On Budget day, TOI breaks down the numbers, offering a snapshot of how the govt raises its money and where it channels spending across key sectors.WHERE GOVT MONEY COMES FROMGovt receipts are broadly divided into own receipts and borrowings.
- Own receipts: Taxes (largest component), fines, fees and profits from the public sector enterprises.
- Borrowings: Loans taken to meet the fiscal deficit.
WHERE GOVT MONEY GOESMajor spending areas include
- Infrastructure
- Welfare schemes and programmes
- Subsidies
- Interest payments on loans
- Salaries, pensions,administration
- A large portion goes toward interest payments, which is called committed expenditure
- Spending areas are classified into revenue expenditure and capital expenditure
WHAT THE BUDGET SHOWSFinance minister presents the Annual Financial Statement, which includes:
- Estimated govt spending for the next year
- Expected revenue from taxes and other sources
- Borrowing requirements and debt levels
- Comparison with previous year’s actual figures
WHY GOVTS BORROWGovts borrow mainly to finance the fiscal deficit (when spending exceeds income)
- Borrowing increases total public debt
- Higher debt leads to larger repayment obligations and higher interest payments
- Fiscal responsibility laws aim to keep debt within sustainable limits relative to GDP
WHEN SPENDING EXCEEDS INCOME
- If govt expenditure is higher than receipts, the gap is financed through borrowing
- This creates a fiscal deficit
- If receipts exceed expenditure, it results in a fiscal surplus
- A revenue deficit occurs when revenue expenditure exceeds revenue receipts, meaning borrowings are used for routine expenses rather than asset creation
