Budget: Where does Centre spend every 1 rupee earned?
Union Budget Explained: As India awaits the Narendra Modi 3.0 governments first full-year Budget, it is an opportune time to learn about the basics of the Centres expenditure, whether it is on interest payments, central sector schemes, pensions or subsidies. Read on to learn more about the expenditure-side aspects of the central governments Budget profile in detail.
Union Budget Explained: As the country awaits Finance Minister Nirmala Sitharaman's next Union Budget, the first under the Narendra Modi 3.0 government, it is prudent to learn about the basics of the annual set of documents outlining an administration's annual collections and spends. Budget 2025 will be the current finance minister's eighth in a row and the second after the 2024 general elections. All eyes will be on the finance minister's speech in the Lok Sabha, the lower house of Parliament, amid hopes for economic reforms and expectations of income tax sops.
Do you know where the central government spends its money?
In this article, let's delve deep on the expenditure side of government finances, according to the July 2024 Budget documents.
For instance, interest payments, defence, subsidies and pensions, and centrally-sponsored schemes form 45 per cent of the government's total expenditure.
Budget Explained | Where does a government spend its money? Where can you find these details?
These details are laid out clearly in the 'Budget at a Glance' document, part of the Budget documents that are tabled in Parliament.
It is this very document that offers an overall summary of Budget, including key aggregates.
The sole purpose of this document is to provide a clear and concise outline of the flow of money on both revenue and expenditure sides, facilitating easy understanding.
For instance, the Budget at a Glance document offers an illustrative account of the money set aside for various expenses through a mix of infographics and tables.
Let's look at the latest Budget at a Glance to understand several expenditure-side aspects of the central government's Budget profile.
Where does Government of India spend every 1 rupee it earns?
| Component | Contribution (in paise out of every 1 rupee of total expenditure) |
| Central Sector Scheme (excluding capital outlay on defence and subsidy) | 16 |
| Interest payments | 19 |
| Defence | 8 |
| Subsidies | 6 |
| Finance Commission & other transfers | 9 |
| State share of taxes and duties | 21 |
| Pensions | 4 |
| Other expenditure | 9 |
| Centrally-sponsored schemes | 8 |
More than two-thirds of the overall expenditure covers central sector schemes, interest payments, defence, subsidies, pensions, centrally-sponsored schemes, and Finance Commission and other transfers, according to official Budget documents.
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