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 â€“ Non Plan Expenditure and Plan Expenditure. Non Plan Expenditure is money thatâ€™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|
|Non Plan Expenditure||11,09,975.32|
Here is a pie chart that shows how this breaks out.
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|
|Grants to Foreign Governments||4,144|
|Other Non Plan expenditure||155,077|
Here is a pie chart that shows the breakup of these numbers.
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.
Now, let’s take a look at the major heads of Plan Expenditure.
|Agriculture and Allied Activities||18781.28|
|Irrigation and Flood Control||1200.00|
|Industry and Minerals||48009.82|
|Science Technology & Environment||17586.79|
|General Economic Services||31602.43|
Here is a pie chart that shows the breakup of all these expenses.
18 thoughts on “2013 Budget – Where does the government spend your money?”
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.
Final numbers aren’t out yet but when they are I will try to such a post. It is a good idea.
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
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.
thanks Manshu for clearing my doubts. Today I only came to know that these term plan/non plan come from 5 year plans
I think that’s where they have come from, I will double check and leave a comment here.
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.
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.
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 ?
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.
Thanks Manshu !
Thanks for the suggest a topic suggestion Amit 🙂
You welcome Manshu !
I agree would be good to know about this, as I found it quite interesting !
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..!
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.