Reasons for unbalanced budget
(a) Surplus budget: The government may opt for a surplus budget for the following reasons:
- A surplus budget is necessary to control inflation and ensure price stability.
- To increase on the level of savings and investments through forced savings ( taxation).
- A surplus budget is necessary to finance government debts.
- To reduce excessive money supply in the economy.
- To reduce consumption and accumulate reserves for future investments.
- To increase on a country's foreign reserves with IMF and other International financial institutions.
- To maintain a favourable B.O.P position.
- A surplus budget may be necessary to enable a country assist other countries in form of grants, gifts etc.