In financial administration budget plays a very vital role. It is during the course of preparation and finalization of a budget that a maximum number of questions of financial policies, including the economy in expenditure arise. The real significance of budget lies in the orderly administration of financial resources and proper fiscal management. It is thus more than a mere statement of income and expenditure.
The budget is a very complex and lengthy process. It is not easy to prepare a budget for a country. But today the importance of budgeting is not being realized but appreciated. It is through a budget that economic inequalities. Which are the root cause of many of our present day social and economic problems, can be removed. It is through a proper budgeting policy that the state can tax those who can pay and benefit the poor and the downtrodden. Through proper budgeting alone the state can mold the trade channel and create and check inflation in the country. By budgets, the stake can also help in promoting social welfare activities and reduce the disparities between the ‘haves’ and ‘have not’s. Such serious problems as those of unemployment and economic deficiencies can also be removed through budgeting alone. Such social advantages as e.g. providing free medical facilities, educational and similar other facilities and amenities can be provided through proper budgeting alone. In a word, it can be said that a good and sound budgeting system is most useful socially, economically and politically.
Today budget is an indicator of government policies which it wants to follow on major issues which confront the society and the way it wants to solve those. It also gives an idea about the shift in government policies and programmes and the extent of growth rate, distribution, and production. Sometimes, as in India, the public sector is regarded as the dynamic element in bringing about a planned transformation of the socio-economic system of strengthening the foundations of self-reliance, balanced growth, stability, and social justice. Under such an enlarged sphere of the government, the budget becomes a tool of planning, articulation of policies, implementation of programmes and review of accomplishments. In brief, apart from being a means of parliamentary financial control, a modern budget is a political document reflecting the plans, policies and social outlook o f the government.