Among the following which are the functions of government budget?
A. Allocation.
B. Redistribution.
C. Production.
D. Stabilisation.
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → A, B and D only
The government budget is the statement of the government’s estimated receipts and expenditures for a financial year (1 April to 31 March), which Article 112 of the Constitution requires it to place before Parliament. Through it the government does three jobs the market cannot do well on its own: allocation, redistribution and stabilisation.
A. Allocation. Correct. The government provides goods that the market cannot provide, such as national defence, roads and government administration. These public goods are paid for through the budget.
B. Redistribution. Correct. Through taxes and transfers the government changes the personal disposable income of households. In this way it brings about a distribution of income that society considers fair.
C. Production. Incorrect. Production is not a function of the budget. Public goods are provided through the budget, but they may be produced either by the government or by the private sector.
D. Stabilisation. Correct. The government uses the budget to correct fluctuations in income and employment. When demand is too low for full employment, it steps in to raise aggregate demand.
Note: A same/similar question was asked in CUET (UG) in the papers below.
| 2026 | 2025 | 2024 | 2023 | 2022 |
| 21-05 S2 | 02-06 S1* | – | – | – |
* A similar question.
NCERT (2025-26): “5.1.1 Objectives of Government Budget The government plays a very important role in increasing the welfare of the people. In order to do that the government intervenes in the economy in the following ways. Redistribution Function of Government Budget …The government sector affects the personal disposable income of households by making transfers and collecting taxes. It is through this that the government can change the distribution of income and bring about a distribution that is considered ‘fair’ by society. This is the redistribution function. Allocation Function of Government Budget Government provides certain goods and services which cannot be provided by the market mechanism i.e. by exchange between individual consumers and producers. Examples of such goods are national defence, roads, government administration etc. which are referred to as public goods.… …There is, however, a difference between public provision and public production. Public provision means that they are financed through the budget and can be used without any direct payment. Public goods may be produced by the government or the private sector. When goods are produced directly by the government it is called public production. Stabilisation Function of Government Budget The government may need to correct fluctuations in income and employment.…” |