Union Budget 2024: Where does the money come from and how is it spent? A dummy’s guide

Finance Minister Nirmala Sitharaman is set to present the Union Budget 2024 in the Parliament in less than 10 days, on July 23, and the market is buzzing with expectations. Every sector has its eyes on the budget and many are expecting favourable decisions for the upcoming year.

According to the ‘Budget at a glance’ document by the Indian government released in February after the interim budget, the total expenditure was estimated to be ₹47.6 lakh crore with capital expenditure of ₹11.1 lakh crore.

The effective capital expenditure was projected to be ₹14.9 lakh crore this year as compared to last year’s revised estimates of ₹12.7 lakh crore. The fiscal deficit, which is the difference between the expenditures and receipts of the government and arises when the spending is more than revenues, was estimated to be 5.1% while it stood at 5.8% in the revised estimates of budget 2023-24.

Additionally, the total transfer to states and union territories, including the devolution of states’ share in taxes and grants, was projected to be ₹22.7 lakh crore, up from the ₹20.9 lakh crore of last year’s revised estimates.

Where does the money come from?

According to the document, borrowings and income taxes were the highest shares in the government’s revenue at 28% and 19%, respectively. This was closely followed by GST at 18%.

Other things in the composition were corporation tax at 17%, non-tax receipts at 7%, Union Excise Duties & Customs clubbed at 9%, and non-debt capital receipts at 1% of the total receipts.

Source: 'Budget at a glance', released by the Government of India

Where is the money spent?

Interest payments and the state's share of tax duties were the biggest expenditure for the Centre at 20% each. Central sector schemes and other expenditure each were allocated 16% and 9% of the total expenditure, respectively.

The defence sector, centrally sponsored scheme, and the Finance Commission were all allocated 8%, while subsidies and pensions were at 6% and 4%, respectively, of the total expenditure.

Source: 'Budget at a glance', released by the Government of India