2013 Budget – Where does the government spend your money?

by Manshu on March 5, 2013

in Economy

Yesterday I detailed out the sources of funds for the government and in today’s post I’ll show a break up of how the government spends your money.

There are two heads of government spending – Non Plan Expenditure and Plan Expenditure. Non Plan Expenditure is money that’s spent on sustaining the country like defense, postal deficit, subsidies etc. and Plan Expenditure is the money that is spent on improving the country like the money spent on dams, roads etc.

As you would probably expect, a lot more is spent on sustaining the country than is spent on improving it.

Plan versus Non Plan Expenditure

First, let’s take a look at the break up between the Plan and Non Plan Expenditure.

Head In Crore of Rupees
Plan Expenditure 5,55,322.00
Non Plan Expenditure 11,09,975.32
Grand Total 16,65,297.32

Here is a pie chart that shows how this breaks out.

Plan and Non Plan Expenditure

Non Plan Expenditure

Now let’s take a look at the break up of the non major expenditure items.

 

Head In Crore of Rupees
Interest Payment and Debt Servicing 3,70,684
Defence Services expenditure 2,03,672
Capital Outlay (excluding Defence) 30,131
Grants to State Governments 76,105
Pensions 70,726
Food Subsidy 90,000
Police 40,895
Grants to Foreign Governments 4,144
Transport 3,541
Petroleum subsidy 65,000
Other Non Plan expenditure 155,077
Grand Total 11,09,975

Here is a pie chart that shows the breakup of these numbers.

Breakup of Non Plan Expenditure 2013 - 14

For those who are not familiar with this, the biggest surprise will be how much we spend on interest payments, and the as you saw yesterday, the borrowing keeps rising and so the interest payment will have to go up as well.

Subsidies are another interesting item because it shows the strain on government finances, and even if you get something for less than the market price, ultimately you will have to pay for it.

Plan Expenditure

Now, let’s take a look at the major heads of Plan Expenditure.

Agriculture and Allied Activities 18781.28
Rural Development 42772.55
Irrigation and Flood Control 1200.00
Energy 158286.92
Industry and Minerals 48009.82
Transport 133488.05
Communications 12379.92
Science Technology & Environment 17586.79
General Economic Services 31602.43
Social Services 206708.92
General Services 9306.71
GRAND TOTAL 680123.39

Here is a pie chart that shows the breakup of all these expenses.

Breakup of Plan Expenditure

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{ 15 comments… read them below or add one }

Mihir Naik March 5, 2013 at 8:29 am

I think, Common people take the budget emotionally..!

They can not understand such things. The only thing which they can see is, The women are provided separate bank and all that stuff..! Such things are used as a gimmic..!

Like, I am also surprised to read that nearly 2/3 of the expenditure is non planned..!

Reply

Manshu March 5, 2013 at 10:22 pm

In this context, the Non Plan expenditure doesn’t really mean unplanned in the literal sense. They are telling you that this is what they plan to spend for the next year so it is planned. It’s just the way they have decided to name this part of the expense.

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Ams March 5, 2013 at 9:53 am

Manshu,

This is very interesting. I have one question here, thinking of goverment spending like an individual who is earning and spending for himself and his family.
Any persons finances would be healthy or for that matter goverments too would be termed healthy only if the planned spendings are more and the unplanned spending are marginal.
So does the goverment too tries to move towards this goal gradually ?

Thanks,
Ams

Reply

Manshu March 5, 2013 at 10:50 pm

Ams, Non Plan spending are not truly unplanned spending because as you can see yourself, they have planned for them one year in advance. The Non Plan expenditure is spending that’s done to sustain the country so to that extent, yes one would hope that the country’s plan expenditure which is done to build infrastructure is more than the money spent to sustain it, but it’s not unplanned expenditure, strictly speaking.

I don’t think I have ever heard anything which says that we should move to a ratio where plan is more than non plan, but it would be beneficial if that were to happen without worsening the deficit.

Reply

Ams March 6, 2013 at 9:47 am

Thanks Manshu !

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Manshu March 6, 2013 at 4:48 pm

Thanks for the suggest a topic suggestion Amit :)

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Ams March 7, 2013 at 11:19 am

You welcome Manshu !
I agree would be good to know about this, as I found it quite interesting !

Thanks,
Amit

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Ramamurthy March 5, 2013 at 10:02 am

I am interested in knowing what is the amount proposed to be spent on Employees of the Govt.
Also why cant the Govt prepare a sort of Cash Flow Account indicating Employee costs,Travel,etc in the same format which a normal Company prepares..I know Govt does not adopt double entry book keeping and cannot complile a Profit and Loss Account.

Reply

Manshu March 5, 2013 at 10:51 pm

I’m not sure how to get to that info sir. I’m sure it is there in one of the expense documents, but I don’t think I’ll be able to wade through them right now.

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santonu March 5, 2013 at 7:16 pm

In continuation to the remark given by AMS i would like to add that our expenditure on children education,paperbill,telephone bill, expenditure on food may be termed as planned expenditure , on the other hand expenditure on movies, outdoor eating,gift to some one etc can be termed as nonplane expenditure

Reply

Manshu March 5, 2013 at 11:10 pm

Non Plan and Plan are terms that were probably derived from 5 year Plans and have really nothing to do with the literal meaning of the word, so you can’t in that sense equate these to unplanned expenditure.

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santonu March 6, 2013 at 7:21 am

thanks Manshu for clearing my doubts. Today I only came to know that these term plan/non plan come from 5 year plans

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Manshu March 6, 2013 at 4:48 pm

I think that’s where they have come from, I will double check and leave a comment here.

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Karthik March 20, 2013 at 5:37 pm

Hi Manshu,

Nice article. Is it possible that you detail the planned activities of the budget 2012, and what all have actually been achieved?

I expect lot of deviations, but it will be good to know in numbers.

Reply

Manshu March 26, 2013 at 6:17 am

Final numbers aren’t out yet but when they are I will try to such a post. It is a good idea.

Reply

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