What Is A Budget ? Components Of Authorities Budget

What is a Budget ? Meaning in addition to Concept

Government has several policies to implement inwards the overall chore of performing its functions to run into the objectives of social & economical growth. For implementing these policies, it has to pass huge amount of funds on defence, administration, in addition to development, welfare projects & diverse other relief operations. It is thence necessary to discovery out all possible sources of getting funds then that sufficient revenue tin last generated to run into the mounting expenditure.

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Planning procedure of assessing revenue & expenditure is termed every bit Budget.

The term budget is derived from the French discussion "Budgette" which way a "leather bag" or a "wallet". It is a disputation of the fiscal innovation of the government. It shows the income & expenditure of the authorities during a fiscal year, which runs to a greater extent than oftentimes than non from 1^stApril to 31^st March.

Budget is most of import data document of the government. One portion of the government's budget is similar to company's annual report. This portion presents the overall moving painting of the fiscal performance of the government. The 2d portion of the budget presents government's fiscal plans for the menses upto its adjacent budget.

So, every citizen of a acre from the mutual human being to the politico is eager to know well-nigh the budget every bit they would similar to larn an sentiment of the :-

Financial performance of the authorities over the past times 1 year.
To know well-nigh the fiscal programmes & policies of the authorities for the adjacent 1 year.
To know how their criterion of living volition last affected past times the fiscal policies of the authorities inwards the adjacent 1 year.

Definitions of Budget

According to Tayler, "Budget is a fiscal innovation of authorities for a definite period".

According to Rene Stourm, "A budget is a document containing a preliminary approved innovation of world revenues in addition to expenditure".

Components of Government Budget

The primary components or parts of authorities budget are explained below.

1. Revenue Budget

This fiscal disputation includes the revenue receipts of the authorities i.e. revenue collected past times way of taxes & other receipts. It likewise contains the items of expenditure met from such revenue.

(a) Revenue Receipts ↓

These are the incomes which are received past times the authorities from all sources inwards its ordinary course of instruction of governance. These receipts practice non practice a liability or atomic number 82 to a reduction inwards assets.

Revenue receipts are farther classified every bit taxation revenue in addition to non-tax revenue.

i. Tax Revenue :-

Tax revenue consists of the income received from dissimilar taxes in addition to other duties levied past times the government. It is a major beginning of world revenue. Every citizen, past times police delineate is fountain to pay them in addition to non-payment is punishable.

Taxes are of 2 types, viz., Direct Taxes in addition to Indirect Taxes.

Direct taxes are those taxes which guide maintain to last paid past times the mortal on whom they are levied. Its burden tin non last shifted to unopen to 1 else. E.g. Income tax, belongings tax, firm tax, estate duty, etc. are straight taxes. There is no straight practice goodness to the taxation payer.

Indirect taxes are those taxes which are levied on commodities in addition to services in addition to touching on the income of a mortal through their consumption expenditure. Here the burden tin last shifted to another person. E.g. Custom duties, sales tax, services tax, excise duties, etc. are indirect taxes.

ii. Non-Tax Revenue :-

Apart from taxes, governments likewise have revenue from other non-tax sources.

The non-tax sources of world revenue are every bit follows :-

Fees : The authorities provides multifariousness of services for which fees guide maintain to last paid. E.g. fees paid for registration of property, births, deaths, etc.
Fines in addition to penalties : Fines in addition to penalties are imposed past times the authorities for non next (violating) the rules in addition to regulations.
Profits from world sector enterprises : Many enterprises are owned in addition to managed past times the government. The profits receives from them is an of import beginning of non-tax revenue. For illustration inwards India, the Indian Railways, Oil in addition to Natural Gas Commission, Air India, Indian Airlines, etc. are owned past times the Government of India. The turn a profit generated past times them is a beginning of revenue to the government.
Gifts in addition to grants : Gifts in addition to grants are received past times the authorities when at that topographic point are natural calamities similar earthquake, floods, famines, etc. Citizens of the country, unusual governments in addition to international organisations similar the UNICEF, UNESCO, etc. donate during times of natural calamities.
Special assessment duty : It is a type of levy imposed past times the authorities on the people for getting unopen to particular benefit. For example, inwards a item locality, if roads are improved, belongings prices volition rise. The Property owners inwards that locality volition practice goodness due to the appreciation inwards the value of property. Therefore the authorities imposes a levy on them which is known every bit particular assessment duties.

iii. India's Revenue Receipts :-

The taxation revenue provides major portion of revenue receipts to the cardinal authorities of India. In 2006-07 taxation revenue (direct + indirect taxes) of cardinal authorities was Rs. 3,27,205 crores patch non-tax revenue was Rs. 76,260 crores.

(b) Revenue Expenditure ↓

i. What is Revenue Expenditure ?

Revenue expenditure is the expenditure incurred for the routine, commons in addition to normal twenty-four hr menses to twenty-four hr menses running of authorities departments in addition to provision of diverse services to citizens. It includes both evolution in addition to non-development expenditure of the Central government. Usually expenditures that practice non number inwards the creations of assets are considered revenue expenditure.

ii. Expenses included inwards Revenue Expenditure :-

In full general revenue expenditure includes next :-

Expenditure past times the authorities on consumption of goods in addition to services.
Expenditure on agricultural in addition to industrial development, scientific research, education, wellness in addition to social services.
Expenditure on defence forcefulness in addition to civil administration.
Expenditure on exports in addition to external affairs.
Grants given to State governments fifty-fifty if unopen to of them may last used for creation of assets.
Payment of involvement on loans taken inwards the previous year.
Expenditure on subsidies.

iii. India's Defence Expenditure :-

In 2006-07, Defence expenditure of the cardinal authorities of Republic of Republic of India was Rs. 51,542 crores.

2. Capital Budget

This portion of the budget includes receipts & expenditure on uppercase trouble organisation human relationship projected for the adjacent fiscal year. Capital budget consists of uppercase receipts & Capital expenditure.

(a) Capital Receipts ↓

i. What are Capital Receipts ?

Receipts which practice a liability or number inwards a reduction inwards assets are called uppercase receipts. They are obtained past times the authorities past times raising funds through borrowings, recovery of loans in addition to disposing of assets.

ii. Items included inwards Capital Receipts :-

The primary items of Capital receipts (income) are :-

Loans raised past times the authorities from the world through the sale of bonds in addition to securities. They are called marketplace loans.
Borrowings past times authorities from RBI in addition to other fiscal institutions through the sale of Treasury bills.
Loans in addition to aids received from unusual countries in addition to other international Organisations similar International Monetary Fund (IMF), World Bank, etc.
Receipts from small-scale saving schemes similar the National saving scheme, Provident fund, etc.
Recoveries of loans granted to province in addition to matrimony territory governments in addition to other parties.

(b) Capital Expenditure ↓

i. What is Capital Expenditure ? :-

Any projected expenditure which is incurred for creating asset amongst a long life is uppercase expenditure. Thus, expenditure on land, machines, equipment, irrigation projects, crude oil exploration in addition to expenditure past times way of investment inwards long term physical or fiscal assets are uppercase expenditure.