Union Budget 2023: The Different Types Of Budget In India
As the release of the upcoming Union Budget 2023 approaches, let’s take a look at the various types of different budgets in India
A budget is an important concept which is crucial in managing finances, for both individuals as well as governments. A government budget is a rough estimate of the total revenue and expenses for a specified time in the future; usually the upcoming financial year. There are two parts to a government budget; government receipts (or income) and government expenditures (or spending). Let’s try and understand the different types of government budgets through this article.
What Is A Budget?
As mentioned above, a budget can be defined as an estate of the government’s revenue and expenses over a specific period of time in the future and is compiled on a period basis, generally for every new financial year. The Indian government’s budget, also known as the annual Union Budget, is the annual financial statement that depicts the revenues and expenditures of the country for a financial year. The budget is generally prepared by the Finance Minister along with the Ministry of Finance of a country.
Types Of Budget
There are a few main types of budgets that exist, as explained below:
A balanced budget is one in which the government's expected revenue for the financial year is equal to its expended expenditure. In this budget, total budget expenditure = total budget receipts. For instance, if the budget expenditure is ₹5 lakh crores and if budget receipts are ₹5 lakh crores, then it will be called a balanced budget.
A deficit budget is one in which expected government spending exceeds expected revenue for the financial year. The budget is said to be a deficit if expenditures surpass revenue over time. The deficit is usually covered by borrowing from the public or pulling funds from the previously collected reserve surplus. A deficit budget is a government liability since it increases debt or diminishes the government's reserve funds. A deficit budget is an important tool used to finance planned improvements in developing countries and to further provide stability in developed countries.
When the government’s predicted income or revenue exceeds planned expenditures, this type of budget is called a surplus budget. If the government’s long-term financial planning is stable and effective, it can lead to surplus budgets where the government has extra revenue to spare. When there is too much inflation, the government can use a surplus budget as a tool to lower aggregate demand and thereby reduce inflation.
Zero-based budgeting (ZBB) is an approach to planning and preparing the budget from scratch, or 'zero bases’. This type of budget is a systematic cost management process that takes into account the efficient allocation of income to fixed expenditures, variable expenses, as well as savings.
Gender budgeting is a process of examining the budget of a government or other organization to assess the extent to which it promotes gender equality. It is used to identify and track the allocation of resources for women, men, and gender-related issues, as well as to assess the impact of these allocations on gender equality.
In conclusion, budgeting is an important aspect of managing finances, both for individuals and for governments. The types of budgets that can exist are balanced budget, deficit budget, surplus budget, zero-based budget and gender budget. Understanding the different types of budgets can help you make better financial decisions. It is also important to note that Gender Budgeting is an important aspect of budgeting as it ensures that the budget is inclusive and focuses on promoting gender equality.
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