The budget of a government shows its comprehensive exercise on taxation and subsidies. 1. A government uses fiscal instruments of taxation and subsidies with a view of improving the distribution of income and wealth in the economy. 2. A government reduces the inequality in the distribution of income and wealth by imposing taxes on the rich and giving subsidies to the poor, or spending more on the welfare of the poor. 3. It will reduce the income of the rich and raises the living standard of the poor, thus, leads to equitable distribution of income. 4. Expenditure on special anti-poverty and employment schemes will be increased to bring more people above the poverty line. 5. Public distribution system should be inferred so that only the poor could get foodgrains and other essential items at subsidized prices. 6. Equitable distribution of income and wealth is a sign of social justice which is the principal objective of any welfare state in India.