Union Budget 2024: A breakdown of how India earns and where it spends

Budget 2024: The Union Budget is an annual financial statement that outlines the government's proposed expenditures and revenues for the upcoming fiscal year, beginning on April 1 and concluding on March 31 of the following year. It is introduced in Parliament by the union finance minister and serves as a comprehensive document explaining the government's economic and fiscal policies for the coming fiscal year.

In the document, apart from the liabilities, the government also announces a plethora of welfare schemes, necessitating significant expenditure. So, from where does the government get its money? Let's find out.

Union Budget 2024: How does the government earn?

The government spending is offset by revenues and loans. Here's a breakdown of how the government obtained funds for expenditure in the Union budget document 2023-24.

The Union Budget draws its major share from borrowings and liabilities, constituting the largest chunk of 34 per cent. Good and services tax (GST) contributes 17 per cent, with income tax and corporation tax contributing 15 per cent each. Union excise duties and non-tax revenue account for 7 per cent and 6 per cent of total revenue, respectively.

Budget 2024: Where does the money go?

Now that you know where the government gets its money, you must wonder where it spends it. According to the Union Budget 2023-24 document:

Interest payments account for 20 per cent of the government's budget. The state's share of taxes and duties, together with the Central sector scheme, dominate spending, with the former accounting for 18 per cent and the latter accounting for 17 per cent. Centrally funded schemes receive 9 per cent, while defence receives 8 per cent. According to the Finance Commission, devolution to states and other transfers require approximately 9 per cent.

No 'spectacular announcement' likely in Budget 2024

In December, Finance Minister Nirmala Sitharaman announced that the Budget to be presented on February 1, 2024 would not have any “spectacular announcement” as it would be a vote on account in run up to the general elections.

“It is a matter of truth that February 1, 2024 budget that will be announced will just be a vote on account because we will be in an election mode. So the budget that the government presents will just be to meet the expenditure of the government till a new government comes to play,” she said.

Speaking at the CII Global Economic Policy Forum, Sitharaman said the country would be preparing for the Lok Sabha elections which are due in the summer of 2024. Hence the February 1 budget, following the British tradition, is called vote on account.

“No spectacular announcements come in that time [in vote on account]. So you will have to wait till after new government comes in and presents next full Budget in July 2024,” Sitharaman said.

On February 1, 2024, Sitharaman will present an interim budget for 2024-25 fiscal, beginning April 1, 2024, in the Lok Sabha. The interim budget which is also known an a vote on account will allow the incumbent government to undertake expenditures till a new government is formed after general elections.