Business News: How Govt Obtain Funds to Boost Economy? Know How it is Utilized

Business News: Ronald Reagan, the 40th President of the United States, proposed an economic program to develop the American economy, reflecting any government’s core responsibility to manage public finances efficiently in order to promote growth. This raises an important question: where does the government get its funds and how does it use it? Government finances are not the personal assets of ministers or officials but rather belong to citizens and are generally collected through taxes. These taxes are divided into two types: direct taxes (such as income tax and corporate tax) and indirect taxes (like GST). These taxes generate revenue collections, which account for a large portion of the government’s income.  

How Govt Obtain Funds?

A country’s economy is not entirely dependent on taxes, as only a small proportion of the population files tax returns. To meet escalating expenses, the government turns to disinvestment, which involves selling holdings in public assets or firms to create cash. When this is insufficient, the government borrows from international financial institutions such as the IMF, World Bank, and Asian Development Bank, as well as from other countries, incurring significant interest, which is classed as capital receipts. The revenues raised are subsequently distributed to a variety of areas, including infrastructure development, state spending, government salaries, and loan repayment.