Types of Budgets in India

Balance Budget versus Unbalanced Budget

Balanced Budget Unbalanced Budget
A balanced budget is a situation, in which estimated revenue of the government during the year is equal to its anticipated expenditure.


The budget in which income & expenditure are not equal to each other is known as Unbalanced Budget.


The government’s estimated

Revenue = Government’s proposed Expenditure.


Unbalanced budget is of two types:

Surplus Budget

Deficit Budget


Surplus Budget

The budget is a surplus budget when the estimated revenues of the year are greater than anticipated expenditures.

The government expected revenue > Government proposed Expenditure.


The surplus budget shows the financial soundness of the government. When there is too much inflation, the government can adopt the policy of surplus budget as it will reduce aggregate demand.


Deficit Budget

Deficit budget is one where the estimated government expenditure is more than expected revenue. Government’s estimated Revenue is less than Government’s proposed Expenditure.


If over a period of time expenditure exceeds revenue, the budget is said to be unbalanced

Such deficit amount is generally covered through public borrowings or withdrawing resources from the accumulated reserve surplus. A way a deficit budget is a liability of the government as it creates a burden of debt or it reduces the stock of reserves of the government.

In developing countries like India, where huge resources are needed for the purpose of economic growth & development it is not possible to raise such resources through taxation, deficit budgeting is the only option.

In Underdeveloped countries, deficit budget is used for financing planned development & in advanced countries, it is used as stability tool to control business & economic fluctuations.


Zero Based Budgeting versus Traditional Budgeting

Zero Based Budgeting Traditional Budgeting
 Zero based budgeting is a method of budgeting in which all expenses are evaluated each time a budget is made and expenses must be justified for each new period. Traditional budgeting calls for incremental increases over previous budgets, such as 2% increase in spending.
Zero budgeting starts from the zero base and every function of the government is analysed for its needs and cost. Budget are then made based on the needs. Traditional budgeting analyses only new expenditures, while zero based budgeting starts from zero and calls for justification of old recurring expenses in addition to new expenditures.

 Outcome Budget

If was first introduced in the year 2005. Outcome budget analyses the progress of each ministry and department and what the respected ministry has done with its budget outlay.

The Outcome Budget will comprise scheme or project wise outlays for all central ministries, departments and organizations during an annual year listed against corresponding outcomes (measurable physical targets) to be achieved during the year.

It measures the development outcomes of all government programs. Which means that if you want to find out whether some money allocated for, say, the building of a school or a health center has actually been given, you might be able to. It will also tell you if the money has been spent for the purpose it was sanctioned and the outcome of the fund-usage.

Gender Budgeting

  • Gender Budgeting is a powerful tool for achieving gender mainstreaming so as to ensure that benefits of development reach women as much as men.
  • It is not an accounting exercise but an ongoing process of keeping a gender perspective in policy/ programme formulation, its implementation and review.
  • Gender Budgeting entails dissection of the Government budgets to establish its gender differential impacts and to ensure that gender commitments are translated in to budgetary commitments.
  • Experts defines Gender Budgeting as “Gender budget initiatives. To analyse how governments raise and spend public money, with the aim of securing gender equality in decision-making about public resource allocation; and gender equality in the distribution of the impact of government budgets, both in their benefits and in their burdens.
  • The impact of government budgets on the most disadvantaged groups of women is a focus of special attention.
  • The rationale for gender budgeting arises from recognition of the fact that national budgets impact men and women differently through the pattern of resource allocation.
  • Women, constitute 48% of India’s population, but they lag behind men on many social indicators like health, education, economic opportunities, etc. Hence, they warrant special attention due to their vulnerability and lack of access to resources.
  • The way Government budgets allocate resources, has the potential to transform these gender inequalities. In view of this, Gender Budgeting, as a tool for achieving gender mainstreaming, has been propagated.


Himanshu Arora
Doctoral Scholar in Economics & Senior Research Fellow, CDS, Jawaharlal Nehru University

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By B2B

Revisiting the Basics

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3 years ago



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