A government budget is a declaration of the government's expected receipts and expenditures for a fiscal year. In India, the government delivers its budget to the Lok Sabha at the start of each year, outlining expected receipts and expenses for the coming fiscal year. The fiscal year begins on April 1st and ends on March 31st of the following year. The main objectives of the government budget are economic growth and stability and reallocation of resources. Union Budget 2022-23 has emphasized giving a push to infrastructure, promoting technology-enabled development, energy transition, and climate action. In this article, we will discuss the objectives of the government budget in detail which is important for the UPSC examination.

What is a Government Budget?

• A budget is a statement of the estimated receipts and expenditures of the government for that particular year, according to the constitution.
• It acts as the financial blueprint for the government to function for a financial year.
• The budget is also known as the nation's Annual Financial Statement.
• The legislative debates the government budget, which is then approved by the President and prepared by the country's Finance Minister.
• The Budget document consists of the Actual transactions of the past year, revised estimates for the current year, and the Budget estimates for the next year. For instance, Union Budget 2022-2023 provided the Actual transactions for 2020-2021, revised estimates for 2021-2022, and budget estimates for the FY 2022-2023.

Objectives of Budget

As the most comprehensive financial document of the country the budget has a broad range of objectives to achieve:

Reallocation of resources

• The government aims at reallocating the resources of the country in a more economically and socially beneficial manner, more profit and welfare-oriented. It is done through the following tools:

(i) Tax concessions or subsidies: The government encourages investment, by giving tax concessions, subsidies, etc. to the producers. For example, the use of ‘Khadi products’ is encouraged by providing subsidies. On the contrary, the Government discourages the production of harmful consumption goods (like liquor, cigarettes, etc.) through heavy taxes.

(ii) Directly producing goods and services: If the private sector does not take an interest, the government can directly undertake the production in particular fields where the emphasis is required and thereby ensuring supply as well as the welfare of the people.

Bridging income disparity

• Through its fiscal policies, the government attempts to decrease such income and wealth disparities in the country.
• The government can do this by levying taxes and granting subsidies: impose taxes on the wealthy while spending more on the poor's welfare. It will lower the income of the wealthy while raising the standard of life of the poor.
• Through the process, the government also ensures that wealth does not focus on a few hands.
• Economic progress in itself is not a sufficient goal but the goal must be equitable progress.

Attainment of economic stability

• The government budget is employed to prevent business volatility in inflation or deflation, thus attaining economic stability.
• Surplus budget policies during inflation and deficit budget policies during deflation help to keep prices stable throughout the economy.

Management of Public enterprises

• The budget is devised also to establish various provisions for operating public sector industries and giving financial assistance.
• National monopolies like railways, power generation, water lines, etc. come under the budget’s priority.
• These industries and businesses are run mostly for public welfare

Economic Growth

• A country's growth rate is determined also by its savings and investment rates. The government includes several policies in the budget to boost the economy's overall savings and investment rate. Adequate resources are allocated in the budget towards this.
• The budget also aims at maintaining a high GDP rate. To this end, enough allocation is made towards enlarging the production of goods and services.

Reducing regional disparities

• The government budget attempts to eliminate regional disparities through taxing and spending policies that encourage the establishment of manufacturing units in economically depressed areas.

Importance of budgeting

• While budgets cannot guarantee 100% economic stability, they do assist in avoiding failure.
• A budget is a tool for transforming a broad concept into a concrete, actionable, and aspirational aim.
• It serves as a tool for identifying and focusing on the development of disadvantaged people.
• It establishes a standard against which to judge success or failure in accomplishing objectives, as well as appropriate corrective actions.

Conclusion

In this section, we looked into the different objectives of government budgeting. The government uses its fiscal policy measures to execute most of these objectives. A budget impacts society at three levels: firstly, it promotes aggregate fiscal discipline by controlling expenditures about revenues; secondly, country resources are allocated based on social priorities; and lastly, it contains effective and efficient programs for the delivery of goods and services to meet the budget's targets and goals.