Budget 2024: Breaking down where the money comes from and how it’s spent

On Tuesday, 23 June, Union finance minister Nirmala Sitharaman made her seventh consecutive Budget presentation, tabling the Central government's plan to achieve fiscal consolidation.

The Budget document outlined the government’s plan to manage the country’s finances, with the fiscal deficit estimated at 4.9 per cent of GDP for the current financial year, lower than was forecast in the interim Budget. The government aims to bring this figure below 4.5 per cent in the coming year, maintaining a declining trajectory of the fiscal deficit relative to GDP.

The capital expenditure allocation remains unchanged at Rs 11.1 lakh crore, the same as in the interim Budget. The Rs 2.1 lakh crore dividend from the RBI (Reserve Bank of India) is being directed toward various welfare schemes for farmers, youth, and women, aligning with expectations following recent electoral outcomes.

The government has slightly reduced its projected market borrowings from Rs 11.77 lakh crore in FY24 to Rs 11.63 lakh crore in the FY25 estimates.

The Budget 2024 listing out how the government’s revenue originates and how it is allocated showed that borrowings and other liabilities form the largest portion of the government’s total receipts, accounting for 27 per cent. In other words, around 27 per cent of every rupee earned by the government comes from borrowing and other liabilities.

This is followed by income tax, contributing 19 per cent, and goods and services tax (GST) at 18 per cent. Corporation tax added another 17 per cent to the total receipts.

Non-tax receipts make up 9 per cent, while Union excise duties and customs account for 5 per cent and 4 per cent, respectively. A modest 1 per cent of the revenue will come from non-debt capital receipts.

On the expenditure side, the largest share of government spending is directed at the states' share of tax duties, which accounts for 21 per cent of total expenditure. Interest payments, a substantial part of the Budget, follow closely at 19 per cent.

In the interim Budget earlier this year, both these categories accounted for 20 per cent each of the government’s spending.

Central sector schemes, excluding capital outlay on defence and subsidy, represent 16 per cent of the expenditure. The government allocates 9 per cent each to finance commission and other transfers and other expenditures.

Centrally sponsored schemes and defence each receive 8 per cent of the budget, while subsidies and pensions constitute 6 per cent and 4 per cent of the total expenditure, respectively.

The detailed financial blueprint presented by the finance minister spells out the government’s efforts to balance its revenue sources and expenditures effectively.