The Union Budget is an annual financial document that indicates the government’s proposed expenditure and revenues for a particular fiscal year starting from April 1 to March 31 of the day following. It is tabled in Parliament by the union finance minister and constitutes a detailed report on the government’s economic and fiscal plans for the next financial year.
In the document, aside from liabilities that must be paid off, the government announced a host of welfare programs that would require tremendous spending. So, where does the government raise its money? Let’s find out.
Union Budget 2024: How does the government earn?
The government spending is balanced by revenues and loans. In this case, a dissection of how the government earned money for spending is mentioned in the Union budget document 2023- To do so.
Borrowings and liabilities form the largest portion of 34 percent of the Union Budget. 17 percent is the contribution from Goods and services tax GST, while income tax as well as corporation tax contribute 15 percent each. Seven percent is union excise duties, and 6 percent is non-tax revenue of total revenue.
Budget 2024: Where does the money go?
Since you know from where the government gets its money, one might be interested to learn how it uses this. According to the Union Budget 2023-24 document:
Interest payments make up 20% of the government’s budget. Eighteen percent of taxes and duties levied by the state, along with 17 percent spent from within the Central sector scheme, make up the major percentage of spending. Nine percent are for the centrally funded schemes, and 8 percent go to defense. The Finance Commission says devolution to the states and such transfers need about 9 percent.
2024 Budget unlikely to have ‘spectacular announcement’
Finance Minister Nirmala Sitharaman had already signaled that the Budget to be introduced on February 1, 2024, will not contain any “dazzling announcement” as it was going to be a vote on account ahead of general elections slated for later next year.
“It is a fact that the February 1, 2024 budget the government will announce to be voted on will contain little more than what it needs just to pay for itself until an elected new party takes over,” she said.
Meanwhile, at the CII Global Economic Policy Forum lately held, Sitharaman said that preparation was underway for the summer of the 2024 Lok Sabha elections in India. So the February 1 budget after British custom is known as vote on account.
Sitharaman said,
”No spectacular announcement comes in that time [of vote on account]. So you will have to wait till after the new government is set up and unveils the first full Budget following July 2024.”
The 2024-25 fiscal budget starts on April 1. Sitharaman will present the interim budget on February 1 in Lok Sabha.
