Union Budget 2019: Why annual financial statement containing govt’s revenue and expenditure for a fiscal year is important

The word budget comes from an old French word meaning purse. The Union Budget is the annual financial statement that contains the government’s revenue and expenditure for a fiscal year. It may also include planned sales volumes and revenues, resource quantities, costs and expenses, assets, liabilities and cash flows. The statement details the revenues from all sources, and expenditure on all activities that the government will undertake for the fiscal year. The fiscal year is calculated from 1 April-31 March. The budget contains revenues and expenditures. A revenue budget comprises of all the revenue expenditure and receipts of the government. If the revenue expense is in excess of the receipts, the government suffers a revenue deficit. The capital budget consists of government-related capital receipts and payments. It includes investments in shares, loans and advances granted by the central government to state governments, government companies, corporations and other parties. [caption id=“attachment_5828171” align=“alignleft” width=“380”]  File photo of the Parliament of India. Twitter @loksabhatv[/caption] A budget is one of the most important administrative tools. It serves also as a plan of action for achieving quantified objectives,  standard for measuring performance, and device for coping with foreseeable adverse situations. There are three types of budgets: Balanced Budget, Surplus Budget and Deficit Budget. A balanced budget is one in which revenues are equal to expenditures. Thus, neither a budget deficit nor a budget surplus exists. A surplus budget is a period when income or receipts exceed outlays or expenditures and is an indication that the government is being effectively managed. A budget surplus often refers to the financial states of governments. A budget deficit indicates the financial health of the country. It occurs when expenses exceed revenue. Follow full coverage of Union Budget 2019-20 here