Photo Source: ANI
Govt earns most from borrowings, spends major share of Budget on interest payments
New Delhi, February 2, 2025 (ANI): India's Union Budget 2025-26 revealed a significant reliance on borrowings, accounting for 24 percent of the government's income, followed closely by income tax, which contributes 22 percent to the revenue.
The Union Budget 2025 provides a clear picture of how the government collects money and where it is spent and aims to strike a balance between its earnings and expenses, using these funds to support economic growth, improve welfare programs, and ensure national security while maintaining financial stability.
The largest source of government income is Borrowing and Other Liabilities, the second-largest source is Income Tax, which makes up 22 percent of the revenue.
This tax is collected from individuals and salaried employees, followed by GST and other indirect taxes account for 18 percent of earnings. These are the taxes that people pay when they buy goods and services.
Corporation Tax, which is the tax paid by businesses on their profits, contributes 17 percent to the total revenue. The other income source of the government is the Non-Tax Receipts (such as profits from government companies) is 9 percent. Union Excise Duties (taxes on specific goods like fuel and alcohol) is 5 percent.
Customs Duties (tax on imports and exports) 4 percent Non-Debt Capital Receipts (such as the sale of government assets) contributes 1 percent
On the expenditure side, the largest allocation goes to States' Share of Taxes and Duties with 22 percent, followed by Interest Payments, which is 20 percent of total spending.Another 16 percent goes towards Central Sector Schemes, which include key national projects and development programs.
For national security, Defence receives 8 percent of the budget. Similarly, 8 percent is spent on Centrally Sponsored Schemes, which are development programs funded jointly by the central and state governments.
Another 8 percent is used for Finance Commission and other transfers, which help states manage their finances.
To support citizens, the government spends 6 percent on Major Subsidies, which include subsidies on food, fertilizers and others.Additionally, Pensions for retired government employees take up 4 percent, while other expenses make up 8 percent.
The budget highlighted the balance between the government's earnings and expenses. While a large part of revenue comes from taxes, borrowing still plays a crucial role. (ANI)