Here are the main objectives a government budget serves

Here are the main objectives a government budget serves

Budget is a crucially important activity under governance.

A government budget accounts for a long list of how needs and and problems in the country are approached and addressed. It is also a vital topic of discussion in statecraft, development and progress, economics, and sociology. The merits of a budget are a signal of the effectiveness of governance.

Broader objectives of a government budget

The most important objectives of a government budget are re-allocating the resources across the nation, bringing down the inequalities in terms of earning and wealth, paving way for economic stability, managing public enterprises, contributing to economic growth and addressing the regional disproportions.

The budget of a given government can be viewed as the visible projection of its political, social and economic policies.

Reallocating the resources across the nation

Through its budgetary policy, every government endeavors to reallocate the resources in line with the economic and social goals of the country namely maximizing the profits and public welfare. It does so through subsidies or tax concessions and by producing goods and services directly.

Tax concessions and subsidies encourage investments and products like ‘Khaki’. The government also implements heavy taxes in some cases in order to discourage the production of goods that will prove harmful when consumed like cigarettes and alcohol. In cases where the private sector does not take interest in producing some goods and services, the government can directly jump into production.

Bringing down inequalities

Every economic system is characterized by some kind of inequality. This is one of the important challenges before a government to tackle. The budgetary policy of the government aims to tackle the inequalities in terms of earning and wealth accumulation. It aims to distribute the wealth by levying more taxes on the rich and allotting more funds towards welfare projects targeting poor people.

Paving way for economic stability

One of the main issues addressed by a government budget is preventing the fluctuations in businesses like inflation and deflation and thereby paving the road for economic stability. The government does this by presenting a surplus budget at times of inflation and deficit budget at times of deflation to maintain the prices of goods and services in a stable condition in the country’s economy.

Managing public enterprises

In every country we find a large number of public sector industries that are created and managed for the welfare of the public. One of the objectives of the budget are bringing in different provisions to increase the overall rate of savings and investments in the nation’s economy.

Contributing to economic growth

A country’s growth ultimately depends on the extent of saving and investment. To augment these aspects, budgetary policies of a government endeavor to mobilize enough resources for investments in the public sector. Hence the government brings in a number of provisions in the budget to increase the overall rate of savings and investments in the economy.

Addressing the regional disproportion

Reducing the regional disproportion is one of the chief aims of a government budget. This is done through an efficient system of taxation and expenditure policy. The government also archives this by setting up manufacturing facilities in the economically unprogressive regions.