Budget is the annual financial plan detailing government revenues and expenditures. Balanced budget: Revenue = Expenditure (zero deficit). Deficit budget: Expenditure > Revenue (borrowing required, stimulates economy). Surplus budget: Revenue > Expenditure (reduces debt, contractionary). Components: Revenue receipts (taxes, non-tax revenue), Capital receipts (borrowing, asset sales), Revenue expenditure (current spending), Capital expenditure (infrastructure, assets). Budget cycle: Formulation (various ministries propose), Approval (parliament), Execution (spending according to plan), Audit (verification and accountability). Types of budgets: Classical budget (balanced), Keynesian budget (deficit for stimulus), Performance budget (outcomes focus), Zero-based budget (all activities justified from zero). Union Budget (India): Presented annually (February 1st, changed to earlier recently), Contains taxation proposals, expenditure plans, deficit targets, policy priorities. State budgets: Similarly structured, focused on state development. Constraints: Revenue limitations, debt sustainability, political pressures, inflation, interest rates. Uses: Revenue raising, Economic stabilization, Allocation of resources, Redistribution of income, Development priorities. ICAI questions: Identifying budget types, understanding multiplier effects. Exam tip: Deficit budget is expansionary (increases demand); surplus budget is contractionary (reduces demand).