what are important questions from government budget chapter
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Answer:
1. Government Budget It is a statement of expected/estimated receipts and expenditure of the government over the period of a financial year, i.e. 1st April to 31st March.
2. Types of Budget
(i) Balanced budget, i.e. estimated receipts = estimated expenditure
(ii) Surplus budget, i.e. estimated receipts > estimated expenditure
(iii) Deficit budget, i.e. estimated receipts < estimated expenditure
3. Objectives of Government Budget
(i) Re-distribution of income and wealth
(ii) Re-allocation of resources
(iii) Economic growth
(iv) Management of public enterprises
(v) Economic stability
(vi) Generation of employment
(vii) Reducing regional
4. Impacts of Budget
(i) Brings aggregate fiscal discipline level.
(ii) Promotes better allocation of resources.
(iii) Can effectively and efficiently implement programme.
5. Components of Budget
(i) Revenue budget It is the statement of estimated revenue receipts and estimated revenue expenditure during a fiscal year.
(ii) Capital budget It is an account of the assets as well as the liabilities of the Central Government, which takes into consideration changes in capital during a fiscal year.6. Revenue Receipts The receipts which neither create any corresponding liability for the government nor does it lead to any reduction in assets is termed as revenue receipts, e.g. tax receipts of the government.
7. Classification of Revenue Receipts
(i) Tax revenue It consists of the proceeds of taxes and other duties levied by the Central Government. It comprises of
(a) Direct tax These are the taxes for which the incidence and impact of tax falls on the same person, i.e. actual burden of the taxes cannot be shifted, e.g. income tax, corporation tax, etc.
(b) Indirect tax These are the taxes for which the incidence and impact fall on separate persons, i.e. burden of these taxes can be shifted to others, e.g. service tax, entertainment tax, etc.
(ii) Non-tax revenue It mainly consists of interest receipts on account of loans by the Central Government, dividends and profits on investment made by the government, fees and other receipts for services rendered by the government.
8. Revenue Expenditures Those expenditures of the government, which neither cause any increase in government assets nor cause any reduction in government liabilities are termed as revenue expenditures, e.g. expenditure on old age pensions, salaries, etc.
9. Classification of Revenue
9. Classification of Revenue Expenditure
(i) Administrative expenses These are incurred on normal running of the government, e.g. salaries and pension of government employees.
(ii) Social welfare expenses These are incurred to promote social well being of the citizens, e.g. expenditure on rural development, education and health services, and subsidies.
Note Interest payments by government on loans taken is also an example of revenue expenditure.
10. Capital Receipts The receipts which create corresponding liability for the government or which lead to reduction in assets of the government are termed as capital receipts, e.g. loans taken by the government, disinvestment of any PSUs, etc. Classification of capital receipts are :
(i) Borrowings These are funds raised by the government to meet its expenses. Government may borrow from :
(a)Public
(b) RBI
(c) Foreign Governments
(d) International Financial Institutions like IMF, World Bank Etc.
(ii) Recovery of loans It refers to that inflow of cash which the government has disbursed previously.
(iii) Other receipts It includes
(a) Proceeds from disinvestment.
(b) Mobilisation of savings through NSC, KVP, etc.
11. Capital Expenditures Those expenditures of the government, which lead to increase in government assets or lead to reduction in government liabilities is termed as capital expenditure, e.g. expenses on the construction of national highways, payment of loan by the government, etc.
Classification of capital expenditure are :
(i) Loans to states and union territories result in outflow of funds, but also create assets in the form of debtors.
(ii) Expenditure of building infrastructure like roads, metro rail network, etc.
12. Public Expenditure These expenses are incurred by the government for developing infrastructure and promoting social welfare.
are the important question from government Budget chapter