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It is annual statement, showing item wise estimates of receipts and expenditures during a fiseal year, which usually runs from April 1to March 31. ~ Revenue Budget Revenue budget is the statement of estimated revenue receipts and estimated revenue expenditure during a fiscal year. Revenue Budget has two parts: i) Revenue Receipts ii) Revenue Expenditures udaak Uaget Government B Important Points of Government Budget The budget is prepared by Government at al levels, ie. Central Government, State Government, and Local Government prepare its respective annual budget. However, we will restrict our studies to the Budget of the Central Government, known as the โUnion Budget. 2) Estimated expenditures and receipts are planned as per the objectives of the government. 3) In India, the Budget is presented in the parliament on such โa day, as the President may direct. By convention, Finance Minister presents the annual budget of the government on the first day of February each year. 4) Itis required to be approved by the parliament before it can be implemented. 5) The budget reveals the financial performance of the government in the last year and financial policies for the i) Reallocation of resources; ii) Reducing inequalities in income and wealth; iii) Economic Stability; iv) Management of public enterprices; v) Economic growth; vi) Reducing regional disparities; vii) Employment Generation. Budget Receipts It refers to the estimated money receipts of the government from all sources during a given fiseal year. Budget receipts may be further classified as: i) Revenue receipts ii) Capital receipts Revenue Receipts Rovenue Receipts are those receipts that neither create any liability nor reduce any asset of the gavernment. Main sources of revenue receipts are: i) Tax Revenue; and ii) Non-tax Revenue. coming fiscal year. Capital Budget Capital budget is the statement of estimated capital receipts and estimated capital expenditure during a fiscal year. Capital Budget has two parts: i) Capital Receipts ii) Capital Expenditures It refers to the sum of total receipts from taxes and other duties imposed by the government. Tax Revenue can be further classified as: i) Direct Taxes; ji) Indirect Taxes. It refer to taxes that are imposed on property and income of individuals anc companies and their burden cannot be shifted to the other person/entity. 1% =z ey ) 2) 3) 4) 5) Capital Receipts are those receipts that cither create a liability (like borrowing) or reduce an asset (like disinvestment of PSU) of the government. Main sources of capital receipts are borrowings, recovery of loans and other receipts like disinvestment and small savings. It refers to the estimated expenditure of the government during a given fiscal year. It can be broadly categorized as: i) Revenue Expenditure ii) Capital Expenditure Government budget is said Rocrowine? to be a balanced budget it Recovery of Loans estimated government Other Receipts receipts are equal to the estimated government expenditure, It refers to the excess of revenue expenditure over revenue receipts. Implications: It indicates the inability of the government to meet its regular and recurring expenditures in the proposed budget. It implies that the government is dissaving, i. up savings from other sectors of the economy to finance its consumption expenditure. It also implies that the government has to make up this deficit from capital receipts, i.e,, through borrowings or disinvestment. It means a revenue deficit either lead; to an increase in liability in the form of borrowings or reduces the assets through disinvestment. The use of capital receipts for meeting the extra consumption expenditure leads to an inflationary situation in the economy. Higher borrowings increase the future burden in terms of loan amount โand interest payments. A high revenue deficit gives a warning signal to the government to either curtail its expenditure or increase its revenue. the government is using It refers to the receipts of government from all the sources other than those of tax receipts. Main sources of non-tax revenue are interest, profits and dividends, fees, fines, and penalties, etc. It refer to those taxes which can be shifted to another person/entity. Their monetary burden is ultimately borne by final users of goods and services, rather than the person on whom the tax is levied. It refers to the expenditure that either creates an asset (like construction of a school building) oF reduces a liability (like repayment of loan) of the government. It refers to the expenditure that neither creates any asset nor reduces any liability of the government. If estimated government receipts are less than the estimated government expenditure, then the budget is termed as Deficit Budget. If estimated government receipts are more than the estimated government expenditure, then the budget is termed as Surplus Budget. Itrefers to the difference between fiscal deficit of the current year and interest payments on the previous borrowings. It refers to the excess of total expenditure over total receipts (excluding borrowings) during the given fiscal year. Implication: 1. Debt Trop 2. Inflation 3. Foreign Dependence 4, Hampers the future growth 
