Surplus Budget:

It has been argued that a surplus budget on revenue account may be used to clear off or reduce public debt gradually instead of creating a separate fund like the sinking fund. Of course, the use of this method depends upon the state of the revenue budget. In other words, this method is less certain than making a fixed amount every year to the sinking fund which aims at reduction of debt. But in the modern times surplus budget is a rare phenomenon due to the fast growth of revenue expenditure. Moreover, surplus budget policy cannot be followed at all economic situations. In other words, surplus budget cannot be followed when deflationary conditions prevail in the economy and so this is the limitation of the present method.