Budget and its Related Concepts

-By Aashay Wadkar

17CSE1001
Prerequisites :

1.Revenue -
Synonym for Income.

2.Expenditure -
The Amount that we spent for goods and services.

3.Relation Between Them.

Budget Defination

What is Budget?
- A Periodic Estimation of Revenue and Expenses over a
specified future period of time.
- It is a term that is Relevant for an Individual as well as a
country.
- Since it is Periodic, It is Re-evaluated Periodically.
- Budget is what determines the end result of a trade off
and can be considered as basis for classification -
1.Surplus Budget – Revenue>Expenditure
2.Balanced Budget – Revenue=Expenditure
3.Deficit Budget - Revenue<Expenditure
Budget of a Country

- Also Known as Annual Financial Statement

- The Constitution of India says that no expenditure
can be incurred from the Consolidated Fund of a
State/country without the authority of Appropriation Act.
- And in order to obtain this authorization, a
statement of anticipated receipts(way of recording
revenue data) and expenditure for each financial
year(fiscal) needs to be laid before.
- A government budget is the statement presenting
the revenues and spending for a financial year that is
often passed by the legislature.
- Revenue of a Country -
Types of Budgets -
- Union Budget : Prepared by Central Govt for the
Entire Country.
 Classified into Revenue Budget and Capital Budget
 Estimated for a Fiscal Year.
 Capital Budget includes payments of the government Loans from public,
foreign governments and RBI Interaction.

- State Budget : Prepared by State Govt for the Entire

State.
- Plan Budget: Prepared for Special Projects,
Programs and schemes Introduced by The Govt.
- Zero-Based Budget: wherein ministry/department
justifies its entire budget in detail.
Importance of Budget

- Budgets are an integral part of running any

business efficiently and effectively.
- It is the Difference between Being Financially
Responsible and floating in Financial Peril.
- Helps Stop Overspending.
- Most Efficient use of Money.
- Makes you Economically Flexible.
Best Way to build your own Budget

Determine your Net Income

That is The Money that is left with you at the end of the month.
Net Income = (Total Revenue – Total Expenses)
Revenue – Income, investments and other Sources of Money like your
pocket money.
Expenses are Classified into two Categories -
1. Fixed Expenses – Hostel Fees, Mess Fees.
2. Variable Expenses – Entertainment, Online Shopping

Net Income is when Revenue is more than Expenses.

Extra Money can be put into Savings
Net loss is when Expenses are more than revenue.
Reducing Variable Expenses can be more easier than
reducing fixed expenses.
Best Way to build your own Budget

Determine your Net Income

That is The Money that is left with you at the end of the month.
Net Income = (Total Revenue – Total Expenses)
Revenue – Income, investments and other Sources of Money like your
pocket money.
Expenses are Classified into two Categories -
1. Fixed Expenses – Hostel Fees, Mess Fees.
2. Variable Expenses – Entertainment, Online Shopping

Net Income is when Revenue is more than Expenses.

Extra Money can be put into Savings
Net loss is when Expenses are more than revenue.
Reducing Variable Expenses can be more easier than
reducing fixed expenses.