Budget 2016: Where the money comes from and where it goes

Finance minister Arun Jaitley presented the Union Budget for 2016-17 on Monday, February 29. Interesting trends have emerged from analysis of budget data over the years.

1. Government spending simplified

The Indian government has proposed to spend Rs.19,78,060 crore in the fiscal year 2016-17, which is 10.8% higher than Rs. 17,65,436 crore, revised estimates for previous year. Here is how the allocation is proposed to be distributed across ministries:

2. Which ministry gained the most?

Proposed allocation to Ministry of Women and Child Development has increased by 313 per cent, from Rs. 747 crores in 2015-16 to Rs. 3,094 crores in 2016-17.

Ministry of Land Resources has been allocated Rs. 230.51, a 437 per cent increase from Rs. 43.71 crore last year.

A 13 per cent increase in Higher Education allocation, from Rs. 25,344 crore to Rs.28,765 crore.

Ministry of Civil Aviation has been allocated Rs. 2,590.68 crore, a 38 per cent decrease from Rs. 4,198 crore.

(All comparisons are between revised estimates for 2015-16 to revised estimates for 2016-17)

3. Comparison of BRICS Nations

How does government spending vary across BRICS nations? BRICS is the acronym for the association of five major emerging economies – Brazil, Russia, India, China and South Africa. As the total government revenue varies widely among the BRICS nations, budgetary allocation to a sector as percentage of GDP is good indicator to compare government spending. Russia has the highest military allocation in percentage terms, followed by India and China. For education and health, India has the lowest allocation in percentage terms.

4. Subsidy subsides

Share of subsidies as proportion of total expenditure has decreased from 2012 onwards, when it reached a peak value of 18.23 per cent. In 2016-17, 12.66 per cent of spending — Rs. 2,50,432.93 crore — has been proposed for various subsidies.

5. Food eats up bulk of subsidy

A closer look at how subsidies are distributed across various sectors reveals that share of food subsidies has been the highest since 2013. Now, half of the total subsidy goes to food. Subsidy of petroleum has varied over time, perhaps due to fluctuating oil prices. Share of fertilisers in total subsidy has gone down from 43% in 2009 to 28% in 2016-17 budget estimates.

6. How does the government earn money?

Corporation tax and income tax together constitute one third of the total government earnings.

7. How has the share of taxes changed?

Of the total tax — Rs. 16,30,887.81 crore — collected by the central government, corporation tax has the major share, though it has declined from 39 per cent in 2009-10 to estimated 30.2 per cent in 2016-17. On the other hand, the share of service tax has gradually increased, now contributing 14 per cent of total tax collected by the government.

8. More revenue forgone

From 2006-07, the government has released a statement of revenue that is forgone, which analyses the impact on government revenue due to the tax incentives available under the Central Tax system. For 2016-17, this amount is projected to be Rs. 6,11,128.31 crores — approximately a third of the total government revenue — higher than last year, when the impact on revenue was Rs. 5,54,349.04 crores.

In contrast, subsidies on various sectors amount to Rs. 2,50,432.93 crores in this year’s allocation.