These objectives are the direct outcome of Government economic, social and political policies. It is incurred on the normal functioning of the Government. Development expenditure directly contributes to the development of the economy, whereas non-development expenditure does not contribute directly to the development but it lubricates the wheels of economic development. It is a revenue expenditure as it neither creates any asset nor any reduces any of the government. Examples: Loan to State and Union Territories expenditure on building roads, flyovers, etc. Budget variances are often used as a means of punishing and rewarding behavior. It means there are two aspects of taxes. For example, income tax is a direct tax as its impact and incidence are on the same person. Small Saving refers to funds raised from the Public in the form of Post office deposits, National Saving Certificates, Kisan Vikas Patras, etc. Therefore, the Government makes the various rate of saving and investments in the economy. According to Tayler, "Budget is a financial plan of government for a definite period". In this receipt, both tax revenue (such as excise duty, income tax) and non-tax revenue (like profits, interest receipts) are recorded. It explains how revenue is generated or collected by the government and how it is allocated among various expenditure heads. The liability to pay the tax and actual burden of tax lie on the same person i.e. Central Government. Components of Government Budget: There is a constitutional necessity in India according to the Article 112 to current before the Parliament passed a declaration statement of gauged receipts and expenditures of the government with respect of every financial year which functions from 1st … How to classify a tax as Direct or Indirect? (II) Revenue Receipts: Revenue receipts refer to those receipts which neither create any liability nor cause any reduction in the assets of the Government. Government Budget and the Economy – CBSE Notes for Class 12 Macro Economics. The government aims to reduce inequalities of income and wealth through its budgetary policy. Measures of Govt. The budget is classified into two segments: (i) Revenue Budget – The revenue budget contains revenue expenditure and receipts. Performance 2018 The original 2018 budget allocation comprising of operating expenditure (OE) and development In India, interest payment has considerably increased in recent years. Expenditure incurred on administrative is a revenue expenditure as it neither creates nor reduces any liability of the Government. tax collected and various other receipts. These mainly include the expenses involved in providing subsidies, loan interest payment that was taken in the previous year, the various amount on defense, industrial development, healthcare, agricultural and scientific research. It can be that. Through the budgetary policy, the Government aims to reallocate resources in accordance with the economic and social priorities of the country. This is to certify that Mr./Mrs. Contents1 INTRODUCTION:2 OBJECTIVES OF BUSINESS PLAN.3 NEEDS OF A BUSINESS PLAN4 IMPORTANCE5 BUSINESS OBJECTIVE6 BUSINESS …, Your email address will not be published. Expenditure on such services is not a part of the essential functions of the Government. Indirect Taxes refers to those taxes which affect the income and property of individuals and companies through their consumption of expenditure. Deficit: Budgetary deficit is defined as the excess of total estimated expenditure over total estimated revenue when the government spends more than it collects then it incurs a budgetary deficit with reference to the budget of Indian Government. Revenue budget has two parts: i. It is the most common method of budgeting because it is simple and easy to understand. tax collected and various other receipts. However, we will restrict our studies to the budget of Central Government known as Union Budget. The Budget process of our country predates the independence. State Government and Local Government, prepares its respective annual budget. These expenditures do not result in the creation of assets. The growth rate of a country depends on the rate of saving and investment for this purpose budgetary policy aims to mobilize sufficient resources for investment in the Public sector. It is a capital expenditure as it increases asset of the Government. Capital receipts are government liabilities or decrease financial a… Your email address will not be published. How is the annual national budget prepared? Capital receipts refer to those receipts which either create liability or cause a reduction in the assets of the Government. Various incomes and expenditure of capital nature that are projected for the coming financial year are included in these part of the budget. revenue collected by way of taxes and other receipts. budget theory by looking at budgets as portfolios. Consolidated Fund 2. The various objectives of the Government budget, etc. It also contains the items of expenditure met from such revenue. Structure or components of a government budget broadly consists of two parts—Budget Receipts and Budget Expenditure as shown in the following chart with their classification. It adds to the capital stock of the Economy and increases its productively through expenditure on long periods like Metro or Flyovers. 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