Purpose (Objective) of the budget:

The government must plan its expenditures and raise its income in such a way that the following objectives can be fulfilled:

1. To obtain approval of the body of elected representatives:

The ruling government need to take approval of the elected representatives of the democratic government for the expenditures and incomes estimated to incur in the coming financial year.

2. To get an idea regarding available resources and areas requiring expenses:
To get an idea regarding:

(a) The activities which the government can and should undertake
(b) The expenses to be incurred in various sectors and
(c) The sources from where the necessary income may be raised

3. Provide direction for allocation of resources:

• To allocate the resources i.e. income earned into different sectors with respect to their priority and need.
• If proper estimates are not made for each sector then it is quite possible that ‘ some sectors may receive more than necessary funds and some seciors may get neglected.

4. For knowledge of the public:

• Through the budget people come to know which sectors is the government favouring and how much resource is it allocating to those sectors.
• People also come to know the change in the tax structure that will be done in the commodities and the sectors.
• All this information helps people to understand which commodities will become costlier and which will become cheaper.