subject: What Do You Understand By Government Budgeting [print this page] Budget is derived of a French word Budgette that means Wallet or Leather Bag. A government budget is a legal document passed by legislature and later approved by President or Chief-executive. This document shows Governments revenue and expenditure incurred during the financial year, 1st April to 31st March.
The financial performance of the government can be traced in the document and hence it is one of the most vital document. And also this document presents the financial plan of Government up to the net budget. From politicians to common man everybody awaits budget because of the following reasons:
It gives crystal clear information about the Governments performance over the past financial year.
It helps you determine financial policies and programs of Government for the next financial year.
To assess how the standard of living will be affected by Government budgeting for the next whole financial year.
There are 3 levels at which the government budgeting is done, central state and local. The decisions are taken on behalf of people through civil bodies. Government budgeting is done on the basis of social, economical, political and regional basis too. The Budgeting further depends on the Fiscal policies, monetary policies and Trade policies etc. The basic aim of the Budgeting is increasing the revenue than the expenditure in a fiscal year.
In words of Mary Landrieu, a government budget should reflect the values and priorities of a nation and its people. To know about the facts about the UK government budgeting read below
March 31 of the following calendar year is when the UK fiscal year ends. This the budget of UK for the fiscal year 2012 will cover the tenure from April 1 2012 to March 31 2013.
A month before the fiscal year starts the budget is presented in UK i.e. in march. Government decided on the proportions by summers.
The action on the budget is taken relatively faster as Prime Minister, exercises significant control over the Parliamentary sessions.
Each department submits their individual funding request. Main Supply Estimates to HM Treasury this is the term given to the request. Then the consolidation of data takes places after which it is released under the following name, Central Government Supply Estimates: Main Supply Estimates.
The UK Government hold back the right to put forward Supplementary Estimates in spring and winters of the fiscal years so that the agencies can be updated about the total spending of the current year. In addition to Supplementary Estimates, agencies also need to submit Estimate Memorandum to the oversight committee justifying and describing the changes.
Government budgeting and its components
Rene Storum rightly defined budget as a document that contains introduction approved plan of public expenditures and revenues. According to Rene Storum, "A budget is a document containing a preliminary approved plan of public revenues and expenditure.
The two components of Government budgeting are:
Revenue budget: This particular financial statement consists of Governments revenue receipts. Taxes and receipts are the sources of revenue for the government.
Revenue receipts: This is earned by Government from all possible sources in the course of governance. There is no decrease in the assets and these receipts are free from liabilities. It can be divided in the following ways:
Tax revenues: Tax revenues the taxes and duties are the incomes. Hence it is one of the major portions of the revenue of the public. Taxes are also of two different types: Direct Taxes (Property Tax, Income Tax, Estate Duty Tax and Corporation Tax) and Indirect Taxes (Excise Duty, Sales tax, Custom Duties and Service Tax)
Non-Tax revenues: The government also collect revenue from several other non tax sources. To name the few there are penalties, fines, profits, fees, grants, gifts.
Revenue expenditure: Revenue Expenditure the addition of all the normal day to day expenses is called revenue expenditure. This includes both non-developmental and developmental expenditures by Central Government.
Capital Budget: This portion of budget includes expenditure and receipts on the capital account that is projected for the coming financial year. Capital expenditure and capital revenue are parts of the capital budget.
Capital Receipts: Creation of liability or reduction in assets, any of the two is the result of capital receipts. Borrowings, disposition of assets and loan recovery are some of the ways through which the funds are raised. Capital receipts are Government borrowings through sale of securities and bonds, RBI and various other financial institutions.
Capital Expenditure: The expenses which are incurred in order to buy assets which has long life are termed as capital expenditure. Expenditure on machine, oil exploration, land, equipment and irrigation projects.
