Objectives Of Government Budget: Definition, Process, Types, Method {Perfect Guide 2023-24}

Objectives Of Government Budget : Introduction & Overview

In this article, we will talk about the purpose of any government’s budget. Alongside this, we will also discuss the significance and benefits of the government budget. We will explore in detail the things that are considered while creating a government budget, as well as shed light on Objectives of Government Budget and the types or elements of the budget. Before Knowing the Objectives of Government Budget, here find some other relevant details regarding budget.

Objectives Of Government Budget : What is Budget?

An estimated breakdown of income and expenses for a specified period is called a budget. A budget can be prepared for a year, six months, three months, or even one month. In other words, the financial details prepared for any specified duration are commonly referred to as a budget in simple language. Income and expenses are two crucial elements that play the most significant role in preparing a budget.

Objectives Of Government Budget
Objectives Of Government Budget


Objectives Of Government Budget : What is Government Budget?

A budget is a legal necessity because, according to Article 112 of the Constitution, the central government is required to prepare financial Budget for each financial year (from April 1 to March 31) and get it approved in Parliament. Similarly, as per Article 202 of the Constitution, each state is mandated to prepare financial details for its budget and pass it in the Legislative Assembly and Legislative Council.

Who Handle Government Budget Process?

By preparing the budget for the central government and getting it timely passed in Parliament, the complete responsibility lies under the Finance Ministry. In other words, it is drafted by the Finance Minister of the central government. Similarly, it is the responsibility of the Finance Department of the state to gather budget estimates from all its departments, prepare a consolidated budget, and get it passed in the Legislative Assembly.

Objectives Of Government Budget : Know Income and Expenditure

A Budget is an estimates of expected income and expenses over a specific period. it can be prepared for a month, quarter, or year. The purpose of a budget is to allocate funds effectively, control spending, and ensure financial stability. The Two components of a budget play an important role to define the types of budget in India. First is Receipt and Second is Expenditure.

There are mainly three types of budget, Details are:

Surplus budget= Receitps> Expenditure

Balance Budget= Recepts= Expenditure

Deficit Budget= Expenditure>Receipts

Income and Expenditure
Income and Expenditure


Objectives of Budget : Budgeting Methods

Different organizations have various goals and ways of earning money, as well as things they spend money on. Based on what the organization needs, there are three common types of budgets:

  1. Incremental Budgeting: This method uses the budget from the previous year as a starting point and makes adjustments by adding a little more each year. It’s often used by schools, governments, and big companies where both income and expenses increase annually. For example, employee salaries may increase each year as part of regular raises.
  2. Zero-Based Budgeting: In this approach, every expense category begins from zero. It focuses on allocating funds based on current needs and priorities, requiring a careful re-evaluation of every detail and decision. This method is commonly used by individuals and families.
  3. Value-Based Budgeting: This type of budgeting ensures that money is spent in a way that aligns with an organization’s priorities and brings a sense of fulfillment. Companies that have specific goals within a certain time frame often use this type of budget.

Objectives Of Government Budget: 17 Points

  1. Efficient use of government funds.
  2. Accurate calculation and determination of direct and indirect taxes.
  3. Assessment of all sources of government revenue.
  4. Projection of expenses based on potential income.
  5. Budget allocation to all departments of the entire state according to their needs.
  6. Reduction of unnecessary expenditures.
  7. Increase in the amount allocated for expenditures related to positive initiatives.
  8. Providing rapid pace to economic development.
  9. Implementation of important schemes and economic assistance for the welfare of the general public.
  10. Economic support for all possible assistance to farmers.
  11. Proper budget provision for the salaries and allowances of all government employees in the state.
  12. Creation of government assets through capital expenditure.
  13. Increase the sources of revenue for the state in short Wealth Creation for State.
  14. Creating opportunities for employment.
  15. Proper budget arrangement to encourage industries and businesses.
  16. Adequate promotion and publicity for all small and large industries and businesses in the State.
  17. Attract Foreign Investors into the State for Businesses.

Process Involved in Creating State Budget :

When preparing the budget for any state, the following process is usually followed:

  1. The State Finance Department requests department-wise estimates of revenue and capital budgets from all departments in the state. This involves obtaining estimates from each department for the projects, activities, and salaries they plan to spend during the entire financial year.
  2. A proper assessment is made for the expenditure on important schemes, roads, drains, and other essential projects in the state.
  3. The state determines where the revenue will come from, considering various types of taxes, government fees, fee collections for government work, loan repayments, loan interest collections, GST collections, etc. It is crucial to accurately determine all sources of income to understand how much revenue will be received and how much will be spent. Generally, it is observed that state governments often prepare budgets with expenditures exceeding income.
  4. After completing all these processes, the Finance Minister presents the budget in the state Legislative Assembly and Legislative Council. Following this presentation, the budget undergoes discussion by honorable legislators, and once the discussions are concluded, the budget is passed.
  5. After the budget is passed, as the financial year begins, the Finance Department allocates budgets to various departments according to their needs and demands throughout the year. The spending is then ensured according to the allocated budgets. At the end of the year, on March 31, the budget is reconciled, and the Finance Department prepares a financial statement.

The budgeting process is extremely crucial for any state or central government, and an accurate assessment of figures is essential. The state government prepares and allocates the budget for the benefit of the entire state, ensuring that there is neither excess nor shortage of funds at any level. Special attention is given to all aspects during the budgeting process to facilitate the economic development of the state.

Frequently Asked Question

1-What is Budget in Simple Language?

An Estimate of Income and Expenditure for specific Time period.

2-What is Government Budget in Simple Language?

State Government prepared its budget for whole state only where Central Government Prepared Budget in view of whole country.

3-Is there any Limit in Amount for Preparing Budget?

It depends on State Various Income Aspects, with fulfulling important expenditures.

4-Can Any Government Avoid Budget?

No, Every Financial Year it is important to Pass Budget for upcoming fin.year.

5-What Happened to Budget, when Election to be held?

Vote on Account Budget in other terms Lekhanudan Budget passes for few month, After declaration of Winning Government, then Budget re-pass for rest of the month.


How did you like our post, Please Tell us the by commenting in the comment box. if you want to ask any question kindly feel free to ask in the comment box. We try give our 100 percent.

Some Powerful Article

Types of Budget in India: A Quick and Perfect Guide in 2023


DDO Full Form : A Financial and Strong Pillar in an Office {Know Every Facts 2023}


2 thoughts on “Objectives Of Government Budget: Definition, Process, Types, Method {Perfect Guide 2023-24}”

  1. It was great seeing how much work you put into it. Even though the design is nice and the writing is stylish, you seem to be having trouble with it. I think you should really try sending the next article. I’ll definitely be back for more of the same if you protect this hike.


Leave a comment