(a) Allocation of Resources : It is one of the important objectives of government budget. In a mixed economy, the private producers aim towards profit maximisation, while, the government aims towards welfare maximisation. The private sector always tend to divert resources towards areas of high profit, while ignoring areas of social welfare. In such a situation, the government through the budgetary policy aims to reallocate resources in accordance with the economic and social priorities of the country.
(b) Reducing Income inequalities: Government through budget makes every possible effort to reduce income inequalities. Income inequalities are so much prevalent in an economy like India. To achieve this objective, government uses fiscal instruments of taxation and subsidies. By imposing taxes on rich and giving subsidies to the poor, the government redistributes income in favour of poorer sections of the society. Distribution of food grain through 'fair = price shops' to BPL (below poverty line) population is an important step in this direction. Equitable distribution of income and wealth is a sign of social justice.
Thus, government budget reduces income inequalities.