Karela Fry

The union budget for 2011-12 is now available. The total expense budgeted for is INR 12,57,729 crores. It is up by 3.4% over last year’s budget. The total reciepts are expected to be INR 12,57,728 crores. The highlights of the expenses are:

1. Interest payment is 21% of the total budget. Last year it was 19%. A further 8% of the budget goes towards debt repayment. Debt servicing therefore takes up 29% of the budget.
2. Defense gets 13% of the budget, compared to 12% last year (the allocation is therefore 8% larger this year). 58% of this (INR 95, 216 crores) is revenue expense, which is largely salary related.
3. Total plan expense is INR 4,41,547 crores, ie, 35% of the budget. This is up from 20% of the budget last year. The highlights of the plan budget are:
   • Health gets INR 26,760 crores in the budget. This is 2.1% of the budget, and is a marginal increase over the previous year as a fraction of the budget. Of this outlay, INR 1,700 crores is earmarked for AIDS control.
   • Education expense is budgeted to be INR 520,60 crores. This is 4% of the budget, compared to 3.6% last year.
   • Science and Technology gets INR 5,679 crores , space gets INR 5,700 crores, atomic energy gets INR 10,012 crores. These together are 1.7% of the budget.
   • Railways gets INR 56,589 crores, ie, 4.5% of the budget.

The reason that this is being called a populist budget is that 31% of the budget will be financed by borrowings. Only about 74% of the receipts are from taxes (28.6% comes from corporate taxes and 13.7% from income tax). Corporate taxes have jumped a bit from last year, but revenue from income tax was only 9% of last year’s budget, so that is a large increase. Certainly not a populist budget by ordinary people’s standards.

The report on last year’s union budget can still be found here.

A very interesting sidelight is reported by Moneycontrol:

In his Budget announcement the Finance Minister said “The electronic filing of Tax Deduction at Source (TDS) statement has stabilized. The Board shall soon notify a category of salaried taxpayers who will not be required to file a return of income as their tax liability has been discharged by their employer through deduction at source.”