|Image credit: india.gov.in|
For the proper functioning of an Economy, the budgetary operations is an important part. It is the role of the government to collect money through taxation policies, borrowing and other various measures; the spending of these monetary funds influences the economy in various ways like savings and investments, income distribution, allocation of resources. The budget is presented every year in order to make changes in the pattern and level of its expenditure, taxation and borrowing schemes. There are various objectives of the government budget which are as follows:
- Economic growth: In order to attain proper economic growth and development it is the role of the government to facilitate the growth. The growth rate of the country depends on the rate of savings and investment.
- Proper Allocation of resources: The government tries to allocate resources in an even manner so as to achieve the goal of economic growth.
- Generation of Employment: The government needs to promote public work facilities, increase the labor absorbing technology and undertake various employment projects.
- Economic stability and equality: To achieve a stable and equal economy the government highly focuses on the annual budget through various taxation and fiscal measures so that the economy attains stability.
- Management of public enterprises: The government establishes public enterprises keeping in view the social interest especially in the form of natural monopolies.
|Image credit: Financialexpress.com|
Thus, we see that the government budget plays such an important role in the functioning of an economy and without it the economy can be in an unstable state. It acts as an important instrument to implement the policies of the government.
During the times of depression the government adopts deficit budgeting; under this, the government increases its spending and cuts down its taxation. In times of inflation, the government adopts surplus budgeting policy to establish a stable economy. Hence, the government tries to control business fluctuations through these budgetary techniques.
Article by Anisha Dutta
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