Budget 2025 Explained: What is Balanced, Surplus, and Deficit Budget?

Budget 2025: The Union Budget, which gets released on February 1, is one of the most important financial events in India. The budget outlines the plan of the government for the upcoming fiscal year. The budget gives the rough roadmap for the plan of the government regarding revenue and expenditures. As we are approaching the release of Budget 2025, it is important to understand the different types of budgets in India. Generally, in India, the budget is divided into three types, such as balanced budget, surplus budget, and deficit budget. In the article below, we will be exploring all different types of budgets.

Budget 2025: What are the Three Types of Budget in India?

In India, three types of budgets are presented, i.e., balanced budget, surplus budget, and deficit budget. A balanced budget is presented when the estimated revenue of the government is equal to the proposed expenditure, which explains that the government is planning to spend only what it will earn. A surplus budget is presented when the government’s estimated revenue exceeds its proposed expenditure; a deficit budget is presented when the government's proposed expenditure exceeds its estimated revenue. Continue reading this article to learn in detail about all three types of budget.

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What is the Union Budget?

The Union Budget is the financial statement of the Government of India which is presented by Finance Minister in the Parliament on February 1. The reason behind presenting the budget on February 1 is that it allows the government to complete all the parliamentary process before March ends and implement all the announcements of the budget from the day one of the start of the fiscal year, i.e., April 1. With the release of the budget, the government dedicates the funds that need to be spent in the upcoming fiscal year in different sectors,  such as healthcare, education, infrastructure, defence, etc. Here we have provided an in-depth explanation of types of budget that are presented  

Balanced Budget

The government may spend an amount equal to the revenue it collects. This is

known as a balanced budget. This means that the government is not planning to spend more than its earning and it is not accumulating debt. A balanced budget is a financial plan where government expenditure is equal to its revenue. This approach reflects fiscal discipline, as it avoids deficit spending and the accumulation of debt. Here, it is important to note that a balanced budget is always not possible, especially during the downtime and when the government needs significant public investment. 

Surplus Budget

When the government  needs to incur higher expenditure, it will have to raise the amount through taxes in order to keep the budget balanced. When tax collection exceeds the required expenditure, the budget is said to be in surplus. This surplus amount can be utilised in various ways, such as investing in infrastructure projects, reducing public debt, or saving for future contingencies.

Deficit Budget

When a government spends more than it collects in revenue, it incurs a budget deficit, which is the most common type of budget. This clearly means that now the government has to borrow money to cover the difference. It is also important to remember that a budget deficit is different from a budget surplus, which is when the government earns more than it spends, and a balanced budget, which is when spending and earnings are equal.

Budget 2025 Date

As per tradition, the union budget is set to release on February 1, 2025. Budget the constitutional requirement of India, which is also mentioned in Article 112 of the Indian Constitution, that the government present before the Parliament a statement of estimated receipts and expenditures of the government in respect of every financial year, which runs from  April 1 to March 31. This ‘Annual Financial Statement’ constitutes the main budget document of the government. Although the budget document relates to the receipts and expenditures of the government for a particular financial year, the impact of it will be there in subsequent years.