Government Budget and the Economy

Lesson

Part 1 — what a budget is, why governments make one, and how receipts and expenditure are classified.

In this lesson you will

Explain what a government budget is and its four objectives
Classify receipts into revenue (tax and non-tax) and capital (debt and non-debt) receipts
Distinguish between direct and indirect taxes
Classify expenditure into revenue and capital expenditure using the asset–liability test

Part 1 at a glance

Concept

What is a government budget?

A government budget is an annual statement of the estimated receipts and estimated expenditure of the government for the coming financial year.

Table of four features of a government budget: a statement of estimates, for one financial year from April to March, placed before Parliament or the state assembly, and a policy document
Feature	What it means
A statement of estimates	Expected receipts and expenditure, not actual figures
For one financial year	In India, 1 April to 31 March
Placed before the legislature	Parliament for the Union budget (the "annual financial statement" of the Constitution); state assemblies for state budgets
A policy document	Shows how the government means to raise and use money to meet its aims

Diagram

Two parts of every budget

Two sides of every budget

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