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Meaning of Budget – Government budget is an annual statement, showing the item-wise estimation of receipts & expenditure during a fiscal year.
Elements of Budget
1. It is a statement that shows estimated receipts & estimated expenditure during a fiscal year.
2. It shows estimates of government receipts & expenditure during a fixed period generally in a year.
3. Budget requires the approval by the parliament.
Objectives of Government Budget
1. Reallocation of resources
2. Redistribution of income & wealth
3. Economic stability
4. Management of public Enterprises
5. Promotion of economic development
NOTE-In short, a budget is a powerful weapon in the hands of government through which it can affect the generation, distribution & spending of National Income.
Structure of the Budget – The components of budget can also be categorised according to receipts & expenditures. On this basis two broad components are as follows:-
A. Budget receipts
B. Budget expenditure
Budget receipts- It refers of estimated money receipts of the government from all sources during the fiscal year.
Budget receipts are classified as
1. Revenue receipts
2. Capital receipts
Revenue receipts– It refers to those receipts of the government which neither create a liability nor lead to reduction in assets.
For example– revenue from taxes is a revenue receipt as it does involve any corresponding liability for the government.
Tax is a unilateral (one-sided) compulsory payment by people to the government. Taxes do not have to be repaid by the government in future.