What do you mean by budget?
A budget approximates the income and expenses over a specified time. Budgets can be made for a government, a country, a company, a family and about anything or anyone that earns and spends money. It is compiled and re-estimated periodically.
The budget meaning explained is only a generic one.
Since we have the introduction of the budget, there is not much of a difference between the meaning of Government budget and union budget definition
Meaning of Government Budget
A Government budget is an annual financial statement that summaries the estimates of revenue and expenses for the upcoming financial year. Depending on the likelihood of these estimates, the budget is classified into three types – balanced, surplus and deficit budget.
This article talks of What is Union Budget of India, which is integral to the other budgets and bills derived from it.
Union Budget Definition
Article 112 of the Indian Constitution states that it is mandatory to present a budget at the Parliament before the commencement of every financial year. The Union Budget is for the forthcoming fiscal year that begins from the 1st of April until 31st March of the following year. It is presented by the Finance Minister in Parliament.
The Union Budget comprises details about the projected receivables and payables of the Government for a particular financial year. This budget statement is divided into two main sections :
Capital Budget definition
The capital budget contains capital revenue and expenses of the Government. Loans to be received from the public, foreign governments and RBI ( Reserve Bank of India ) for the main structure of the governments capital receipts.
On the other hand, capital expenditure is expenditure on the development of machinery, equipment, infrastructure, etc. The fiscal deficit is incurred when the government’s total expenditure surpasses its total revenue. According to the Union Budget for the Financial year 2019- 2020, the fiscal deficit of India is at 3.4 %.
Revenue Budget definition
The revenue budget comprises the Government’s revenue receipts and expenditures. Revenue receipts are classified as two types – tax and non-tax revenue. In contrast, revenue expenditure is an expenditure incurred on a day to day basis by the Government. If the revenue expenditure is more than the revenue receipts, then the Government incurs a revenue deficit. According to the Union Budget for the Financial year 2019- 2020, the revenue deficit of India is at 2.2 %.
Various other documents are part of the Union Budget as described below :
Annual Financial Statement (AFS): Shows estimated expenses and receipts of the Central Government in a financial year.
Demands for Grants (DG): Submitted under the provisions of Article 113. It shows the total votes of the Lok Sabha on the estimated expenses documented in the AFS.
Finance Bill: Required under Article 110 (1)(a) of the Constitution. It details the imposition, abolition, remission, alteration or regulation of taxes proposed in the Budget. The Finance bill is also considered to be known as the Money bill
Statements mandated under FRBM- Fiscal Responsibility and Budget Management Act:
i. Macro-Economic Framework Statement: It contains an assessment of the growth prospects of the economy. This statement includes an estimate of the GDP growth rate, the domestic economy, stability of the external sectors of the economy, fiscal balance of the Central Government.
ii. Medium-Term Fiscal Policy and Fiscal Policy Strategy Statement : It outlines three-year rolling targets for six specific fiscal indicators in relation to GDP at market prices, namely (i) Fiscal Deficit, (ii) Revenue Deficit, (iii) Primary Deficit (iv) Tax Revenue (v) Non-tax Revenue and (vi) Central Government Debt.
E. Expenditure Budget: this budget estimates the schemes that are brought together and shown on a net basis on Revenue and Capital basis at one place.
The importance of a Union Budget
1. Ensure efficient allocation of resources: assigning resources optimally assists to achieve maximum profit for the Government.
2. Reduce unemployment and poverty levels: through the creation of more job opportunities. It proposes to ensure that every citizen can meet their basic needs of food shelter clothing together with health care and education.
4. Reduce wealth and income disparities: it assists in influencing the distribution of income through subsidies and taxes. It helps to ensure that a high rate of tax is levied on the rich and a lower rate tax is collected from lower income groups.
5. Keep a check on prices: it aids in the proper handling of inflation and deflation to bring about economic stability. Through this, price stability is maintained throughout the economy.
The Union Budget definition economics is undoubtedly critical as it has a significant impact on numerous economic profiles. Hence, it is necessary to have knowledge about what it stands for and its importance.