Budgeting is the process of planning to spend your money. This spending plan is called a budget. By creating this spending plan you can determine in advance whether you will have enough money to do the things you need to do or want to do. The budget only balances your expenses with your income. The government presents a similar budget to run the country. Depending on the feasibility of the projections, there are three types of budgets – Balanced Budget, Surplus Budget and Deficit Budget.
Government budgets are of three types :
operating or current budget, capital or investment budget, and cash and cash flow budget.
The main objectives of the budgets are :
– To provide a realistic estimate of income and expenditure for a period and the financial situation.
– To provide a coordinated plan of action designed to achieve projections reflected in the budget. A budget is a formal statement of projected income and expenditure based on plans and objectives. In other words, a budget is a document that management makes for businesses to estimate revenue and expenses for the coming period based on their goals.
Budgeting enables you to know what you can afford, take advantage of buying and investing – opportunities, and plan how to reduce your debt. It also tells you what is important to you based on how you allocate your funds, how your money is working for you, and how far you are to reach your financial goals.
Why is it important for the government to make a budget?
While making the budget, the government identifies the weak areas, this helps in the proper distribution of resources.
Any political party that forms a government at the centre has certain social, political and economic responsibilities. In a diverse country like India, it is the government’s important responsibility to distribute resources wisely among the people.
There are many things to take care of. Special emphasis is placed on the upliftment of the economically backward in the society, agriculture, financial inclusion, increasing strategic capacity, providing education facilities etc. In this way, a good budget is very important for any government. This helps in promoting economic stability and development.
The government identifies weak areas by making a proper allocation of resources budget. This helps in the allocation of resources. This is the basic reason for making a budget.
It is necessary for the government that money should reach where it is most needed. It also helps the government to formulate welfare policies.
To ensure economic development, with the help of a budget, the government can decide what the tax rates in different sectors are. Investment and expenditure contribute to the economic development of the country. The government promotes more savings and investment by giving tax concessions and subsidies.
The growth of the business is always on the budget of the industries. The reason is that through this, resources are distributed to different sectors. The government can encourage the owners of businesses by changing their policy. This brings economic prosperity to the country.
Reducing inequality Economic inequality is considered a threat to any economy. The government can eliminate such threats through welfare economic policies. The weaker sections of the country are supported through the budget.
Just as spending more than earning is dangerous for the financial health of any person, in the same way spending more of a state or country can ruin it.
When a country spends according to the fixed plan, it is called fiscal discipline.
The Prime Minister of the country, Narendra Modi has shown a commitment to reduce the fiscal deficit.
Many people say that they will not allocate much money in the next budget on concessions and welfare schemes, because the government wants the fiscal deficit to be contained.
Some Unknown Benefits of Budget :
The first benefit of the budget -not only the country’s budget, if the house also has a budget it is also prepared with anningHow much is our income and how much can we spend every month. According to that, we spend.
The Finance Ministry does the same. First, he asks for reports of his income and expenditure from all the departments and after that, he places them in the budget according to the expenditure.
The second advantage of the budget -Whenever the budget is prepared, the expenses and schemes are implemented according to the need.
There is never a place in the budget for Useless expenditure. If you are preparing your budget then you will always have to keep your expenses. For this, you have to stop extravagance.
