In simple sense, budget means an estimate of revenue and expenditure. According to Phillip Taylor, “Budget is a master financial plan of the government. It brings estimates of financially anticipated revenues for the purpose of expenditures, employing schedule of activities to be under taken towards the direction of national objectives. It is a device for consolidation of various interests, objectives, desires and needs of the people into a programme, where by they provide for their safety, convenience and comforts”.
The Budget is an estimate of government
expenditure and revenue for the ensuring financial year presented to parliament
(in case of union budget) usually by the finance minister. Sometime there may
be slight modifications in taxation and expenditure without the formality of
introducing a revised budget.
Budget comes under:
(i) Union Budget;
(ii) State Budget.
The Structure of Budget
The budget can be sub-divided into two parts:
1. Revenue Budget.
2. Capital Budget.
1. Revenue Budget: The revenue budget deals with the receipts of revenue, which includes receipts from taxes, interest receipts and dividends and profit and revenue expenditure which is mainly on administration.
2. Capital Budget: The capital budget is the statement of all capital expenditure and capital receipts, which include market loans, external loans and deposits.
Importance of the Budget: Budget is the only government measure that affect the whole economy of a country, by forcing the country forward on the path of growth with stability and social justice.
In India, today over one-third of the GNP is channelized into the government sector by the union and the state budget and disbursed by the union and the state government under various development and non-development heads.
These indicate the development and
distribution importance and the implications of the budgeting operations.
lii a developing country like India, the budget policy has to serve the following purpose:
1. Accelerate the pace of economic development by mobilising resources for the public sector and their optimal allocation.
2. Effect in improvement, of production in the private sector in accordance with the national priorities.
3. Effective in the improvement of the income distribution.
4. Achieving economic stabilisation.
5. Promoting exports and encourage imports substitution.
The Union Budget
The union budget is the estimate of government expenditure and revenue for the ensuring financial year, presented in the parliament by the finance minister on the last working day of February every year.
The budget is the annual financial statement which covers the central government’s transactions of all kind in and outside India during the year in which the statement is prepared, as well as budget year.
All the receipt and disbursements of the union government are kept under two separate heads, namely the consolidated funds of India, which includes all revenues received, loans raised and money received in repayment of loan by the union governments. No money can be withdrawn from this fund except under the authority of an act of parliament.