Union Budget 2024: Where does the govt get its money, where does it go?

Union Budget 2024-25: The fiscal deficit is estimated at 4.9% of the GDP for the current financial year and the government aims to reduce it to below 4.5% next year

Union Finance Minister Nirmala Sitharaman announced her seventh consecutive Budget on Tuesday, sticking to the path of fiscal consolidation. In her Budget speech, Sitharaman said the fiscal deficit is estimated at 4.9 per cent of the GDP for the current financial year. The government plans to reduce the fiscal deficit below 4.5 per cent in the coming year, aiming to maintain a declining trajectory of the fiscal deficit as a percentage of GDP.

But first, where does the government receive its money from and where does it spend it? Here is a breakdown of government spending and expenditure, as stated in the Budget at a glance document.

Budget 2024: Where does the rupee come from?

The Budget 2024 outlined the sources of government revenue, revealing where the rupee comes from. The highest proportion of total receipts, 27 per cent, is derived from ‘borrowings’ and ‘other liabilities’.
 

This is followed by 19 per cent from Income Tax and 18 per cent from Goods and Services Tax (GST).
 

Corporation tax contributes 17 per cent to the total receipts, and 9 per cent comes from non-tax receipts.
 

Union Excise Duties and Customs account for 5 per cent and 4 per cent, respectively, while 1 per cent is sourced from non-debt Capital receipts.

Budget 2024: Where does the rupee go?

The Budget 2024 also detailed where the rupee is spent. The largest share of the central government’s expenditure goes towards the state’s share of tax duties, accounting for 21 per cent of the total spending.
 

Interest payments follow closely, making up 19 per cent of the expenditure. These two categories accounted for 20 per cent each of the government’s spending in the interim budget earlier this year.

Expenditures on Central Sector Schemes (excluding Capital Outlay on Defence and Subsidy) represent 16 per cent of the total spending.

‘Finance commission & other transfers’ and ‘other expenditure’ each account for 9 per cent.
 

Centrally sponsored schemes make up 8 per cent of the expenditure. The defence sector also accounts for 8 per cent of total spending, while subsidies constitute 6 per cent, and pensions account for 4 per cent of the expenditure.