Answer» - In order to run the state, the state needs money. The state incurs expenses for the activities it undertakes. In order to pay for these expenses, it must raise and generate income.
- A budget in which the government plans its expenditures in such a way that all the expenditures can be fully made from the available sources of revenue is called a balanced budget.
- Developing countries need a lot of funds to develop their nations. Hence, the government of these nations cannot plan expenditures within given revenue constraints. So, such countries, cannot have a balanced budget.
- On the other hand, developed countries also do not have a balanced budget because they keep on increasing their expenditures on defence, research, technology, etc. to maintain their growth rate and develop in newer directions.
- Since, neither developing countries can have a balanced budget nor developed countries, it is said that balanced budget is a theoretical situation.
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