANCE OF GOVERNMENT BUDGET

• Every country aims to improve the standard of living of its people and eradicate issues like poverty, illiteracy, unemployment,
income inequality, etc. Budget measures help the government in meeting these goals. A budget gives an overview of the fiscal
policy of the government. The public can see how much and on what items the government spent in the last fiscal year. The
budget also shows itemized receipt, which reveals the sources from the revenue for these expenditures were generated.
 Measures to Reduce or Correct Different Deficits

• Borrowing from international monetary institution and other

countries • Lowering government expenditure
• Increasing government revenue
• Monetary expansion
• deficit financing
• Borrowing from public
• Disinvestment
SOME IMPORTANT POINTS :-

1.Government Budget: A government budget is an annual financial statement showing itemwise estimates of expected
revenue and anticipated expenditure during a fiscal year.

2. 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.

3. Unbalanced budget: If the government expenditure is either more or less than a government receipts, the budget is
known as Unbalanced budget.

4. Surplus Budget: If the revenue received by the general government is more in comparison to expenditure, it is known
as surplus budget.

5. Deficit Budget: If the expenditure made by the general government is more than the revenue received, then it is
known as deficit budget.

6. Budget receipt: It refers to the estimated receipts of the government from various sources during a fiscal

7. Budget expenditure: It refers to the estimated expenditure of the government on its “development and
year.
 non
development programmes or “plan and non-plan programmes during the fiscal year.

8. 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.

9. Revenue Receipts: Government receipts, which

(a) Neither create any liabilities for the government; and
(b) Nor cause any reduction in assets of the government, are called revenue receipts.

10. Tax Revenue: Tax revenue refers to receipts from all kinds of taxes such as income tax, corporate tax, excise duty etc.
11. Tax: A tax is a legally compulsory payment imposed by the government on income and
profit of persons and companies without reference to any benefit.

12. Non-tax revenue: It refers to government revenue from all sources other than taxes called non-tax revenue.

13. Revenue Expenditure: An expenditure that (a) Neither creates any assets (b) nor causes any reduction of liability.
14. Capital Budget: Capital budget contains capital receipts and capital expenditure of the government.

15. Capital Receipts: Government receipts that either creates liabilities (of payment of loan) or reduce assets (on
disinvestment) are called capital receipts.

16. Capital Expenditure: Government expenditure of the government which either creates physical or financial assets
or reduction of its liability.
17. 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.
18. Indirect Tax: When (a) liability to pay a tax (Impact of tax) is on one person; and (b) the burden of that
tax (Incidence of tax), falls on the other person, it is termed as indirect tax.

19. Progressive Tax: A tax the rate of which increases with the increase in income and decreases with the fall
in income is called a progressive tax.

20. Proportional Taxation: A tax is called proportional when the rate of taxation remains constant as the
income of the taxpayer increases.

21.Regressive Tax: In a regressive tax system, the rate of tax falls as the tax base increases.

22. Plan expenditure: It refers to that expenditure which is incurred by the government to fulfill its planned
development programmes.

23. Non-Plan Expenditure: This refers to all such government expenditures which are beyond the scope of its
planned development programmes.

24. Developmental Expenditure: Developmental expenditure is the expenditure on activities which are
directly related to economic and social development of the country.
 25. Non-developmental expenditure: Non-developmental expenditure of the government is the expenditure
on the essential general services of the government.
26. Budgetary deficit: It refers to the excess of total budgeted expenditure (both revenue expenditure and
capital expenditure) over total budgetary receipts (both revenue receipt and capital receipt).

27. Revenue Deficit: Revenue deficit refers to the excess of revenue expenditure of the government over its revenue
receipts.

28. Fiscal deficit: It is defined as excess of total expenditure over total receipts (revenue and capital receipts)
excluding borrowing. Fiscal deficit indicates capacity of a country to borrow in relation to what it produces. In other
words, it shows the extent of government dependence on borrowing to meet its budget expenditure.

29. Debt Trap: A vicious circle set wherein the government takes more loans to repay earlier loans, which is called
Debt Trap.

30. Primary deficit: It is defined as fiscal deficit minus interest payments.

BIBLIOGRAPHY

WWW.WIKIPEDIA.COM
 ALL THE PICTURES USED FROM WWW.GOOGLE.COM AND UNACADEMY
WWW.LEARNCBSE.COM
WWW.VEDANTU.COM

CONCLUSION

• BUDGET IS PREPARED BY GOVERNMENT AT ALL LEVEL i.e., CENTRAL

GOVERNMENT , STATE GOVERNMENT AND LOCAL GOVERNMENT PREPARE ITS
RESPECTIVE ANNUAL BUDGET . HOWEVER , WE RESTRICT OUR STUDIES TO
BUDGET OF CENTRAL GOVERNMENT KNOWN AS UNION BUDGET.
• IN INDIA, BUDGET IS PRESENTED IN PARLIAMENT ON SUCH A DAY AS THE
PRESIDENT MAY DIRECT BY CONVECTION. IT IS PRESENTED ON LAST
WORKING DAY OF FEBRUARY EACH YEAR.
• THERE HAS BEEN MUTED REFRENCES TO DISINVESTMENT AND BANKING
REFORMS .THE FDI SCENARIO HAS BEEN LEFT LARGELY UNCHANGED WHILE
REFORMS IN THE EDUCATION AND INSURANCE SECTOR HAVE NOT BEEN
MENTIONED EXTENSIVELY .
• ON THE POSITIVE SIDE THIS BUDGET HAS BEEN VERY GOOD TO THE RURAL
SECTOR AND THIS IS SINGLE BIGGEST IMPACT OF THIS BUDGET. THE NATIONAL
RURAL EMPLOYMENT GUARANTEE SCHEME HAS BEEN ALLOTED MORE FUNDS
TO MAKE IT A BIGGER