Different Types of Government Budget - Diagram ↓
A. Balanced Budget ↓
Balanced budget is a situation, inwards which estimated revenue of the regime during the yr is equal to its anticipated expenditure.
Government's estimated Revenue = Government's proposed Expenditure.
For individuals in addition to families, it is ever advisable to accept a balanced budget.
Most of the classical economists advocated balanced budget, which was based on the policy of 'Live inside means'. According to them, government's revenue should non autumn curt of expenditure. They also favoured balanced budget because they believed that regime should non interfere inwards economical activities in addition to should only concentrate on the maintenance of internal in addition to external safety in addition to provision of basic economical in addition to social overheads. To ambit this, regime has to accept plenty financial dependent area in addition to hence that its expenditures are equal to revenue.
B. Unbalanced Budget ↓
The budget inwards which income & expenditure are non equal to each other is known every bit Unbalanced Budget.
Unbalanced budget is of ii types :-
- Surplus Budget
- Deficit Budget
1. Surplus Budget
The budget is a surplus budget when the estimated revenues of the yr are greater than anticipated expenditures.
Government expected revenue > Government proposed Expenditure.
Surplus budget shows the financial soundness of the government. When in that place is likewise much inflation, the regime tin strength out adopt the policy of surplus budget every bit it volition trim aggregate demand.
Increase inwards revenue past times levying taxes on people reduces their disposable incomes, which otherwise could accept been pass on consumption or saved in addition to devoted to uppercase formation. Since regime spending volition hold out less than its income, aggregate demand volition decrease in addition to assist to trim the cost level.
However, inwards modern times, when governments accept in addition to hence many social economical & political responsibilities it is close impossible to accept a surplus budget.
2. Deficit Budget
Deficit budget is i where the estimated regime expenditure is to a greater extent than than expected revenue.
Government's estimated Revenue < Government's proposed Expenditure.
According to Prof. Hugh Dalton, "If over a menses of fourth dimension expenditure exceeds revenue, the budget is said to hold out unbalanced".
Such deficit amount is by in addition to large covered through populace borrowings or withdrawing resources from the accumulated reserve surplus. In a way a deficit budget is a liability of the regime every bit it creates a blogspot.com//search?q=burden-of-internal-and-external-public">burden of debt or it reduces the stock of reserves of the government.
In developing countries similar India, where huge resources are needed for the role of economical increase & evolution it is non possible to enhance such resources through taxation, deficit budgeting is the solely option.
In Underdeveloped countries deficit budget is used for financing planned evolution & inwards advanced countries it is used every bit stability tool to command concern & economical fluctuations.
At the Point E, budget is balanced. To the left of betoken due east the regime budget is inwards deficit in addition to to the correct of betoken E, the budget is inwards surplus.
When the regime incurs a budget deficit it is financed past times borrowing. The regime borrows from the populace past times issuing regime bonds. This gives rising to regime debt or populace debt.
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