Budget is a statement of estimated receipts and expenditure of the government in respect of every financial year.we can also understand the budget in a very simple way because it is prepared in every house in the beginning of every month.
As the government budget is a very broad concept.This comprise of
(1) Revenue budget
Revenue Budget : The revenue budget shows the current receipts of the government and the expenditure that can be met from these receipts.
Capital Budget : Capital budget shows the requirement of the government and the pattern of their financing.
It consist of capital receipts and capital expenditure of the government.
When a government spends more than its collects by the way of revenue , it incurs the budget deficit.
Revenue deficit : The revenue deficit refers to the excess of the governments revenue expenditure over revenue receipts.
Fiscal deficit : Fiscal deficit is the difference between the government’s total expenditure and its total receipts excluding borrowing. This deficit is financed by the government by increasing the tax burden on the public and the organizations or by disinvestment in PSUs.
Budget plays a very important role because it is a framework on which government applies the policies related to revenue and expenditure.It helps the economy to work in a efficient way and to identifies the weakness.