Economics · Ch 10 — Budget
Summary: The Budget at a Glance
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Summary: The Budget at a Glance
This chapter has built the full picture of how a government budget is structured and assessed, a core topic for the Gujarat Secondary and Higher Secondary Education Board (GSHSEB) Std 11 Economics examination:
- A budget is an ex-ante statement of estimated receipts and expenditure for the coming financial year, serving objectives that go well beyond simple accounting — reallocating resources, reducing inequality, stabilising the economy, running public enterprises, promoting growth, and narrowing regional disparities.
- The budget splits into the Revenue Budget (Revenue Receipts — tax and non-tax; Revenue Expenditure — routine, non-asset-creating spending) and the Capital Budget (Capital Receipts — debt-creating and non-debt-creating; Capital Expenditure — asset-creating and liability-reducing).
- A quick classification test for any item: does it change a liability or an asset? If yes, it's a capital item; if no to both, it's a revenue item.
- Three deficit measures, in increasing order of scope:
| Deficit | Formula | What it measures |
|---|---|---|
| Revenue Deficit | Revenue Expenditure − Revenue Receipts | Shortfall in meeting routine expenses from routine income |
| Fiscal Deficit | Total Expenditure − (Revenue Receipts + Non-debt Capital Receipts) | Total borrowing requirement for the year |
| Primary Deficit | Fiscal Deficit − Interest Payments | Borrowing need excluding the burden of past debt |