The origin of the word ‘Budget’ is traceable from the French word “Bougette”, which means a small leather bag. In 1733, in England, the word “budget’ was used to denote a magic box. Budget is a statement of the estimates of the Government Receipts and Government Expenditure during the financial year. Thus, the government budget is basically an annual exercise relating to Revenue and Expenditure policy of the government. By managing the various components of budgetary revenue and budgetary expenditure, the government tries to achieve economic stability along with a faster rate of GDP growth.

Importance of budget : The main objective of budget is to provide direction to the economy of the country. The economy of country is affected by the budget of the government. 

The main objectives of the budget are as follows :

Objectives of Budget:

1. Economic growth has been the main objective of all the governments of all countries at all times. By government budget, not only development is affected, but direction of development is also determined by the budget.
2. Budget has an important role in increasing production. Government may grant tax rebate and other incentives like tax holidays to boost up production.
3. Normally, with the help of budget, government levies new taxes and borrows from the public to reduce the purchasing power for controlling price level.
4. Accelerating the economic and social development of the country and redistribution of income and wealth is also an objective of the budget of the country.
5. To provide direction to the level of production and structure of production. Tax concessions and incentives are helpful in promotion of production.
6. By regulating the provisions of budget, control on inflation and deflation is done. All these are necessary for economic stability.
7. The objective of welfare state is attained through budget.
8. Various tasks such as prevention of economic inequality, implementation of various policies for social security, formation of schemes for economic development, etc. are performed through provisions made by the budget.

From the above definitions, it is clear that budget has two sides. On one side, there is expected revenue of government, and on the other side, expected expenditure of the government. In a democratic set up, government presents the budget in the parliament and after its approval the works are performed as per its proposals.