The expense account: A look at the various components of government expenditure

Government's financial plans, pretty much like household budgets, are primarily about prioritising spending. The budget for 2015-16 will be a tough balancing act with the government required to keep public spending under check, rein in a widening deficit. A look at the various components of government expenditure:

Government's financial plans, pretty much like household budgets, are primarily about prioritising spending. The budget for 2015-16 will be a tough balancing act with the government required to keep public spending under check, rein in a widening deficit. A look at the various components of government expenditure:

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Total Expenditure

Total expenditure or the size of the annual budget is the amount of money that government spends during the year. Over the years, the government's annual spending has risen sharply reflecting the growing size of the economy, the need to fund welfare schemes such as the rural job guarantee scheme and rising food and fuel subsidies.

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India's total expenditure are divided into two broad components: Plan and Non-Plan

Plan Expenditure

Plan expenditure is spent on productive asset creation through centrally-sponsored programmes and flagship schemes. Traditionally, greater plan expenditure is considered good budget management because it implies that more funds are going towards asset creation that can multiply income and create jobs.

32% - Of the total spending by the Centre is on Plan expenditure.

Rs 575000 crore - India's budgeted plan expenditure in 2014-15 according to the Interim Budget compared to Rs 475532 crore last year

Non-Plan Expenditure

"Non-plan" refers to all other expenditure such as defence expenditure, subsidies, interest payments, including expenditure on establishment and maintenance activities and salaries to government employees.

68% - Of the total spending by the Centre is on non-Plan expenditure.

Rs 1219892 crore - India's budgeted non-plan expenditure in 2014-15, according to the Interim Budget compared to Rs 1114902 crore last year

Not good with numbers? Here is Gaurav Choudhury's simple take on the budget