As Finance Minster Nirmala Sitharaman presents her first Union Budget for the financial year 2019-2020, all eyes are set to know how the Modi government in its second term will deal with the country's economy. As the goal envisioned by Prime Minister Modi is to make India 5 trillion dollar economy till 2025, it is expected that Budget 2019 will pave the way for it.
A day ahead of Union Budget, the Finance Minister tabled economic survey 2019 that drew a roadmap for achieving the goal of five trillion dollar economy by 2024-2025. India is currently around 2.8 trillion dollar economy. The Economic survey stated that the the country will have to sustain a real GDP growth rate of 8% to achieve the target. The Union Budget will present policies by the government that will chalk out the road ahead.
TYPES OF BUDGETS
The annual budget is defined as a plan presented by the government estimating the income and calculating the expenditures in a given fiscal year. Budget is categorised into three types. The categorisation of the Budget is based on the comparison of the projected spending by a government to that with the projected income in that year. Each type of Budget has its benefits and defects, which are listed below. The three types of Budget are:
- Balanced Budget
- Surplus Budget
- Deficit budgets
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DETAILING THE TYPES OF BUDGET
- Balanced Budget: When the estimated income by the government is equal to the estimated spending, it is called Balanced Budget. The key factor of this budget is that it leads to financial stability. However, it limits the scope of welfare activities by the government.
- Unbalanced Budget: When the estimated income of the government is more or less than the estimated spending it is said to be an unbalanced budget. It is further categorised into Surplus Budget and Deficit budget.
- Surplus Budget: When the governments' estimated income is more than the estimated expenditure, then it is said to be surplus budget. In simple terms, the government's revenue is more than what it is spending. It is suggested by economists that at the time of inflation, surplus budget is beneficial whereas at the time of recession surplus budget is incorrect.
- Deficit Budget: When the government's estimated expenditure is more than the estimated income. In simple terms, it means that the government is spending more money than it is pumping into the country's economy, that is the revenue by the government is less that its expenditure. Economists around the world suggests that governments' across the world presents this kind of budget and its aim remain to bridge the gap between income and expenditure to maintain inflation.
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