GOVERNMENT

BUDGET
AND
ITS STRUCTURE
SUBMITTED TO: RICHA AGGRAWAL
SUBMITTED BY:
SARIKA KUMARI
1808190002
B.A.(H) ECONOMICS
 GOVERNMENT BUDGET
Government budget is an annual statement,
showing item wise estimates of receipts and
expenditure during fiscal year i.e. financial year.
The receipts and expenditure shown in the budget
are not actual figure, but the estimated value for
the coming fiscal year. The fiscal year is considered
from 1st April to 31st March.
 IMPORTANT POINTS OF
GOVERNMENT BUDGET
 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.
 Estimated expenditure and receipts are planned as per
the objective of the government.
 In India, Budget is presented in parliament on such a
day as the president may convention, it is presented on
last working day of February, each year.
 It is required to be approved by the parliament before it
can be implemented.
 OBJECTIVES
1. Reallocation of resources:
i. Tax concession or Subsidies.
ii. Directly producing goods and services.
2. Reducing inequalities in income and wealth.
3. Economic Stability.
4. Management of Public Enterprises.
5.Economic Growth.
6. Reducing regional disparities.
 COMPONENTS OF BUDGET
Two main components of Budget are:-
 Revenue Budget:- It deals with the revenue aspect of the

government budget. It explains how revenue is generated

or collected by the government and how it is allocated
among various expenditure heads. Revenue budget has
two parts:
i. Revenue Receipts
ii. Revenue Expenditures
 Capital Budget:- It deals with the capital aspects of the

government budget and it consists of:

i. Capital Receipts
ii. Capital Expenditures.
 Revenue Budget:-
 Revenue receipts:These are the incomes which are

received by the government from all sources in its

ordinary course of governance. These receipts do not
create a liability or lead to a reduction in assets.
Revenue receipts are further classified as tax revenue and
non- tax revenue.
a. Tax revenue:
Direct revenue.
Indirect revenue.
b. Non-tax revenue:
Fees.
Fines and penalties.
Profits from public sectors enterprises.
Gifts and grants.
 Revenue expenditures:Revenue expenditure is the expenditure
incurred for the routine, usual and normal day to day running of
government departments and provision of various services to
citizens. It includes both development and non-development
expenditure of the Central government. Usually expenditures that do
not result in the creations of assets are considered revenue
expenditure.
 In general revenue expenditure includes following :-
 Expenditure by the government on consumption of goods and
services.
 Expenditure on agricultural and industrial development, scientific
research, education, health and social services.
 Expenditure on defense and civil administration.
 Expenditure on exports and external affairs.
 Grants given to State governments even if some of them may be used
for creation of assets.
 Payment of interest on loans taken in the previous year.
 Expenditure on subsidies.
 Capital Budget:-
 Capital receipts:Receipts which create a liability or result in a reduction
in assets are called capital receipts. They are obtained by the government
by raising funds through borrowings, recovery of loans and disposing of
assets.
 The main items of Capital receipts (income) are :-
 Loans raised by the government from the public through the sale of
bonds and securities. They are called market loans.
 Borrowings by government from RBI and other financial institutions
through the sale of Treasury bills.
 Receipts from small saving schemes like the National saving scheme,
Provident fund, etc.
 Recoveries of loans granted to state and union territory governments
and other parties.
 Capital expenditures: Any projected expenditure which is incurred for
creating asset with a long life is capital expenditure. Thus, expenditure
on land, machines, equipment, irrigation projects, oil exploration and
expenditure by way of investment in long term physical or financial
assets are capital expenditure.
 TYPES OF BUDGET
There are three types of budgets:
 Balanced Budget: Government budget is said to be

balanced budget if estimated government receipts are

equal to the estimated government expenditure.
 Surplus Budget: If estimated government receipts are

more than the estimated government expenditure,

then the budget is termed as Surplus Budget.
 Deficit Budget: If estimated government receipts are

less than the estimated government expenditure, then

the budget is termed as Deficit Budget.