Public Administration (SYBA-PAPER-III) Importance of Budget

Importance of the Budget:

Budget is very core of democratic government. It is the master financial plan of the Government.

A modern budget plays a very important role in the social and economic life of a community. In early days budget being the statement of estimated receipts and expenditure had only two objectives.

·         First, government had to determine how much money it wanted to take out of the pockets of tax payers in order to maintain its necessary activities with proper standard of efficiency.

·         Second, legislature had to vote funds, so it necessarily wanted to know the plan of expenditure.

Thus, in the days of laissez-faire, budget was a simple statement of estimated income and expenditure.

Modern society, with the rise of the welfare state, had to assure ever-increasing quantity and variety of government activities. The activities of government tend to cover almost all aspects of social life.

·         Government budgeting is one of the major instruments by which the use of public resources is planned and controlled.

·         The budget is thus an instrument for the articulation of government programmes which have ramifications (effects) in the entire national economy.

·         It affects development and production, size and distribution of income and the availability of man-power and materials.

·         From the budgets citizens can know what benefits they are going to derive from the various plans and programmes of the government and how much tax they will have to pay.

·         Through the budget, various interests, desires, and needs of the citizens are consolidated into concrete programmes.

·         The taxation policy of the government as reflected in the budget aims at narrowing down of class distinctions and social inequalities.

·         The production policy as reflected in the budget may help in removing poverty, unemployment and mal-nutrition of wealth.

·         It can check inflation enable the citizens to lead their life in safety and with the happiness.

The modern states are welfare states and as such budget is used as means for the promotion of welfare objectives. Thus considered the budget has tremendous social and economic implications in a genuine welfare state.