When it comes to government financial planning or budget, specific objectives are crucial. It includes economic stability, reallocation of resources, reducing inequality in income and wealth, managing public enterprises, economic growth, and reducing regional disparities. The preparation of the budget is an integral aspect of the monetary functions of the higher authorities. According to Michael E Weintraub Esq, the objectives are like a guiding light, which helps them appear with a governmental plan. It takes care of the social, economic, and political aspects. Keep in mind that there is an Interrelation between socio-economic and political policies, which work hand in hand.
Some objectives of government financial planning you must understand
It comes without saying that the government budget or financial planning objectives direct the higher authorities’ activities. The government’s policies have a lot to do with the bureaucratic analysis of the present economic condition. The financial plan is developed based on recent survey reports, census, and other significant data. Hence, take a quick look at the following objectives of the government budget
Reallocation of resources
Budgetary policy is how the government strives to reallocate the resources. According to Michael E Weintraub Esq, it is related to the country’s social, economic, and political policies. Moreover, the allocation of resources depends on the following points
• Tax subsidies or concessions: for encouraging investment, higher authorities give tax concessions and subsidies. The government discourages the formulation of harmful consumption goods that harm individuals by imposing heavy taxes. Also, the government encourages the promotion of certain eco-friendly products by making provisions of subsidies on them.
• Direct production of services and goods: the second significant influence on the relocation of resources is manufacturing current jobs and services. According to Michael E Weintraub Esq, many governments are trying to create employment and allocate resources among citizens.
• Reduce imbalances in wealth and income– economic inequality is the hard reality of every country. The government targets to reduce these inequalities in wealth and income by formulating financial plans. It aims to influence the distribution of wealth. Financial planning utilizes money by spending on the lower privileged individuals’ welfare and imposes taxes on the wealthy class.
• Economic stability– a significant step taken by the government to prevent business fluctuation of deflation or inflation is the formulations of a financial plan. It aims to control the different levels of business fluctuation by formulating monetary policies. The financial proposal during budget and inflation helps in maintaining stability.
• Proper management of public enterprise: public sector undertakings are in huge demand these days. These are both created and managed by the government for the social welfare of individuals. A financial plan provides individuals with various provisions for governing such an undertaking.
In addition to this, the financial plan helps in promoting economic growth and reduces regional disparities. It thereby plays a significant role in the overall development of the nation. Keep in mind that when you remove regional discrepancies and invest in the welfare of the citizens. It leads to the prosperity of the government in the long run. For this, an adequate financial plan at the beginning of each year after examining current data and input is crucial.