Budget of India over the years, in numbers

parting pain

The economic burden of the enormous humanitarian crisis created by Partition was evident in the first budget of independent India, presented by RK Shanmukham Chetty in November 1947. Defense forces played an important role in the rehabilitation of the refugees. The country was also in the midst of a military conflict with Pakistan. As a result, 47% of the total expenditure was earmarked for defence. The fiscal deficit was as high as 21% of the expenditure.

fm score

Since independence, 26 finance ministers have presented 89 Union Budgets. Morarji Desai presented the highest number of 10 of them. P. Chidambaram is second with nine budgets, followed by Pranab Mukherjee with seven budgets, spanning the 1980s and 2009 to 2012. The current Finance Minister, Nirmala Sitharaman is all set to present her 5th budget on Wednesday, which will position her as the next. Joint seventh on the list. Four finance ministers became prime ministers.

small pockets

This has traditionally been the ministries’ share of the total budget spent, with very little allocation. In the last 14 years, 37 ministries and departments had a share of less than 1% of the Centre’s expenditure. This includes the Ministry of Social Justice and Empowerment and the Department of Atomic Energy. On the other hand, on an average over 50% of the outlay over a decade has gone to only two ministries. Finance and Defense made up 39% and 13% of Budget 2022.

not women friendly

Gender budgeting was first introduced in 2005-06, with the objective of tracking budgetary allocations through a gender lens. Historically, only about 5% of the money was spent on schemes benefiting women, and last year the share was about 4%. There are two types of schemes: those that are completely women-specific (Part A) and those that partially address the developmental needs of women (Part B). Part B plans dominate the gender budget, with an 84% share in 2022-23.

tax benefits

After crossing 8% of GDP for a few years, the central government’s tax receipts have remained at around 7% of GDP since FY10. Since then the share of non-tax revenue has also fallen, mostly below 2% and now just over 1%. For FY23, the government had projected a 9.6% growth in both gross and net tax revenue over the revised estimates for FY22, and collections are expected to exceed estimates. Non-tax revenue was projected to decline by 14%.

getting it right

The annual financial statement also comes with a forecast of economic growth every year. Over the past decade, the budget has over-estimated nominal GDP on six occasions, while under-estimating economic output in the other four years. In pandemic-hit 2020-21, the government had projected nominal GDP 224.9 trillion, but the final figure has come 198 trillion, down 12% due to the lockdown.

Failure

Historical patterns show that equities trade weak on Budget day. In the last 20 budgets, which include both interim and full-year budgets in election years, the Sensex has posted losses on 11 occasions, while it has advanced on nine other times with a highest gain of 5% in 2021. Broader markets generally follow suit as only a few of the major sectoral indices end in the green on D-Day. However, Auto, FMCG and Banks cheered over 55% of the cases.

budget curiosity

This annual financial exercise that sets the tone for policy and financial reforms each year derives its name from the French word bouget, meaning leather briefcase. The much publicized event generated a lot of interest as Indians watch for tax relief and other major announcements. Google search interest for the term “budget” last year was highest in major state economies such as Maharashtra and Karnataka and Delhi.