“Budget”….Doesn’t this word seem quite familiar?
As a kid in our school days, when we used to allowance, we used to have a plan in our mind that how to spend that money to fulfil our various needs like buying video game cassettes, for movies, and for other needs.
Actually we have a limited income but our needs are endless, so in such a scenario it becomes really important to prepare a budget.
In a layman term, a budget is an estimation of revenues and expenses over a specified future period of time which can be made for a person, family, organisation, government and anything which makes and spends money.
Our Indian budget is no different, but done on a bigger scale.
Union Budget discusses the government’s overall finances for the fiscal year which spreads from 1st April to 31st March.
It is considered to be one of the most important events for the entire nation since this is when the government announces the financial performances for the previous year and estimates income and expenditure for the upcoming year. It takes place on the last working day of the month of February.
The Union budget is broadly classified into Capital budget and Revenue budget.
Capital Budget includes government’s capital receipts and expenditure. Capital expenditure is the expenditure done on the improvement of infrastructure, health facilities, machinery, technology, education etc. On the other hand, government’s major capital receipts comprises of loans from public, foreign governments and RBI.
Revenue Budget comprises of government’s revenue receipts and expenditure. Revenue expenditure includes expenses on the various services offered to the masses and for the day to day functioning of the government. While the revenue receipts includes both tax and non-tax revenue.
When the government’s total expenditure exceeds total revenue, it is referred to as fiscal deficit and fiscal surplus is just the opposite.
In case of our government, fiscal deficit is a quite common phenomenon, since it has to meet the need of the entire country.
This writeup is just the basic introduction to Budget and there is more to come up in the coming days on Budget and Expectations.