Question

Explain the following:

Economic and functioning classification of budget.

Answer 1

1. Economic budget: The breakdown of government spending and its financing methods in specific income categories, such as spending on salaries, wages, market borrowings, etc., is referred to as economic classification. Information about consumption, investment, saving, the creation of financial assets and liabilities, etc., will be greatly aided by such classification. Having effective programs and a budgetary picture of the overall amount of money spent by the government on its basic functions, programs, and activities will be made easier with this classification.
2. Functional budget: The division of government spending according to the various functions (tasks) that the government carries out or services that are provided, such as defence, education, health, transportation, construction, etc., is known as functional classification.