Union Budget 2020 will be presented in Parliament on February 1 by Finance Minister Nirmala Sitharaman. As the country awaits the Budget, here are the different types of budget that one should know about.
Balanced Budget
In a balanced budget, the government's expenditure is not more than the revenue it has generated. This means the government spends within its limits. It appears easier in theory but hard to implement practically.
A balanced budget shows economic stability but at the time of recession, it does not resolve issues such as unemployment. This budget is not feasible for developing countries as it restricts government's expenditure on public welfare.
Surplus Budget
When the government has more revenue than the expenditure in a financial year, then they have a surplus budget. This budget shows the financial affluence of the country and can be used at times of inflation to reduce aggregate demand.
Deficit Budget
If the government's expenditure is more than the revenue it earns in a financial year than it is called a deficit budget. This budget generates additional demands and aids in boosting the rate of the economic growth of the country.
This type of budget helps in addressing public concerns such as unemployment during an economic recession. It also enables the government to spend on public welfare.