Budget 2019: Pruning revenue expenditure toughest task for Finance Minister Piyush Goyal

By: |
New Delhi | January 28, 2019 9:38 PM

Budget 2019: The Union government’s total revenue expenditure has never been so high in the history of independent India.

Budget 2019, Piyush Goyal, NDA government, arun jaitley, Modi government, finance commissionAccording to the revised estimates for FY 2017-18, the Union government’s revenue expenditure rose by almost 15% or nearly Rs 2.54 lakh crore as it went up from Rs 16.9 lakh crore to Rs 19.44 lakh crore in FY 2017-18.

Budget 2019: One of the biggest challenges for newly appointed finance minister Piyush Goyal is to reduce the massive revenue expenditure, which is almost 90% the country’s budget outlay. The Union government’s total revenue expenditure has never been so high in the history of independent India. It is set to cross the figure of Rs 20 lakh crore in this financial year with total budgeted expenditure pegged at around Rs 25 lakh crore.

Revenue expenditure includes administrative expenses, interest payments and subsidies, spending that is not considered productive. According to the last year’s budget estimates, the centre’s total budgeted expenditure was estimated to be Rs 24.42 lakh crore and nearly 90% of it or over Rs 21.41 lakh crore was earmarked for revenue expenditure.

Also read| Budget 2019: 7 most critical areas where startups want government to focus on

It means almost 88-90% of this massive amount of nearly Rs 25 lakh crore will go into the establishment expenses, payment of wages and pensions, loan and interest repayments and other kind of subsidies, including transfer to states for centrally sponsored schemes and grant-in-aids. And only 10-12% or nearly Rs 3 lakh crore will be used for creation of some kind of physical assets necessary for the country’s development.

And one third or nearly 94,000 crore of the total proposed capital expenditure of Rs 3 lakh crore was estimated to go for defence acquisitions and not for creating schools, hospitals and other public oriented infrastructure. As per the actual estimates for FY 2016-17, NDA government’s revenue expenditure was Rs 16.9 lakh crore. Next year, the then finance minister Arun Jaitley projected an increase of 8.65% or Rs 1.46 lakh crore. However, contrary to the direction of following the path of fiscal consolidation as per the stated policy of Modi government, he ended up spending Rs 1.07 lakh crore more over and above the projected increase of Rs. 1.46 lakh crore.

According to the revised estimates for FY 2017-18, the Union government’s revenue expenditure rose by almost 15% or nearly Rs 2.54 lakh crore as it went up from Rs 16.9 lakh crore to Rs 19.44 lakh crore in FY 2017-18.

In last year’s budget, finance minister Arun Jaitley proposed a further increase of 10% in the centre’s budgeted revenue expenditure for this financial year, for the first time taking the total figure to over Rs 20 lakh crore as he earmarked Rs. 21.41 lakh crore for revenue expenditure alone.

Almost 88% of the total budgeted expenditure of Rs. 24.42 lakh crore in this financial year will go into six major heads: centre’s establishment expenditure Rs 5,08,400 crore; central sector schemes and projects Rs 7,08,934; other central sector expenditure Rs 6,78,017 crore (inclusive of interest payment of Rs 5.75 lakh crore); centrally sponsored schemes Rs 3,05,517; finance commission grants Rs 1,09,373 crore; and other grants, loans and transfers account for Rs 1,31,972 crore.

Do you know What is Finance Bill, Short Term Capital Gains Tax, Fiscal Policy in India, Section 80C of Income Tax Act 1961, Expenditure Budget? FE Knowledge Desk explains each of these and more in detail at Financial Express Explained. Also get Live BSE/NSE Stock Prices, latest NAV of Mutual Funds, Best equity funds, Top Gainers, Top Losers on Financial Express. Don’t forget to try our free Income Tax Calculator tool.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.