A government budget is a financial report that explains the item-wise calculations of future revenue and expenditure of a country for a year. It is a detailed program and policies for the given fiscal year. The budget explains the income and expense of a nation. The government prepares an expenditure according to its objectives and then starts gathering the resources and funds to fulfill the proposed investment. The funds are collected from fees, taxes, interest on loans given to states, fines, and dividends by public sector enterprises. The main objectives of a government budget are:
- Re-allocation of resources: The government budget aims to allocate resources of a nation on a foundation of social priorities.
- Reducing inequalities in income and wealth: The government budget aims to reduce inequalities in income and wealth by providing equal opportunities to all.
- Economic stability: The government budget aims to maintain economic stability by controlling inflation, promoting economic growth, and creating employment opportunities.
- Efficient and productive programs: The government budget comprises efficient and productive programs to deliver goods and services and achieve targeted goals.
The components of a government budget are:
- Government expenditure and receipts: The budget determines government expenditure and receipts.
- Fixed period: The budget is estimated for a fixed period, typically for a year.
- Investment and sources of finance: Investment and sources of finance are prepared with the budget.
The budget is divided into three types:
- Balanced budget: A government budget is assumed to be balanced if the expected expenditure is similar to the anticipated receipts for a fiscal year.
- Surplus budget: A budget is said to be surplus when the expected revenues surpass the estimated expenditure for a particular business year.
- Deficit budget: A budget is said to be a deficit when the expected expenditure surpasses the estimated revenue for a particular business year[[1]](https://byjus.com/c...
