Downloaded 14 times
More Related Content
Similar to Government budget
Government budget
- 1. Macroeconomics Unit-4 Government Budgetand the Economy
- 2. Learning Outcomes • Meaningof Budget. • Objective of Budget. • Budget Components. • Measure of Budget Deficits.
- 3. Meaning • A governmentbudget is a the annual financial statement of estimated receipts and expenditure of the government over a fiscal year. • Financial Year: 1st April to 31st March • Budget 2021-22 • Total Revenue: ₹19.76 trillion • Total Expenditure: ₹34.83 trillion
- 4. Facts about IndianBudget. • First Union Budget of India was came on 7th April 1860. • First Budget of Independent India was introduced on 26 November 1947. • 93 crore which was 46% of the budget was allocated to defence. • In 2017 Railway budget was merged with union budget.
- 5. Government Budget • UnionBudget • State Budget • Local Government • Gram Panchayat • Municipality • BMC Budget is greater than the budget of several states like Manipur, Mizoram, Sikkim, Meghalaya, Arunachal Pradesh, Nagaland and Tripura.
- 6. Objective • Allocation ofresources. • Economic Growth. • Management of public enterprises. • Reducing Income and Wealth Inequality. • Reducing Regional Inequality.
- 7. Allocation of Resources •The government through its budgetary policy reallocates resources so that social (public welfare) and economic (profit maximization) objectives are met. • Tax concession and Subsidy. • Direct Production of Goods and Services.
- 8. Budget Education School Education Higher Education Defence Healthcare AgricultureInfrastructure Social Infrastructure Economic Infrastructure
- 9. Economic Growth • Investmentand Saving Rate. • Empirical evidence shows that developing economies have a positive long-term correlation between savings and growth. • In a fast-growing economy like India, investments generally outpace domestic savings, and the gap gets funded by foreign savings.
- 12. Management of PublicEnterprises • Many public sector industries are built for the social welfare of people. The budget is planned to deliver different provisions for operating such business and imparting financial help. • Public Goods are: • Non Rival • Non Excludable
- 14. Reducing Income andWealth Inequality • Tax on rich. • Subsidies to poor.
- 16. Reducing Regional Inequality •It aims to diminish regional inequalities by implementing taxation and expenditure policy and promoting the installation of production units in underdeveloped regions.
- 18.
- 19. Capital Budget • Thesereceipts and expenditures are related to assets and liabilities of the government. • It consists of capital receipts and capital expenditure.
- 20. Capital Receipts • Itrefers to those receipts which either create a liability or cause a reduction in the assets of the government. • They are non-recurring and non-routine (irregular) in nature. • Example: Sale and Purchase of Govt Security, Recovery of Loan, FDI, Disinvestment.
- 21. Capital Expenditure • Itrefers to those expenditures which either create (or increase) an asset or cause a reduction in the liabilities of the government. • It is non-recurring (or irregular) in nature. • It adds to the capital stock of the economy and increases its productivity through expenditures on long period development programmes like construction of metro, flyovers etc.
- 22. Revenue Budget • Thesereceipts and expenditures are of current financial year, related to day to day functioning of the government. • It consists of revenue receipts and revenue expenditure.
- 23. Revenue Receipts • Revenuereceipts are those receipts which neither create any liability nor lead to any reduction in assets of the government. • They are regular and recurring in nature and government receives them in normal course of activities. • Types of Revenue Receipts: Tax and Non- Tax Receipts
- 24. Revenue Expenditure • Itrefers to those expenditures which neither create any asset nor causes any reduction in any liability of the government. • It is regular/ recurring in nature. It is incurred on normal functioning of the government and provision of various services. • Examples: Payment of salaries to the government employees, pensions, interest payment, expenditure on the administrative services, defence services, health services, subsidies, grants to the state government etc.
- 25. Budget Receipts &Expenditure • Total Receipts = Revenue Receipts + Capital Receipts • Total Expenditure = Revenue Expenditure + Capital Expenditure
- 26. Types of Budget •Balance Budget: Total Receipts = Total Expenditure • Surplus Budget: Total Receipts > Total Expenditure • Deficit Budget: Total Receipts < Total Expenditure
- 27. Types of Deficit •Revenue Deficit = Revenue Expenditure – Revenue Receipts • Fiscal Deficit = Total Expenditure – Total Receipts ( Excluding Borrowings) • Primary Deficit = Fiscal Deficit – Interest Payments
- 28. Revenue Deficit • Therevenue deficit refers to the excess of government’s revenue expenditure over revenue receipts. • Significance: The revenue deficit includes only such transactions that affect the current income and expenditure of the government. When the government incurs a revenue deficit, it signifies that government’s own revenue is insufficient to meet the normal functioning of government departments and provision of services.
- 29. Fiscal Deficit • TheFiscal Deficit in a government budget refers to the excess of government’s total expenditure over its total receipts excluding borrowings. • Significance: It indicates the total borrowing requirements of the government from all sources during the budget year. It shows the amount by which an economy’s expenditure exceeds its receipts excluding borrowings.
- 30. Primary Deficit • Itrefers to the difference between fiscal deficit of the current year and interest payments on the previous borrowings. • Significance: The borrowing requirement of the government includes interest obligations on accumulated debt. Primary Deficit indicates how much borrowings are required by the government to meet expenses other than the interest payments.
- 31.
- 32. Multiple Choice Questions Question-1:An annual statement of the estimated receipts and expenditure of the government over the fiscal year is known as____ Budget Income estimates Balance of Payment Account
- 33. Multiple Choice Questions Question-1:An annual statement of the estimated receipts and expenditure of the government over the fiscal year is known as____ Budget Income estimates Balance of Payment Account
- 34. Multiple Choice Questions Question-2:What is the period of a fiscal year? 1 January to 31 Dec 1 April to 31 March 1 March to 28 February None of these
- 35. Multiple Choice Questions Question-2:What is the period of a fiscal year? 1 January to 31 Dec 1 April to 31 March 1 March to 28 February None of these
- 36. Multiple Choice Questions Question-3:Which of the following is the objective of government budget? Economic Growth Employment Generation Reduction in Regional Inequality All of these
- 37. Multiple Choice Questions Question-3:Which of the following is the objective of government budget? Economic Growth Employment Generation Reduction in Regional Inequality All of these
- 38. Multiple Choice Questions Question-4:The fiscal deficit is the difference between the government’s total expenditure and its total receipts excluding ______ Interest Tax Borrowing Spending
- 39. Multiple Choice Questions Question-4:The fiscal deficit is the difference between the government’s total expenditure and its total receipts excluding ______ Interest Tax Borrowing Spending
- 40. Multiple Choice Questions Question-5:The amount collected by the government in the form of interest, fees, and dividends is known as ________ Non Tax Revenue Receipts Tax-Revenue Receipts Borrowing Capital Receipts
- 41. Multiple Choice Questions Question-5:The amount collected by the government in the form of interest, fees, and dividends is known as ________ Non Tax Revenue Receipts Tax-Revenue Receipts Borrowing Capital Receipts