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Budget-Narendra Modi-Arun Jaitley
Reuters/Adnan Abidi
Going in for the kill.

The two numbers that really matter in Narendra Modi’s first full budget

Pranav Kumar
By Pranav Kumar

Pranav is a development specialist at the World Bank

For all the excitement, most budget numbers in reality in India—and elsewhere—are only incremental changes over the past. This is expected because countries cannot and should not be changed drastically every year.

So unsurprisingly, numerically speaking, most big-picture numbers in the union budget 2015 indicate gradual changes. But two numbers stand out—one on the expenditure side and (by corollary) one on the revenue side.

Expenditure

This year’s estimated total union government expense is Rs1.78 lakh crore, which is 6% higher than last year. The centre’s decision to devolve more money to the states has kept this number lower than it would have been. Revenue expenses are up by 3%. In contrast, non-revenue expenses are up a significant 26%.

Revenue expenditure includes items that do not create any assets including salaries, interest payments, and subsidies. Capital expenditure includes items that create assets such as schools, roads and other infrastructure or repayment of loans. It is the capital expenditure where this budget has clearly stepped up.

Income

Total estimated receipts are up 6%. When we dig deeper, receipts from taxes and non-tax sources are up 1% and those from borrowing are up 8%. The big change is from a category called “miscellaneous capital receipts,” which are up 122%. This item, which is mainly about divestments, is estimated to fill our coffers by Rs69,500 crore this year up from an average of Rs30,000 crore per year for the last two fiscal years.

In summary, the government is stepping on the gas on capital expenditure and on capital receipts. The plan is to build India’s future assets by monetising existing ones. Onward to execution now.

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