6.1.7 TYPES OF BUDGETS:

1. Traditional or General Budget

The initial structure of the present-day general budget is known as Traditional Budget. The main aim of the General Budget is to set up the financial control over Executive and the Legislative. This budget contains the details of income and expenditure of the Government.

         2.Performance Budget: When the outcome of any activity is taken as the base of any budget, such budget is known as ‘Performance Budget’. For the first time in the world, the performance budget was made in USA. It is the compulsion of the government to tell that ‘What is done’, ‘how much done’ by it for the betterment of the people. In India, the Performance Budget is also known as ‘Outcome Budget’.

3. Zero Based Budgets:

There are two primary reasons for adopting this type of Budget.

• The continuous revenue deficit in the budget of the country.
• (ii) Poor implementation of the Performance Budget.

Under Zero based budgets, every activity is decided based on Zero basis i.e., the previous expenditures are not considered. This budget is also known as ‘Sun Set Budget’ which means the finance department has to present the zero-based budget before the end of the financial year.

4. Gender Budget

If a budget describes the schemes and plans for the welfare of children and females, it is known as Gender Budget. Through Gender Budget, the Government declares an amount to be spent over the development, Welfare, Empowerment schemes and programmer for Females.

5. Balanced budget

When total public sector spending equals total government income (revenue receipts) during the same period from taxes ad charges for public services. It is a budget with zero deficit is balanced budget.

6. Outcome – Output framework

This concept was introduced in 2019-20. It is a framework of measurable indicators has been put in place, monitoring the objectives (outcomes) of the central sector and centrally sponsored schemes which account for around 40% of government budget expenditure. It is a governance-based model. It necessitates active tracking of targets achieved against defined targets. It benefits by enhancing the transparency and accountability.

6.1.8 REVENUE AND EXPENDITURE

Revenue:

Every form of money generation in the nature of income, earnings are revenue for a firm or a government which do not increase financial liabilities of the government, i.e., the tax incomes, non-tax incomes along with foreign grants.

Non-Revenue:

Every form of money generation which is not income or earnings for a firm or a government (i.e., money raised via borrowings) is considered a non-revenue source if they increase financial liabilities.

Government receipts are divided into two groups

Receipts:

Every receiving or accrual of money to a government by revenue and     non-revenue sources is a receipt. Their sum is called total receipts. It includes all incomes as well as non-income accruals of a government.

Revenue Receipts and Capital Receipts:

REVENE RECEIPTS

Government receipts which neither (i) create liabilities nor (ii) reduce assets are called revenue receipts.

These are proceeds of taxes, interest and dividend on government investment, cess and other receipts for services rendered by the government.

Capital Receipts

Government receipts which either (i) create liabilities (e.g. borrowing) or (ii) reduce assets (e.g. disinvestment) are called capital receipts.

The capital receipts are loans raised by Government from public, called market loans, borrowings by Government from Reserve Bank and other parties through sale of Treasury Bills, loans received from foreign Governments and bodies,

Disinvestment receipts and recoveries of loans from State and Union Territory Governments and other parties.

Expenditure

Simply put, an expenditure which neither creates assets nor reduces liability is called Revenue Expenditure.  e.g., salaries of employees, interest payment on past debt, subsidies, pension, etc.

An expenditure which either creates an asset (e.g., school building) or reduces liability (e.g., repayment of loan) is called capital expenditure.