Government budget can be helpful in bringing economic stabilization in the economy. Economic instability occurs when there is frequent price fluctuations in the economy. Such price fluctuations can becontrolled through budget by taxes, subsidies and expenditure, For instance, if there is the condition of inflation (continuous rise in prices), government can reduce its own expenditure, tax rates can be increased or subsidies can be withdrawn or reduced to control the expenditure on the part of consumer and producer both. While in the condition of depression characterised by falling output and prices, government can reduce taxes and grant subsidies to encourage spending by people.