Government Budget

Meaning of the Government Budget

A very important part of the economic activities in an economy is the management of finances by the government. Raising of revenue and incurring expenditure by the government are two major aspects of the fiscal system. The statements relating to revenue and expenditure of the government are integrated in a document called budget.

Government in every country is required to undertake various economic, social and other activities. It also likes to pursue various policies to achieve certain objectives like economic development, reduction of inequalities of income and wealth, etc.
The government has to incur expenditure in performing these activities and in persuing its policies for instance, the government has to incur expenditure in maintaining law and order and in undertaking various developmental activities. As such, the government has to raise the necessary revenue to finance these expenditures. It raises its revenue through various sources like taxes and public borrowings. Accordingly the government has to draw a financial plan corresponding to various activities it wants to undertake during the coming year. Such a financial plan is known as the budget of the government.
Thus, the budget of the government is an annual financial statement describing in details the estimated receipts and proposed expenditures and disbursements of the government under various heads for the financial or fiscal year. It is a description of the fiscal policies- taxation and public expenditures policies-of the government and the financial plan corresponding to these policies.

While the budget gives the budget estimates for the coming financial year, it also gives the actual financial accounts for the previous year and the revised estimates of the current year.

Constitutional Obligation

As in other democratic countries, government budget is a constitutional obligation in India. Under article 112 of the constitution a statement of estimated...