Question

Surplus budget hinders economic development. Give reason.

Answer 1

• A budget in which the government’s anticipated total expenditure is less than the anticipated total income is called deficit budget.
• If a government’s budget is a surplus budget it means that the government is collecting more revenue from citizens through taxes as compared to the amount it is spending for the citizens.
• Moreover, in case of deflation lower spending will result in lower investment, , employment, income and production which may lead to depression in the economy.
• Since surplus budget result in lesser overall development and welfare activities, it hinders economic development.