Budgeting and Financing Essay Example | Topics and Well Written Essays - 1500 words

Budgeting and Financing - Essay ExampleNo matter how one refer to it, its a tool to help him/her to prioritize spending and manage money-no matter how much or how little he/she has. A financial deficit is regarded by some as a positive economic event. For example, economist John Maynard Keynes believed that deficits help countries climb out of economic recession. On the other hand, fiscal conservatives feel that governing bodys should annul deficits in favor of a equilibrise budget policy. pecuniary deficit is an economic phenomenon, where the Governments total pulmonary tuberculosis surpasses the revenue generated. It is the difference between the governments total receipts (excluding acquire) and total use of goods and services. Fiscal deficit gives the signal to the government about the total borrowing requirements from all sources. The fiscal deficit is the difference between the governments total using up and its total receipts (excluding borrowing). The elements of t he fiscal deficit are (a) the revenue deficit, which is the difference between the governments current (or revenue) expenditure and total current receipts (that is, excluding borrowing) and (b) capital expenditure. The fiscal deficit can be financed by borrowing from the Reserve Bank of UK (which is also called deficit financing or money creation) and market borrowing (from the money market that is mainly from banks).It is the fund used by an establishment to produce physical assets worry property, equipments or industrial buildings. Capital expenditure is made by the establishment to consistently maintain the operational activities. Arguments Fiscal deficit lead to inflation According to the view of renowned economist John Maynard Keynes, fiscal deficits hurry nations to escape from economic recession. From a nonher point of view, it is believed that government needs to avoid deficits to maintain a balanced budget policy. In order to relate high fiscal deficit to inflation, some economists believe that the dower of fiscal deficit. Expert recommendationFinancial advisors recommend that the Government should not promote disinvestment to reduce fiscal deficits. Fiscal deficit can be reduced by bringing up revenues or by lowering expenditure. Logically, there are two ways in which the fiscal deficit can be reduced - by raising revenues or by reducing expenditure. However given the character of our rural area and the constraints of a liberalized economy, the government has not increased revenues. In fact, in budget after budget the government has actually given away tax cuts to the rich. Even when it has tried to raise revenues, it has been through counterproductive mean like disinvestment. The main impact of the policy of reduced fiscal deficits has therefore been on the governments expenditure. This has had a total of effects. First, government investment in sectors such as agriculture has been cut. Secondly, expenditure on social sectors like education, h ealth and poverty alleviation has been reduced leading to greater hardship for the poor already heading the brunt of liberalization. Perhaps most importantly, in an economy going through a recession the government is not allowed to play any role in boosting demand.CATEGORY BQ. No. 1 Why