Union Budget 2021: What Are The Three Types Of Govt Budgets? Here’s All About It

<p>The Government budget is an annual financial statement that provides details of the estimated expenditure and expected revenues for the government in the forthcoming financial year.&nbsp;<strong>ALSO READ | <span style="color: #e03e2d;"><a style="color: #e03e2d;" href="https://ift.tt/3c2fC2x Sector Budget 2021 Expectations: NEP, Loan Rebates &amp; More - What The Education Sector Expects From FM Sitharaman</a></span><br /></strong></p> <p>The government budgets are of three types: balanced budget, surplus budget, and deficit budget. Here is what they involve:</p> <h3><strong>Balanced Budget</strong></h3> <p>When the estimated government expenditure is equal to expected government revenue in a particular financial year, it is called a balanced budget. Broadly this kind of budget can be understood as &ldquo;living within one&rsquo;s means&rdquo; as conservative economists believe that the government&rsquo;s expenditure should not exceed the returns it receives.</p> <p>This seems to work in an ideal scenario to have a balanced economy however it is not the practical option for times of economic depression, deflation, or other times of crisis.</p> <p>In its positives, this type of budget ensures economic stability when implemented successfully as it ensures that the government refrains from extravagant expenditures.</p> <p>However, adopting it can restrict the government from spending on public welfare especially as developing and underdeveloped countries that do not enjoy a certain kind of revenue will struggle to adopt this method of financial spending. Like previously stated, it is not a viable option for times of recession or other crises where the government is encouraged to spend for strengthening its states and different industries.</p> <p><strong>ALSO READ |<span style="color: #e03e2d;">&nbsp;<a style="color: #e03e2d;" href="https://ift.tt/3sStG4H" rel="nofollow">Budget 2021 Expectations: From Health To Education, Here&rsquo;s What Govt Should Prioritise In This Budget</a></span></strong></p> <h3><strong>Surplus Budget</strong></h3> <p>A government budget is a surplus one in case the expected government revenues exceed the estimated government expenditure in a financial year. In simple terms, the government is earning more than it spends. Such a budget can display the financial affluence of a country. It can be implemented at times of inflation to reduce aggregate demand.</p> <p>This kind of budget is appropriate in times of economic stability as an attempt to attain a budget surplus in a recession will involve higher taxes and lower spending - policies that can make the recession worse.</p> <p>It is a rare occurrence because when a conducive scenario arrives, governments are likely to reduce tax rates thereby reducing their revenue and perhaps go on to spend more on public schemes.</p> <p><strong>ALSO READ |&nbsp;<span style="color: #e03e2d;"><a style="color: #e03e2d;" href="https://ift.tt/39P38ZG" rel="nofollow">Budget 2021 Expectations: From Affordable Housing To GST Reforms, 5 Demands Of Real Estate Industry</a></span></strong></p> <h3><strong>Deficit Budget</strong></h3> <p>A deficit budget is the kind of government budget where the estimated government expenditure exceeds the expected government revenue in a particular financial year.</p> <p>It is the type of budget seen in most developing economies including India. It is considered to be helpful at times of recession as a deficit budget helps generate additional demand and boost the rate of economic growth. The government also incurs excessive expenditure to improve the employment rate.</p> <p>In case of good priorities and implementation, it can boost demand for goods and services to revive the economy.</p> <p>The Deficit Budget also enables a government to spend more on public welfare. However, if undertaken irresponsibly, it can be caused by the government indulging in unnecessary expenditure &ndash; leading to an unnecessary burden on reserve with piling debts.</p>

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