Discuss the importance of budget in an economy.List out its components.Why do v hv a deficit budget?
The importance of budget in an economy are the following:
- It help in the reallocation of resources for productive ue.
- It lead to the redistribution of income and wealth.
- It paves the way for economic growth.
- It helps the government manage the Public sector Undertaking by providing them the reuire assistance.
- It protects the economy from the business cycles of depression and boom to ensure economic stability.
- It reduces regional imparities by encouraging the setting up of industries in backward areas.
- It provides employment opportunities through the various employment generation programs.
- Revenue Receipts: It is those receipts that neither reduce the assest nor increase the liabilities of the government.It includes direct an indirect taxes and alo non tax revenue receipt like fine an penalties, escheat etc.
- Capital Receipts: It is those receipts that either reduce the assets or increase the liabilites of the government. It includes Recovery of loan, disinvestment and Borrowing from the Public and the Market
- Revenue Expenditure: It is those expenditure that neither reduce the asset nor increase the liabilities of the government. It include the salaries of government servants, defence personnel etc
- Capital Expenditure: It is those expenditure that either reduce the assets or increase the liabilities of the government. It include the interest paid on loans borrowed from public and market.