govt budget 2025 pptx

1. GOVERNMENT BUDGET
AND
ITS COMPONENTS
PRESENTED BY: ATHARV SINGH BAGHEL
AYUSH VISHVAKARMA
KANHA KUSHWAHA
SURYANSH SINGH PARIHAR

2. INDEX
• Introduction
• Meaning of Government Budget
• Objective of Government Budget
• Components of Budget
• Revenue Receipts
• Capital Receipts
• Budget Expenditure
• Measures of government Deficit

3. INTRODUCTION
• In the modern world every government aims at
maximization of the welfare of its country.
• It requires a number of infrastructural economic and
welfare activities.
• All these activities requires huge expenditure to be
incurred.
• This requires appropriate planning and policy.
• Budget helps in Planning and framing policies.

4. MEANING OF BUDGET
The term budget is derived from the French word "Budgette" which means a "leather bag"
or a "wallet". It is a statement of the financial plan of the government.
"A budget is a document containing a preliminary approved plan of public revenues and
expenditure". - Rene Stourm
In general Government Budget is an annual statement’ showing items wise estimates of
receipts and expenditures during a fiscal year. The receipts and expenditure shown in the
budget are not the actual figures but only the estimated values for the coming year. The
fiscal year is considered from 1st
April to 31st
March.

5. 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 expenditures 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
direct by 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.

6. OBJECTIVES
• Government prepares the Budget for fulfilling certain objectives. These
objectives are the direct outcome of government economic , social and
political policies . The various objectives of Government Budget etc.
 1) Reallocation of Resources: Through the Budgetary policies, government
aims to reallocate resources in accordance with the economic and social
priorities of the country.
 Tax concessions or subsidies:- to encourage investment government can give tax
to producers for ex: government discourage the production of harmful by
providing subsidies.
 Directly producing goods and services:-If private sector does not take interest,
government can directly undertake the production.

7. 2) Reducing inequalities in income and wealth: Economic inequalities is
an inherent part of every economic system. Government aims to reduce
inequalities of income and wealth through its budgetary policy. Government
aims to influence distribution of income by imposing taxes on the rich and
spending more on the welfare of the poor. It will reduce income of rich and
raise standard of living of the poor, thus reducing inequalities in the
distribution of income.
3) Economic Stability: Government budget is used to prevent business
fluctuations of inflation or deflation to achieve the objective of economic
stability.
 Inflationary tendencies emerge when aggregate demand is higher than
expenditure.
 During deflation, government can increase its expenditure and give tax
concessions and subsidies.

8. 4) Financing and management of public sector enterprises: There are
large number of public sector industries and managed for social welfare
of the public budgets prepared with the objective of making various
provision for managing such enterprises and providing them financial
help.
5) Economic Growth: the growth rate of a country depends on rate of
saving and investment for this purpose budgetary policy aims to mobilize
sufficient resources for investment I the public sector. Through the
government makes various provisions in the Public Sector . Therefore the
government makes various rate of saving and investments in savings.
6) Reducing regional disparities: The government budget aims to
reduce regional disparities through its taxation and expenditure policy for
encouraging setting up of production units in economically backward
regions.

9. COMPONENTS OF BUDGET
Two major components of Budget are :
1. Revenue Budget : It deals with the revenue aspect to the
government budget. It explains how revenue is generated or collected .
2. Capital Budget : Capital Budget consists of capital receipts and
payments. It also incorporates transactions in the Public Accounts.

10. Revenue Receipts : Revenue Receipts refers to those receipts which
 Create any liability nor cause any reduction in the assets of the government. They are
regular and recurring in nature and government receives them in its normal course of
activities.
 A receipt is a revenue receipt is satisfies the following two essential conditions:-
i. The receipt must not create a liability for government for ex:- taxes levied by the government are
revenue receipts as they do not create any liability. However any amount borrowed by the
government is not a revenue receipt as it cause an increase in the liability in terms of repayment of
borrowings.
ii. The receipt must not cause decrease in the asset for ex:- receipts from sale of shares of a public
enterprise is not a revenue receipt as it leads to a reduction in assets of the government.

11. ITEMS CATEGORIZED AS REVENUE AND
CAPITAL RECEIPTS
1. Loan from the World Bank: It is a capital receipt as it creates liability for the
government.
2. Corporation Tax: It is revenue receipt as it neither creates any liability nor reduces any
asset.
3. Grants received from World Bank: It is a revenue receipt as it creates any liability nor
reduces any asset of the government.
4. Profits of Public Sector Undertaking: It is a revenue receipt as it neither creates
liability nor reduces asset of the government.
5. Sale of a Public Sector Undertaking: It is a capital receipt as it reduces assets of the
government.

12. 6. Foreign Aid against earthquake victims: It is a revenue receipt as it
neither creates any liability nor reduce any asset of the government.
7. Dividends on Investment made Government: It is revenue receipt as it
neither any liability nor reduces any asset of the government.
8. Borrowings from Public: It is a capital receipt as it creates liability.
9. Recovery of Loans: It is a capital receipt as it reduces assets of the
government.
10. Interest received : Its is a revenue receipt as it neither creates any
liability nor reduce liability any asset of the government.

13. BUDGET EXPENDITURE
Budget Expenditure refers to the estimated expenditure of the
government during a given fiscal year. The budget expenditure
can be broadly classified as:
1. Revenue Expenditure
2. Capital Expenditure

14. REVENUE EXPENDITURE
• Revenue expenditure refers to the expenditure which neither creates any
asset nor causes reduction in any liability of government
• It is recurring in nature.
• It is incurred on normal functioning of the government.
• The expenditure must not create an asset of the government. Payment of
salaries or pension is revenue expenditure as it does not create any asset
Development of Delhi metro is not a revenue expenditure as it leads to
creation of an asset.

15. CAPITAL EXPENDITURE
• Capital Expenditure refers to the expenditure which either creates an asset or
cause a reduction in the liabilities of the government. It is non-recurring in
nature.
• It adds to capital stock of the economy and increase its productivity through
expenditure on long period like Metro or Flyover.
• The expenditure must create an asset for the government for ex:- School
building construction is capital expenditure as it leads to creation of asset
However, any amount paid as salaries to teachers is not a capital expenditure.
• Examples: loan to states and union territories expenditure on building, roads,
flyovers etc.

16. PLAN AND NON PLAN EXPENDITURE
• Plan Expenditure: Plan Expenditure refers to the expenditure that is
incurred on the programs detailed in the current five year plan for ex:-
expenditure on agriculture and allied activities, irrigation, energy, transport
etc.
 Projects covered under the central plans
 Central assistance for state and Union Territory.
• Non-Plan Expenditure: Non plan Expenditure refers to the expenditure
other than the expenditure related to the current five year plan and other
schemes.

17. DEVELOPMENT AND NON DEVELOPMENT
EXPENDITURE
• Development Expenditure : refers to the expenditure which is directly
related to economic and social development of the country. Expenditure on
such services is not a part of the essential functioning of the government.
Developmental expenditure adds to the flow of goods services in the
economy.
• Non Developmental Expenditure : refers to the expenditure which is
incurred on the essential general services of the government. It does not
directly contributes to economic development but it directly help in the
development in the economy such expenditure is essential from the
administrative of view.

18. MEASURES OF GOVT. BUDGET DEFICIT
Budgetary deficit is defined as the excess of total estimated expenditure over
total estimated revenue. When the govt. spends more than it collects then it
incurs a budgetary deficit with reference to budget of Indian Govt. Can be of
3 type :
1. Revenue Deficit
2. Fiscal Deficit
3. Primary Deficit

19. REVENUE DEFICIT
• Revenue Deficit is concerned with the revenue expenditure and revenue
receipts of the government. It refers to excess of revenue expenditure over
revenue receipts during the given Fiscal, year.
• Revenue Deficit signifies that government own revenue is insufficient to
meet the expenditures of government departments.
Revenue deficit= Revenue expenditure – Revenue Receipts

20. REFERENCES
• Macroeconomics:T.R.Jain &V.K.Ohri
• Macroeconomics: Sandeep Garg
• All in one :Akansha Sharma
• Modern EconomicTheory By: K.K.Dewett
• www.wikipedia.com
• www.slideshare.com
• https://www.financialexpress.com/budget/
• https://www.indiabudget.gov.in/doc/Budget_at_Glance/bag6.pdf
• https://www.indiabudget.gov.in/doc/Budget_at_Glance/bag1.pdf