Meaning of Government Budget and its Objectives

Meaning of Government Budget and its Objectives

Meaning of Government Budget and its Objectives


The government budget is an annual financial statement showing item wise estimates of expected revenue and anticipated expenditure during a fiscal year. Just as your household budget is all about what you earn and spend, in the same way the government budget is a statement of its income and expenditure. In the beginning of every year the government presents before the Lok Sabha an estimate of its receipts and expenditure for the coming financial year. It plans its expenditure according to its objectives and then tries to raise the resources to meet the proposed expenditure.


  • Economic growth: to promote rapid and balanced economic growth so as to improve living standard of the people.
  • Reduction of poverty and unemployment: to eradicate mass poverty and unemployment by creating employment opportunities and providing maximum social benefits to the poor.
  • Reduction of inequalities: inequalities of income and wealth are reduced through levying taxes and granting subsidies. Government levies high rate of tax on rich people and lower rate in the lower income group and also provides the latter with subsidies and amenities. Economic progress in itself is not a sufficient goal but the goal must be equitable progress.
  • Reallocation of resources: the reallocation of resources is necessary in order to achieve social and economic objectives. The government allocate resources into areas where private initiative is absent such as public sanitation, education, health etc.
  • Price stability: to maintain price stability and correct business cycles involving depression characterized by falling output, prices and increasing unemployment.
  • Management of public enterprises: to manage public enterprises which are of nature of national monopolies like railways, electricity etc.

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