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.