Elaborate ‘economic growth’ as objective of government budget.
Answers
Budget is a comprehensive statement of the expected receipts and expenditure of the government during a financial year (1st April to 31st March).
Following are the principal objectives that the government pursues through the budget:
(i) Reallocation of resources The government, through its budgetary policy reallocate resources, so that social and economic objectives can be met.
(ii) Redistribution of income and wealth Government through fiscal tools of taxation and transfer payment brings fair distribution of income. Equitable distribution of income and wealth is a way to bring social justice.
(iii) Economic stability The government tries to prevent business fluctuations and maintain price and employment stability. Economic stability stimulates inducement to invest and increases the rate of growth and development.
(iv) Economic growth The growth rate of a country depends on the rate of savings and investment. Therefore, the roles that are assigned to budgetary policy in this regard are to create conditions for increase in savings and investment.
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Answer: economic growth implies a sustainable increase in the real GDP of an economy an increase in the value of goods and services produced in an economy. Budget can be an effective tool to ensure the economic growth in a country
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