A visual look at the Indian National Budget

I’ve always been troubled by the fact that I never really understood how much our budget numbers were. Every article I read stats are thrown about, 2% of GDP, 6% growth, spending of $250Mn, etc, but they are never put in context. How much do we spend for Defence? What are Sonia Gandhi’s “social” schemes really going to cost? Did you know India had a department for AIDS control? How much do they spend a year?

Hence, this year I start a series, and hope to compound this post every year to show the trend of key aspects of the Indian national budget. This is built using Tableau  a fantabulous quick analysis software that I used to break down the budget components. I intend this to be a living Tableau sheet which will grow with more figures and graphs over time.

Note: All figures are in Crores. So if a number says 10K that means that value is 10,000 Crores.

First, the basics. How much does the government earn and how much does it spend! All incoming money in the budget is termed as Receipts and all outgoing money is termed as Expenditure. Out of receipts, money earned from income sources like taxes are named income. So here is a graph of Income vs Expenditure. The difference between the two is basically what they call the Budget fiscal deficit!

Look at the chart below. Last year we spent roughly 14.3 lakh crores and made 8.7 lakh crores. This year we’re budgeted to spend 16.6 lakh crores and make about 10.5 lakh crores. So we roughly make only 57-60% in income as we spend!

Now, our budget is not balanced (It has a deficit). Aamdhani athanni Kharcha Rupaiya. So where do we get the money so that we’re able to spend more than we earn? We borrow that’s where! We borrow from the World bank/Asian Development Bank, other countries (Basically sell them treasury bonds type thingies) and we borrow from our own people (When you buy a National Savings Certificate, you’re basically lending the govt. money to spend). How much do we borrow each year? Well basically we need to finance our deficit. So we borrow about as much as the difference between our income and our expenditure. The chart below shows our borrowings for the last 3 years.

We borrowed roughly 5.2 lakh Crores each year for the last year. Please note that these are new loans. This is NOT the total National debt. We add roughly 5 Lakh Crores to our national debt each year and we repay roughly 1.1 Lakh Crores (This number is understated. I haven’t found a source for the amount of the difference. I’ll update once I have that, but it shouldn’t be a lot) of old loans. So we add about 4 Lakh Crores to our total National Debt every year! Are you reassured that we’re not living out of our means. I bet that Food Security Bill is beginning to look real good now huh!

Straw poll. How much of our governments total receipts comes from taxes. Well, they do tax us a lot don’t they. I’m sure our taxes cover most of it right? WRONG! Our taxes only cover roughly 50% of the governments spending. A massive 30-40% of it comes from debt. So if we wanted to balance our budget, we’d need to cut spending by a massive 40%. The good news though. The Tax revenue percentage of total revenue has been increasing and the Debt % has been decreasing. Well that just says we shouldn’t hope for a tax break any time soon!

There is nothing certain but death and taxes! We pay a lot of taxes. We pay a lot of type of taxes. At the petrol pump, at the restaurant, from our salaries. How do these add up. Which are the biggest earners for the government? Well, corporation taxes or taxes on companies are the leaders by a long mile. Income taxes are second. Growth rate of income taxes are more than 20% whereas growth rate of corporation taxes are about 10-17% per year on average.

Notice that Service Tax will almost double this year from two years ago. When Pranab Mukherjee stood in Parliament and said, “I must be cruel only to be kind”, he wasn’t joking huh! His changes in the Service Tax Regime are set to double collections!

I know you’re thinking, Customs, Excise, how do they bring in so much? Those people at the airports actually collect taxes? Well this is mostly from fuel. The Customs duty and Central Excise Duty on fuel is a massive contributor (Almost 30% combined – see second graph) to the central government tax revenues. And they talk as if they’re so kind in giving us fuel subsidies.

That’s all for now. I’ll have another post with details on expenditure soon! Thanks.

Here is the source for all data http://indiabudget.nic.in/

Here is the link to the full tableau if you’d like to play around. http://public.tableausoftware.com/workbooks/IndianNationalBudget

(I think you may need to sign up for Tableau public)


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