5 Reasons Why The Budget Is Important


BANGALORE: The Union Budget is a widely covered event in the media every year, and is important for citizens, business and institutions in India, in different ways. Some of  the things the  budget does are:

# Supplies incentives for industries:

The government allots tax breaks such as a reduction in excise duties and incentives like increased investment allowances to encourage growth in particular industries.  For example, during  the 2014 budget, the government proposed to set aside a large sum of money for better infrastructure, development of metros, and for smart city initiatives. This indirectly affected the stock price of the cement and steel industries.

# Establishes fiscal policy: Fiscal policy is the amount of tax money a government spends, and the projects it chooses to spend on.  The fiscal policy also establishes the inflation rate. The budget decides how much tax will be collected and its source. It also fixes the cap on the quantity of public infrastructure spending. A good balance between public saving and spending is a good fiscal policy.

# Decides on public debt: India spends more than it earns, and this is means that the country borrows a lot of money from the public or global financial institutions like the World Bank. A large part of the country’s earnings, then, go into paying back interest on these loans. The budget decides the amount of new debt to take on and allocates revenue to pay back old debts so the country progresses economically.

# Facilitates social welfare: The budget enables the functioning of India as a welfare state. Sectors like, rural development, education, health, and basic minimum services help in the total development of the public, and not just in terms of financial profit. The budget decides how the common man can access basic necessities.

# Apportions money for state government: The budget decides the amount of money that India’s 29 states and 7 Union Territories receive. This is set in accordance with each state’s financial needs. The states put forward their expenditure, and the money is doled out.

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