4.Do Budget cuts hurt young more than elderly?
INTRODUCTION TO BUDGET
A Budget is a financial statement prepared in the light of anticipated/ predicted or visualized expenditure during a year. It stipulates how the resources will be made available or going to be made available will be used for achieving the goals/objectives and budgeted targets. The work has to be accomplished within the stipulated period, at most times within one financial year. At the end of the period, data is collected to find out whether the projections have been actually achieved. Budget preparation is an elaborate exercise keeping in mind the period of performance, goals to be achieved, resources at our disposal. Supplementary goals related to defense, education, development of backward areas, housing sports etc are also prepared.
NEED FOR BUDGET CUTS
When the Government’s outlay (its purchases of goods and services, plus its transfers (grants) to individuals and corporations, in addition to its net interest payments) exceeds its tax revenues, the Government budget is said to be in deficit – termed as Deficit Spending. When the economy has high unemployment, an increase in government purchases creates a market for business output, creating income and encouraging increases in consumer spending, which creates further increases in demand for business output. This is the multiplier effect. This raises the real gross domestic product (GDP) and employment of labour and if all else is constant, lowers the unemployment rate. The connection between demand for GDP and unemployment is called Okun's Law.
When a Government continuously spends more amount than the earnings (fiscal deficit), a number of problems arise in the economy like;
- Inflation
- Increased taxation in future thus burdening future generation
- More debt burden (national or public debt)
- Rising interest rates which can discourage fixed private investment spending, canceling out some or even entire demand stimulus arising from the deficit and perhaps hurting long-term supply-side growth.
MECHANISM OF BUDGET
In order to curb the above mentioned problems and to balance the budget, the Government may decide to cut the expenditure in the budget. As the government has to spend in various sectors, the reduction in the expenditure depends on the economy of the country. The cuts in the budgetary expenditure affect the people of nation depending upon the sector on which Government decides to cut the expenditure.
“A budget is made using funds allocated for that purpose. If the funds are not available or for some reason must be reduced in number, then you must remove some items from your budget.”
ü This results in a balanced budget as a sequel to the reduced allocation of budgetary resources.
Let us try to visualize as to “How budget cuts in state and/or school district are impacting children/youth, and school in areas such as:-
- Impact on student learning/achievement;
- Change in class size;
- Change in workload/caseload;
- Impact on services/resources provided;
- Impact on professional development opportunities.”
IMPACTS OF BUDGET CUTS
Whenever government decides reduction in spending in a particular sector like education, defense, health etc. the people directly/ indirectly related to that sector get affected. Population of every country includes children, young people, middle aged people and old people. The effect of slash in the government expenditure may vary between these people.
IMPACT ON YOUNG PEOPLE
Ø More Unemployment: When government makes substantial cuts in spending (in education, defense, health or in other sector) there would be situation of more job loss and increase in the unemployment. In
Ø Weaker economies: Cuts in spending it slows down economic growth consequently reducing GDP thus impacting younger people more because with reduction in GDP, income of the people also gets reduced.
Indirect Impact :
§ When the Government decides to cut the spending, at the same time it will also try to increase taxation which will indirectly impact the younger generation because usually government charges higher rate of taxation to younger people as compared to older people/senior citizens which enjoy higher exemption limits.
§ Normally younger people have more needs in comparison to older people. They are also more extravagant curious for undertaking costly recreational activities as compared to older people. By nature also young generation is more spendthrift and older are little frugal. These days young generation starts earning at very young age for pocket money. They usually avoid saving money. We can conclude that the young people have lesser value for money in comparison to older one. So when the government slashes the expenditure it will have a huge impact on the younger generation.
IMPACT ON OLDER PEOPLE
- In recent years older people have been particularly affected by rising energy and food prices, as well as reduced income from savings. After retirement, they have less opportunity to increase their income through paid works, their financial well-being can depend on levels of state provision of pension and welfare benefits and services. Those on a low income will be relatively harder hit by the forthcoming increase in VAT. It is also possible that older people's outgoings will increase if they have to pay (more) for services that were previously free or subsidised. And a withdrawal of services may affect people’s general well-being and quality of life. While progress has been made in reducing pensioner poverty over the last decade, pensioners still do not claim all the benefits they are entitled to.
MY OPINION:
- The impact of cut in government expenditure is no doubt more on the young generation because their savings are lesser and tendency to expend is more in comparison to older people. When it happens, the unemployment in the economy will increase and younger will get lesser opportunity to earn. As they have lesser savings, they may face more difficulty to survive in this kind of scenario. On the other hand older people will also get affected if the govt. cuts their spending in those areas in which older people are getting facilities either free or at subsidized rate.
- Cuts made in budgets adversely affect our attempt to bring about improvement in defense, education, sports. This is harmful because as more than 70% of our population is below 45 years of age. Their interest, personality, development, academic achievements, all will be adversely affected.
- It is the youth/younger elements who have to receive our focus/attention, concentration of activities and investment of funds. Any denial of support will greatly harm their future prospects, blooming and growing of the youngsters, building their character, widening their outlook, broadening their mental horizon, enhancing their vision and making them fit and ready to shoulder responsibilities as our leaders, administrators and performers.
ü Budget cuts impact youth correctional facilities.
ü It also affects rehabilitation programme.
ü The budget cuts put a greater financial strain on youth.
ü Budget cuts lead to large class sizes.
CONCLUSION
Cut is a risky game. It may be hazardous and havoc causing factor. It is a detriment to the development of the younger generation. The budgetary cuts normally result in to reduction in the available resources. It consequently results in to lesser avenues for youth for venturing out in to development activities which are crucial for overall national development and growth.
REFERENCES
ü http://in.answers.yahoo.com/question/index?qid=20110714105601AA5NKdr
Submitted To: Mr. Gurdeepak Singh
Submitted By: Ankur Bhalla
MBA- I (1st Semester)
Section - B
Ankur except for the title which is not as per the guidelines, its an excellent attempt... I am so proud of you and feel elated that you are my student.... Keep it up :)
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