Class 12 Economics – Government Budget and the Economy

Chapter Overview

This chapter examines the government budget—an annual statement of receipts and expenditures—and its key objectives: resource allocation, income redistribution, economic stability, management of public enterprises, growth, and employment generation. It also outlines the budget’s components, classification of receipts and expenditures, and introduces various types of deficits and their policy implications. :contentReference[oaicite:1]{index=1}

Important Keywords

• Revenue Budget: Includes revenue receipts (tax & non-tax) and revenue expenditure.
• Capital Budget: Includes capital receipts (borrowings, asset sales) and capital expenditure.
• Revenue Deficit: When revenue expenditure exceeds revenue receipts.
• Fiscal Deficit: When total expenditure exceeds total receipts (excluding borrowings).
• Primary Deficit: Fiscal deficit minus interest payments. :contentReference[oaicite:2]{index=2}
• Surplus Budget: Receipts exceed expenditures.
• Balanced Budget: Receipts equal expenditures.
• Deficit Budget: Expenditures exceed receipts.