Government bodies raise Money by imposing taxes on citizens and then use those funds to pursue various programs such as Education, defence, Infrastructure-2/”>INFRASTRUCTURE and research and development. A government’s budget describes all of its sources of income and where it spends that income, and budget reform is the process of making changes to how the government collects and spends money.
Governments pursue budget reform for many reasons. If government spending is greater than the amount of money the government takes in with taxes, reform may be necessary to balance the budget and control government debt. Politicians may pursue changes in government spending or Taxation to gain favor with their constituents.
Budget reform can have many potential benefits. Reforms can reduce wasteful expenditures and help lessen government deficit, potentially leading to surpluses. A surplus occurs when a government takes in more money than it spends. Budget reform can result in funding for new beneficial programs or increases in funding education, infrastructure or other areas to help certain individuals or organizations. Tax Reforms can benefit individuals and businesses if they reduce their tax burden. Cutting taxes can stimulate spending, which can help stimulate economic activity.
Budget reform only describes changing the collection or spending of money, not whether spending or collection goes up or down. Any potential benefit to budget reform can also be a drawback if changes occur in an unfavourable direction. For instance, if the government reforms its budget by cutting spending on education and infrastructure, it could hurt students and those who rely on public infrastructure spending for their jobs. Increases in spending can make governments fall into debt.
Government spending and taxation is controversial, and any budget reform that a government pursues is likely to be viewed as beneficial by some and negatively by others. Budget reforms passed by Congress often reflect a compromise between desires of different Political Parties.
The parliamentary committee headed by the Congress MP M Veerappa Moily, had been constituted to review the all budgetary reforms. Besides the budget, the committee will also review the Disinvestment policy, Banking sector in India.
Budgetary Reform in India for 2017
The Union Cabinet had given in principle approval last year for advancement of the date of Budget presentation from the last day of February to a suitable date.
Besides in another reform relating to budgetary process, Union Cabinet had approved merger of Plan and Non Plan Classification in Budget and Accounts.
Advancement of the date of Budget presentation Benefits Pave way for early completion of Budget cycle and enable Central Ministries and Departments to ensure better planning and execution of schemes from beginning of financial year. It will also enable Central Ministries and Departments to ensure better utilize the full working seasons including the first quarter of the year. It will preclude the need of appropriation through ‘Vote on Account’. It will enable implementation of legislative changes in tax and laws for new taxation measures from the beginning of financial year.
Merger of Plan and Non Plan classification in Budget and Accounts the Union Cabinet also approved proposal of Union Finance Ministry to do away with the Plan and Non-Plan expenditure classification from 2017-18and replace with ‘capital and receipt’. The relevance of plan and non-plan expenditure was lost after the abolition of the Planning Commission. However Budget will continue earmarking funds for Scheduled Castes Sub-Plan/Tribal Sub-Plan and similarly, the allocations for North Eastern States. Plan/Non-Plan will help in resolving the following issues This distinction of expenditure had led to a fragmented view of resource allocation to various schemes. It had made it difficult to ascertain cost of delivering a service and also to link outlays to outcomes. It had led to bias in favour of Plan expenditure by Centre as well as the State Governments and had neglected essential expenditures on maintenance of assets and other establishment related expenditures to provide essential social Services. The merger is expected to provide appropriate budgetary framework that will have focus on the capital and Revenue Expenditure.
,
Budgetary reform is the process of changing the way that a government or organization allocates its Resources. It can involve changes to the BUDGETING process, the budget structure, or the budget priorities. Budgetary reform is often undertaken in response to fiscal challenges, such as a budget deficit or a need to reduce spending. It can also be used to improve the efficiency or effectiveness of government spending.
There are a number of different approaches to budgetary reform. One approach is to focus on the budgeting process. This can involve changes to the way that budgets are prepared, approved, and executed. For example, a government might move to a more centralized budgeting process, or it might introduce new procedures for performance budgeting.
Another approach to budgetary reform is to focus on the budget structure. This can involve changes to the way that government spending is classified. For example, a government might move to a more functional budget structure, or it might introduce new categories of spending, such as Climate change or social inclusion.
Finally, budgetary reform can also focus on the budget priorities. This can involve changes to the way that government spending is allocated. For example, a government might decide to increase spending on education or healthcare, or it might reduce spending on defense or infrastructure.
Budgetary reform can be a complex and challenging process. It is important to carefully consider the objectives of the reform and to develop a plan that is likely to achieve those objectives. It is also important to involve all stakeholders in the reform process, including government officials, civil Society organizations, and the private sector.
Budgetary reform can have a number of benefits. It can help to improve the efficiency and effectiveness of government spending. It can also help to reduce the budget deficit or debt. Additionally, budgetary reform can help to improve Transparency and Accountability in government.
However, budgetary reform can also be difficult and time-consuming. It is important to have realistic expectations about what can be achieved through budgetary reform. Additionally, it is important to be prepared for the challenges that may arise during the reform process.
Despite the challenges, budgetary reform can be a valuable tool for improving government performance. By carefully considering the objectives of the reform and developing a plan that is likely to achieve those objectives, governments can make significant progress in improving the way that they allocate their resources.
Here are some examples of budgetary reforms that have been implemented in different countries:
In the United States, the Budget and Accounting Act of 1921 established the Bureau of the Budget (now the Office of Management and Budget) and created a new budget process for the federal government.
In the United Kingdom, the Financial Management and Accountability Act of 1983 introduced a new system of performance budgeting for central government departments.
In Australia, the Financial Management Improvement Program (FMIP) of the 1990s introduced a new system of performance budgeting and financial management for all levels of government.
These are just a few examples of the many budgetary reforms that have been implemented around the world. Budgetary reform is a complex and challenging process, but it can be a valuable tool for improving government performance.
What is a budget?
A budget is a financial plan that outlines how much money you expect to earn and spend over a period of time, usually a year. It helps you track your income and expenses, and make sure you’re not spending more than you earn.
What are the benefits of budgeting?
There are many benefits to budgeting, including:
Improved financial security: A budget can help you track your spending and make sure you’re not overspending. This can help you avoid debt and build up Savings.
Reduced Stress: When you know where your money is going, it can help you feel more in control of your finances. This can reduce stress and anxiety.
Reaching financial goals: A budget can help you track your progress towards your financial goals, such as saving for a down payment on a house or retirement.
How do I create a budget?
There are many different ways to create a budget. The most important thing is to find a method that works for you and stick to it. Here are a few tips:
Start by tracking your spending: The first step to creating a budget is to track your spending for a month or two. This will help you see where your money is going and where you can cut back.
Set a budget goal: Once you know where your money is going, you can set a budget goal. This could be saving a certain amount of money each month or paying off debt.
Create a budget plan: Once you have a budget goal, you can create a budget plan. This will outline how you’re going to reach your goal.
Track your progress: Once you have a budget plan, it’s important to track your progress. This will help you stay on track and reach your goal.
What are some common budgeting mistakes?
There are a few common budgeting mistakes that people make, including:
Not tracking spending: The first step to creating a budget is to track your spending. This will help you see where your money is going and where you can cut back.
Not setting a budget goal: Once you know where your money is going, you can set a budget goal. This could be saving a certain amount of money each month or paying off debt.
Not creating a budget plan: Once you have a budget goal, you can create a budget plan. This will outline how you’re going to reach your goal.
Not tracking progress: Once you have a budget plan, it’s important to track your progress. This will help you stay on track and reach your goal.
What are some tips for sticking to a budget?
There are a few tips for sticking to a budget, including:
Make a budget that is realistic: Your budget should be based on your actual income and expenses. Don’t try to create a budget that is too ambitious, or you’ll be more likely to give up.
Automate your savings: One of the best ways to stick to a budget is to automate your savings. This means setting up a direct deposit from your paycheck into your savings account. This way, you’ll never even see the money and you’ll be less likely to spend it.
Track your spending: It’s important to track your spending so you can see where your money is going. This will help you identify areas where you can cut back.
Review your budget regularly: Your budget should be a living document that you review regularly. This will help you make adjustments as needed.
Don’t be afraid to ask for help: If you’re struggling to stick to a budget, don’t be afraid to ask for help. There are many resources available, such as financial advisors and budgeting apps.
Which of the following is not a type of budget? (A) Capital Budget (B) Operating budget (C) Cash budget (D) Budgetary reform
The purpose of a budget is to: (A) Control spending (B) Track income and expenses (C) Plan for the future (D) All of the above
The first step in creating a budget is to: (A) Determine your income (B) Determine your expenses (C) Set financial goals (D) Create a budget template
A budget surplus occurs when: (A) Income is greater than expenses (B) Expenses are greater than income (C) Income and expenses are equal (D) None of the above
A budget deficit occurs when: (A) Income is greater than expenses (B) Expenses are greater than income (C) Income and expenses are equal (D) None of the above
A budget can be used to: (A) Save money (B) Pay off debt (C) Reach financial goals (D) All of the above
A budget is a financial plan that outlines your income and expenses for a specific period of time. (A) True (B) False
A budget can be used to track your spending and make sure you are not overspending. (A) True (B) False
A budget can help you save money and reach your financial goals. (A) True (B) False
A budget is a tool that can help you take control of your finances. (A) True (B) False