When one thinks about budget, many relate it to household finances. Or planning for a monthly expenditure type of budget. However, the word takes a much larger role when seen from the perspective of a national economy. For example. The types of budget utilized by the governments also become potent engines. Of livelihood for managing the nation’s finances. Ensuring development and locating funds for areas in need of help.
In the content that follows, we shall enter into a detailed discussion. Of the different types of budgets pertaining to India. Explaining them in simple, comprehensible terms. Thus, if you are a student, an interested reader, or in the early stages of becoming an economist. This blog is right for you!
What Is A Budget?
The Budget is a financial statement of the excess estimated income and expenditure. Charged against those incomes for an accounting period, generally for a year. For the government, a budget is a document where the government’s expenditures. How much money is expected to be earned (through taxes, loans, and so forth)? And how it plans to spend it (on infrastructure, welfare, defense, and so on).
Importance of Budgeting
The importance of budgeting is due to the fact that it:
- They reflect government priorities.
- They provide economic stability.
- They promote social welfare.
- They ensure optimal allocation of resources.
- They ensure transparency and accountability.
Type of Budget in India
Let us break down the major types of budgets existing in the financial system in India:
Union Budget
The most significant budget in India. And it details the revenue and expenditure expected by the central government. In the ensuing financial year.
The budget is divided into 2 parts:
Revenue Budget
This includes revenue, expenses, and net anti-legal gross receipts. Essentially used for revenue support and income support.
Capital Budget
Relates to budgetary capital receipts. And capital expenditures (like building roads and infrastructure).
State Budget
Every state in India also has its own State Budget introduced by the State Finance Minister. It functions in a similar manner to the Union Budget. At, state level and, therefore, covers all expenses and revenues state-wise.
Interim Budget
A budget that is not a full-fledged one but is introduced by the government. When it has a term of less than a year, as in, case of elections. It gives an estimate for a short period. Ensuring the continuation of most essential functions.
Key Feature: It will encompass complete accounts but no major policy changes.
Vote on Account
The Vote on Account is a temporary provision. Parliament allows the government to withdraw funds for a very short period of time. Usually equivalent to 2 months until the full budget is cleared.
Supplementary Budget
This is when the government promptly needs more money. Then the original budgeted amount. Here, such additional expenditure is introduced.
Zero-Based Budgeting (ZBB)
In contrast to last year’s figures, which is what traditional budgeting relies on. Every cost incurred for evaluation within Zero-Based Budgeting. Usually has to be justified afresh. This method prevents unnecessary spending. Promotes cost-effectiveness. Encourages a fresh look at every program:
Performance Budget / Outcome Budget
It reflects the results or the outcome of spending by the government. It does not merely show where and how money was spent. But, rather, illustrates the achievements and impacts of the expenditure.
Gender Budget
It shall make gender budgeting and equalisation of sexes through focused programme interventions.
Green Budget
Environmental budget, whereby it is concerned with spending on management. Of environmental aspects such as climate change and conservation. It is very important to mention in a changing globalized world. That has become increasingly beleaguered by global warming and pollution problems.
A Quick Recap on All type of Budget in India
| Type of Budget | Focus Area |
| Union Budget | National income and expenditure |
| State Budget | State-specific planning for finances |
| Interim Budget | Temporary budget in lieu of election |
| Vote on Account | Temporary permission for payments by the government |
| Supplementary Budget | Extra finance post-budget |
| Zero-Based Budget | Justification for each expense from scratch |
| Performance Budget | Evaluates the performance in terms of expenditure |
| Gender Budget | Women-related allocations and programs |
| Green Budget | Environment-related policies and expenditures |
Conclusion
Knowing the types of budget becomes important in understanding the financial operation. These budgets represent the aspirations, priorities, and commitment of the government. Toward growth and welfare. Environmental goals, gender equality & economic growth. Or Digital India—each of these types of budgets forms the medium to realize these ends. An understanding of different types of budget is a great place to start.
FAQs
Q1. What are the type of budget in India? List them.
India has its Union Budget, State Budget, Interim Budget & Vote on Account.
Performance Budget, Gender Budget, and Green Budget.
Q2. What is the difference between the Union Budget and the State Budget?
The Union Budget deals with the finances of the nation brought out by the central government. While the State Budget holds good for distinct states. And is brought out by the respective state government.
Q3. What is a Vote on Account?
This is an interim budget that allows the government to run. Until the main budget is approved, it usually covers expenses for around two months.
Q4. What is Zero-Based Budgeting?
Zero-Based Budgeting justifies each and every expense from the building block of zero. It does not carry forward last year’s expenses. And it is good for planning resources efficiently.
Q5. Why is the Green Budget important?
This heavily endorses financing for environmentally friendly projects. To combat climate change and follow sustainable performance development.
