Government Budget is a statement of the estimates of the government receipts and government expenditure during the period of the financial year. It reveals fiscal policy (Budgetary policy) of the government, focusing on growth and stability of the Economy.
Objectives of Government Budget
Here are some Principal Objectives related to Budgetary Policy on Indian Economy
(1) GDP Growth: GDP growth is the principal objectives of government budgetary policy. It is achieved in two ways: (i) by making public investment on infrastructure, and (ii) by inducing private investment through tax rebates and subsidies.
(2) Balanced Regional Growth: The budgetary policy focuses on the development of backward regions in the country. This is achieved through liberal tax laws for the backward regions. Establishment of SEZ (Special Economic Zones) in the backward regions through liberal tax laws may be cited as an example.
(3) Allocation of Resources: In the market economies, resources are allocated to the production of such goods and services which the consumers wish to buy.
Social welfare is lost on account of these Factors:
(i) Market economies fail to produce public goods which satisfy collective need of the society.
(ii) Market economies fail to account for the negative externalities of production.
(4) Redistribution of Income and Wealth: The distribution of income and wealth is highly skewed (unequal) in countries mainly in India. 'Economic Divide' (the gulf between the rich and the poor) is huge and alarming. The budgetary policy helps solve the problem of economic divide. 'Taxation and subsidies' is the key policy instrument used by the government in this context.
(5) Employment Opportunities: Budgetary policy also focuses on the generation of employment opportunities. Investment in public enterprises and provision of administrative services generate employment.