Studying the Union Budget is crucial for gaining insight into the government’s fiscal strategies and priorities. Comparing the Union Budgets of 2023-24 and 2024-25 unveils significant shifts in central revenue and expenditure allocations, providing a clear indication of the government’s evolving approach to fostering economic stability and growth.
Revenue Sources: A Shift Towards Sustainability
| Source | 2023-24 (%) | 2024-25 (%) |
| Borrowings and Other Liabilities | 34 | 27 |
| Income Tax | 15 | 19 |
| Goods and Services Tax (GST) | 17 | 18 |
| Corporation Tax | 15 | 17 |
| Non-Tax Revenue | 6 | 9 |
| Union Excise Duties | 7 | 5 |
| Customs | 4 | 4 |
| Non-Debt Capital Receipts | 2 | 1 |
One of the most notable changes in the 2024-25 budget is the reduced reliance on borrowings and other liabilities, which has decreased from 34% to 27%. This reduction signifies a strategic move towards more sustainable fiscal practices. By lowering dependence on borrowings, the government aims to ensure greater fiscal stability and potentially lower interest payments in the long run.
Increased contributions from Income Tax (up from 15% to 19%) and Goods and Services Tax (GST) (up from 17% to 18%) highlight an expanding tax base and improved compliance mechanisms. The rise in Corporation Tax from 15% to 17% also underscores the robust performance of the corporate sector. These changes collectively indicate successful tax reforms and a growing economy.
Moreover, the increased emphasis on non-tax revenue, which has risen from 6% to 9%, reflects the government’s efforts to diversify its revenue sources. This diversification is crucial for maintaining a balanced and resilient fiscal framework.
Expenditure Allocations: Prioritising Decentralisation and Strategic Investments
| Expenditure | 2023-24 (%) | 2024-25 (%) |
| States’ Share of Taxes & Duties | 18 | 21 |
| Interest Payments | 20 | 19 |
| Central Sector Schemes | 17 | 16 |
| Finance Commission and Other Transfers | 9 | 9 |
| Other Expenditure | 8 | 9 |
| Centrally Sponsored Schemes | 9 | 8 |
| Defence | 8 | 8 |
| Subsidies | 7 | 6 |
| Pensions | 4 | 4 |
Examining the expenditure side, the 2024-25 budget showcases a significant increase in the States’ Share of Taxes and Duties, up from 18% to 21%. This shift underscores the government’s commitment to decentralisation and empowering state governments, which can stimulate economic activity and encourage innovation at both national and regional levels, fostering optimism about India’s economic future.
Interest Payments have slightly decreased from 20% to 19%, highlighting effective debt management strategies. This reduction, coupled with the reduced reliance on borrowings, reflects a prudent approach to fiscal policy.
Allocations for Central Sector Schemes have slightly decreased from 17% to 16%, and Centrally Sponsored Schemes have been reduced from 9% to 8%. These adjustments suggest a more focused allocation of resources to critical areas, ensuring efficient use of public funds.
Defence spending remains stable at 8%, emphasising continued national security. Subsidies have been trimmed from 7% to 6%, indicating better targeting and efficiency in welfare programs. The allocation for Other Expenditures has increased from 8% to 9%, reflecting a broader focus on various critical sectors. Pensions remain steady at 4%, ensuring ongoing support for retirees.
The Union Budget 2024-25 reflects a prudent and balanced approach, prioritising sustainable revenue sources and strategic expenditure. Reducing reliance on borrowing and increasing tax revenue could lead to greater fiscal stability and lower interest payments in the long run. The emphasis on non-tax revenue and increased devolution to states may stimulate economic activity and encourage innovation at both national and regional levels, instilling confidence in India’s economic stability.
Increased state allocations underscore the government’s focus on federalism and local governance. At the same time, continued investments in defence, welfare schemes, and infrastructure are set to drive long-term economic stability and growth.
In summary, the shifts from the 2023-24 to the 2024-25 budget demonstrate the government’s adaptability and focus on sustainable economic policies, setting a solid foundation for India’s future growth. By carefully balancing revenue and expenditure, the government aims to foster a resilient and inclusive economy.