Explained: How India earns every rupee and where it goes

New Delhi:

The Union Budget for 2023 shows that for every rupee of Indian government earnings, 34 paise comes through borrowings and liabilities, while the Goods and Services Tax (GST) contributes 17 paise.

Income tax and corporation tax add 15 paise to every one rupee earned by the Center every year, while central excise and customs duty add seven and four paise, respectively.

The remaining eight paise comes from non-tax receipts and non-debt capital receipts.

As per the Union Budget 2023, the Centre’s outstanding internal and external debt and other liabilities for the financial year 2023-24 are estimated at ₹1,69,46,666.85 crore. On the other hand, GST is estimated to grow by 12 per cent to Rs 9,56,600 crore in 2023-24 from Rs 8,54,000 crore.

Income tax, which is paid by a small segment of India’s population, is expected to cross Rs 9 lakh crore in 2023-24. Corporation tax, which is the tax levied on the income of companies, is expected to be Rs 9,22,675 crore by March 2024.

These two taxes together with total debt and liabilities contribute 64 per cent of the total income of the government, which is Rs 45 lakh crore in 2023-24.

Non-tax revenue, estimated at ₹3,01,650 crore in 2023-24 – a 15.2 per cent increase over the revised estimate for 2022-23 – adds six per cent to the Centre’s coffers.

Where does one rupee go?

The higher percentage of debt and liabilities in the government’s annual income, however, also means that interest payments account for 20 per cent of expenditure in 2023-24.

In other words: for every rupee spent by the government, 20 paise goes into repayment of loans and liabilities.

The second biggest chunk of expenditure for the Center is sharing the revenue earned from taxes and fees with the states – 18 per cent. The total amount to be shared with the states is Rs 10.21 lakh crore for the financial year 2023-24, which is 41 per cent of the total net proceeds of shareable central taxes, as per the recommendations of the 15th Finance Commission.

As per the Union Budget 2023, the states of UP and Bihar will get about 28 per cent of the total share of central taxes and duties.

Central sector schemes (17 per cent) and centrally sponsored (9 per cent), which are 100 per cent centrally funded and partially centrally funded, respectively, account for more than one-fourth of total government expenditure. In terms of one rupee, 26 paise goes into these schemes.

Defence, the largest sectoral expenditure in the Indian budget, takes up eight paise out of every rupee spent by the Centre. The defense budget in 2023 is Rs 5.94 lakh crore, which is 13.2 per cent of the total budgeted expenditure of the Centre.

At least seven paise will go to subsidy, one paise less than in 2022-23. In the Union Budget, the Center has cut expenditure on food, fertilizers and petroleum by 28 per cent as compared to the Revised Estimates for the current fiscal.