Economist are now generally of the opinion that fiscal policy should be used as a tool to achieve full employment and stability in the economy. For example, construction of a hospital building is capital expenditure. Prices are sub-divided into: i Receipts from public property passively held such as rents received from the tenants of public lands; ii Receipts from public enterprises charging competition rates; iii Fees or payments charged for rendering administration services, such as birth and death registration fees, and iv Voluntary public debt. The government, therefore, may impose some special levy to recover a part of the expenses so incurred. The judiciary consists of the , at the state level, and and at the level. For example, if redistributive public expenditure is financed through taxation and if the tax system of the country is regressive, it will work against the desirable distributive effects of public expenditure.
Budget Deficit: Budget deficit is the overall type of deficit. By disposable income is meant the income left in the hands of the tax payer for disbursement after tax payment. Does the Budget boost spending? On the other hand, expenditure on defence, civil administration i. This equilibrium level may not be established at full-employment level. Traditionally, all grants given to state governments are treated as revenue expenditure even though some of the grants may before creation of assets. These government expenditures are either directed towards purchase of a part of the gross domestic product that an economy produces, which is known as government purchases, or towards members of other sectors of the economy as gifts, which is known as transfer payments. It is short period expenditure.
In countries like India which have socialistic tendencies the public sector plays an important role in promoting economic growth and development. This is bound to affect adversely productive efforts in the present. It is recurring in nature and incurred regularly. For example, a fighter jet can be assumed to be a final good produced in an economy. Redistribution of income: Equalities in income distribution mean allocating the income distribution in such a way that reduces income inequalities and also there is no concentration of income among few rich.
Though Wanger based his law on the historical evidence drawn from economic growth of Germany, this applies equally to other countries, both developed and developing ones. It can also cause reallocation of resources between industries and regions and exert wholesome influence on the pattern of production work by the Government undertaken through public enterprises. An interesting idea is to issue bonds to fund political parties. A detailed report on the working of public sector enterprises is given in the document titled 'Public Enterprises Survey' brought out separately by the Department of Public Enterprises. Obviously, the budget is the most important information document of the government because government implements its plans and programmes through the budget. A balanced budget will then imply that the amount of tax is equal to the amount of expenditure.
Expenditure incurred on old-age pensions, unemployment allowance, sickness benefits, interest on public debt during a year etc. Under various types of government deficits, primarily, there are four types of deficit in India. It has now been realised that economic growth alone will not eradicate poverty, at least in the short run. Expenditure on old age pensions, unemployment relief, free education, free mid-day meals etc. Members of the , which represents the , are elected by the members of State legislative assemblies by , except for 12 members who are nominated by the president.
Non-Tax Revenue : Public income received through the administration, commercial enterprises, gifts and grants are the source of non-tax revenues of the government. Detailed Demands for Grants further elaborate the provisions included in the Demands for Grants as also actual expenditure during the previous year. Further, the Indian Government, both Central and States, incur a lot of expenditure on relief public works in rural areas when drought and other natural calamities occurs. This means government is using savings of other sectors of economy to finance its consumption expenditure. It should be noted that, revenue deficit is a part of fiscal deficit.
The government can resort to counter cyclical fiscal policy, which means the taxes and government spending be varied in an anti-cyclical direction; government spending being cut and taxes increased in the expanding phase of cycle and government spending increased and taxes cut during the contraction phase. Similarly, when a government is unable to raise enough revenues to meet its expenditure needs, it has to borrow. The market economy, if certain conditions are met, enables an efficient use of resources for providing private goods. Each minister must be a member of one of the houses of the parliament. B i Article 113 of the Constitution mandates that the estimates of expenditure from the Consolidated Fund of India included in the Annual Financial Statement and required to be voted by the Lok Sabha are submitted in the form of Demands for Grants.
It may be noted that expenditure on defence, education, health etc. Since government spending will be less than its income. For instance, a government may decide to increase government spending as a result of a recession. In actual practice, governments across the world today are rarely seen presenting a balanced budget or a surplus budget. They are entirely of a voluntary nature. It included all the expenses which are incurred during day to day running of business.
Wiseman-Peacock Hypothesis: The second hypothesis about the growth of public expenditure has been put forward by Wiseman and Peacock in their study of public expenditure of U. There is no direct, quid pro quo between the tax-payers and the public authority. This is the basis of classification between revenue expenditure and capital expenditure. Gifts are voluntary contributions from individuals or institutions for specific purposes. Types of Budget: Recall, a budget is defined as an annual statement of the estimated receipts and expenditure of the government over the fiscal year.
The receipts and disbursements are shown under the three parts, in which Government Accounts are kept viz. Note: these numbers do not include U. The Budget is a statement of those accounts. An unbalanced budget can be further classified either as a surplus or deficit budget. Follow and keep up with the latest industry news, career, jobs and tech updates.