On February 1, 2024, Finance Minister Nirmala Sitharaman will present the General Budget for the financial year 2024-25 in the Parliament. Since it is an election year, this is an interim budget. The full budget will be presented after the Lok Sabha elections. The budget is the government's 'ledger'. In this, the government presents a complete account of the income and expenditure for the coming financial year. During the budget speech, the Finance Minister gives details of the sources of income and expenditure for the financial year.
Where does the government earn from?
- Borrowing: 34% of the budget amount comes from loans.
- Taxes: Taxes are also a major source of government revenue. Tax revenue includes GST, income tax, capital gains tax, etc.
- Non-tax revenue: Non-tax revenue includes fees, dividends, profits, and interest.
If the government's earnings are one rupee, then the income tax share is about 15 paise. GST contributes about 17 paise. Additionally, 15 paise comes from corporate tax. 4 paise comes from customs.
20% of the money goes towards interest
According to the Ministry of Finance, if the government earns one rupee, then 20 paise of it is spent on repaying the interest on the loan. Besides, 7 paise is spent on subsidies, 4 paise on pensions, 8 paise on defense, 17 paise on central schemes, and 9 paise on centrally sponsored schemes. Additionally, 18 paise is given to the states as their share of taxes. Apart from this, the government also makes capital expenditures. From this, the government spends on infrastructure and social infrastructure.
Budget has increased significantly in recent years
In 2019, the Modi government came back to power. In 2019-20, India's total budget was Rs 27.84 lakh crore. In 2023-24, India's budget had increased to Rs 45.03 lakh crore.
Key takeaways
- The government spends 20 paise out of every rupee earned on interest payments.
- 34% of the government's revenue comes from loans.
- The major sources of tax revenue are GST, income tax, and corporate tax.
- The major sources of non-tax revenue are fees, dividends, profits, and interest.
- The government spends on a variety of things, including subsidies, pensions, defense, central schemes, centrally sponsored schemes, and capital expenditure.