what are the objectives of government budget and state its components

Government budget is a financial statement that shows the expenditures and receipts of the government in the fiscal year during aa accounting period.

There are two components of budget :

(a) Revenue budget (b) Capital budget
Revenue Budget consists of revenue receipts of Govt. and expenditure met
from such revenue.
q Capital budget consists of capital receipts and capital expenditure.
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 Objectives of budgetary policy are the following:

 a) Reallocation of resources: Through budgetary policy government directs the allocation of resources in the manner  that there is a balance between the goal of profit maximisation and social welfare.

 b) Redistribution of income and wealth: Government uses budgetary policy instruments of taxation and subsidy  for equitable distribution of income and wealth in the economy. 

 

 

 

 

 

c) Economic stability: Budgetary policy is used as an important instrument to combat the situation of deflation and inflation in order to achieve economic stability. Economic stability stimulates the inducement to invest and increases the rate of economic growth and development.

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 Government budget is a financial statement that shows the expenditures and receipts of the government in the fiscal year during aa accounting period.

Objectives of budgetary policy are the following:

a) Reallocation of resources:Through its Budgetary policy the government directs the allocation of resources in a manner such that there is a balance between the goal or of profit maximisation and social welfare. Government can provide subsidy and reduction in tax rate to motivate investment into areas where private sector initiative is not coming. Production of goods which

are injurious to social life is discouraged through heavy taxation

b) Redistribution of income and wealth:Budgetary policies are useful medium to reduce inequalities of income for the fair distribution of income. government can use tax policy and

public expenditure as a tool. govt can reduce the disposable income and wealth of Rich by imposing heavy tax and can spend more on providing free services to the poor. It raise the disposable income welfare of the poor.

 

 

 

 

 

 

 

 

 

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Please find this answer

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Thank you Bhumika Jain
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Attarianisa@gmail.com
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It's components were
1) Budget recepits(= revenue receipts and capital receipts)
2) Budget expenditure (=revenue expenditure + capital expenditure)

Tip: Objectives of government budget usually asked as separate questions for 4 marks and quite important

Hope this helps!

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Please find this answer

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Objectives
1 Reallocation of resources
2. Redistribution of income
3. Development of backward area
4. GDP Growth
5. Management of PSUs
6. Employment opportunities
7. Economic stability
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1) Reallocation of resources.
2) Reducing inequality in Income and Wealth.
3) Economic growth.
4)Economic Stability.
5) Management of Public Enterprises.
6) Reducing Regional Disparities.
Components:- 1) Revenue Budget : It deals with revenue aspect and revenue Budget is divided into two parts.
A) Revenue Receipts.
B) Revenue Expenditure.
2) Capital Budget : It deal with capital aspect and Capital Budget divided into two parts.
A) Capital Receipts.
B) Capital Expenditure.
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