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In: Finance

Why is it important for citizens to know how to read a budget? What information would...

Why is it important for citizens to know how to read a budget? What information would they be able to obtain from the budget document? Why and how would that information be helpful?  

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Expert Solution

1.Why is it important for citizens to know how to read a budget?

Ensuring economic growth
A budget allows the government to regulate the imposition of taxes in various sectors. Investment and expenditure are some of the most prominent factors contributing to the growth of a nation’s economy. The government can encourage people to emphasize more on savings and investments by providing tax rebates and subsidies.

2.What information would they be able to obtain from the budget document?

Growth of business and trading

Businesses and enterprises look forward to the government budget as resources being allocated to various sectors are revealed. The government can encourage business owners to revise their policies accordingly and contribute to the country’s economic prosperity and the proposed budget provides this information.

Why and how would that information be helpful?  

Here are a few reasons why it’s important for the government to have a budget:

-Proper resource pool allocation
When it comes to budgeting, identifying areas of weakness helps the government to allocate resources in a useful and sustainable manner. This is one of the most fundamental objectives behind framing a government budget. It’s important for the government to ensure that funds reach where it’s required the most. Therefore using past data to identify sections  of the society in need of economic welfare policies and implementing those policies helps the government demonstrate efficient governance and achieve economic stability in the country.

-Administering Operation of PSUs
Industries operating in the public sector contribute immensely to the country’s economy by providing employment to a lot of people and generating revenues. A budget helps the government focus appropriately on companies in the public sector by introducing policies to aid their growth.

Mitigating economic divide
Economic disparity and inequality is an imminent threat to any country’s economy. The government can address these kinds of threats by introducing public and economic welfare policies for the underprivileged sections of the society through the budget.


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