2012 Budget: Where does the government spend your money?

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

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

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.

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

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.

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.