Question

Write explanatory note.

Components of Government budget.

Answer 1

The following are the components of a government budget:
a. Budget Receipt- Budget receipts refer to the estimated money receipts of the government during a particular fiscal year from all sources namely, tax non-tax and capital sources. These receipts imply the total cash inflow of the government during a fiscal year. Budget receipts can be further classified as- Revenue Receipts and Capital Receipts

i. Revenue receipts- These are those receipts of the government which neither creates any liability nor it creates any reduction in the assets of the government. These comprises of tax and non-tax receipts, duties and fines, interest and dividends receipts on government investments and assets
ii. Capital receipts- These receipts refer to those receipts of the government, which cause a reduction in the government assets and also create a liability for the government.

b. Budget Expenditure- Budget expenditure refers to the estimated money expenditure by the government on various social, economic and political activities in the country during a particular financial year. The budget expenditure can also be classified on three bases:

i. On the basis of creation of assets and liabilities- On this basis, the budget expenditure is divided in two, revenue expenditure and capital expenditure.

ii. On the basis of planned and non-planned activities- On this basis, the budget expenditure is divided in two, plan expenditure and non-plan expenditure.

iii. On the basis of development and non-developmental activities- On this basis, the budget expenditure is divided in two, deveopment expenditure and non-development expenditure.