2012 Budget: Where does the government spend your money?

by Manshu on March 23, 2012

in Economy

Earlier in the week I looked at how the government raises money, and in this post I’m going to look at a few charts on how the government spends its 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.

It won’t surprise you to learn that a lot more is spent on sustaining ourselves than is spent on improving the infrastructure etc. and here is a pie chart that shows how this ratio is expected to look like in 2012.

Government Expenditure Plan and Non Plan

Government Expenditure Plan and Non Plan

The absolute numbers for this is Rs. 9,69,920.90 crores of Non Plan Expenditure and 5,21,025.00 crores of plan expenditure.

But if the government spends so much on sustaining us – where does that money go?

Here is a pie chart that shows the spending on the major non plan expenditure heads.

Breakup of Non Plan Expenditure

Breakup of Non Plan Expenditure

This chart would probably surprise people who see this break up for the first time, but others would know that a large part of the spending goes in making interest payments of the debt that we’ve accumulated over the years, and the next biggest head is Defense of course.

Here are the absolute numbers.

Heads Rs. In Crores
Interest Payments and Debt Servicing  319,759.43
Defence  193,407.29
Total – Subsidies  190,015.13
General Services  120,086.08
Social Services  20,784.13
Economic Services  20,479.24
Others  105,368.99
Grand Total  969,900.29

Now, let’s move on to plan spending. Here is a pie chart with the break up on the plan spending.

Planned Exp Breakup

Planned Exp Breakup

The big spend here is Social Services and that comprises of a lot of items under broad heads like Education, Health, Housing, Art and Culture, Water Supply etc.

Here are the absolute numbers.

Agriculture and Allied Activities 17692.37
Rural Development 40763.45
Irrigation and Flood Control 1275.00
Energy 154841.94
Industry and Minerals 57226.76
Transport 125357.06
Communications 15411.38
Science Technology & Environment 16591.65
General Economic Services 24777.28
Social Services 188871.69
General Services 8700.67
Grand Ttotal 651509.25

I think perhaps the biggest thing to take away from this post is how nothing is free and how money that’s used to subsidize oil has to be later borrowed which then accrues interest on it and then paying that interest eats up into money that you could use to finance growth.

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