The Union Budget of India is an annual financial statement presented by the government to the parliament, which outlines the estimated revenues and expenditures for the upcoming fiscal year. The expenditure of the Union Budget refers to the planned spending by the government on various sectors and programs. The government’s expenditure can be broadly categorized into two types: revenue expenditure and capital expenditure.
- Revenue Expenditure: Revenue expenditure refers to the expenditure incurred by the government in the course of its normal activities. These expenses can be further classified into two categories: plan expenditure and non-plan expenditure.
a. Plan Expenditure: Plan expenditure refers to the expenses incurred by the government on the planned development of various sectors and programs, including education, health, infrastructure, and social welfare. The government sets targets and allocates funds for plan expenditure under various Five-Year Plans.
b. Non-Plan Expenditure: Non-plan expenditure refers to the expenses incurred by the government on its day-to-day functioning and administration, including salaries and pensions of government employees, maintenance of government buildings, subsidies, and interest payments on loans.
- Capital Expenditure: Capital expenditure refers to the expenses incurred by the government on the creation or acquisition of assets, including land, buildings, equipment, and infrastructure. Capital expenditure can be further classified into two categories: plan and non-plan capital expenditure.
a. Plan Capital Expenditure: Plan capital expenditure refers to the expenses incurred by the government on the creation or acquisition of capital assets for the development of various sectors and programs under various Five-Year Plans.
b. Non-Plan Capital Expenditure: Non-plan capital expenditure refers to the expenses incurred by the government on the creation or acquisition of capital assets for its day-to-day functioning and administration.
In recent years, the government of India has been focusing on increasing its capital expenditure, particularly plan capital expenditure, to boost economic growth and development. The Union Budget of 2021-22, for example, projected a significant increase in capital expenditure through investments in infrastructure, including roads, railways, ports, airports, and urban infrastructure. The budget also proposed increased spending on healthcare, education, and social welfare programs, along with higher allocation for defense and security. At the same time, the government has also been working on rationalizing its revenue expenditure by reducing subsidies, improving tax compliance, and implementing various administrative reforms.