Friday, March 8, 2013

Government Spending In 2013-14 :

People may wonder why does the government need to earn money and where is the money spent. When it comes to spending, the government has certain goals and expectations in relation to the nation based on which it plans the expenditure.

Goals may vary from year to year and it is a bit of a balancing act between hopes, expectations and the available kitty. When he announced the Budget 2013-14, Finance Minister, P Chidambaram established the ‘overarching goal’ for the financial year – “creating opportunities for our youth to acquire education and skills that will get them decent jobs or self- employment”. And with this theme he put out the expenditure targets for the year.

Here is the expenditure plan for 2013-14
  • Total expenditure: The government plans to spend 16,65,297 cr in 2013-14, It is an increase of 16% over the last financial year. Government expenditure is divided into two parts, plan-expenditure and non-plan expenditure. The two heads are further dividend into revenue and capital expenditure. Revenue expenditure is the money spent to run the day-to-day business of the government. Capital expenditure is the money spent for creating new assets like infrastructure in the economy.

  • Plan Expenditure: In the financial year 2013-14, the government has a target of Rs 5,55,322 cr on Plan Expenditure which is a growth of 29.4% over the current fiscal. This expenditure is incurred on the items relating to five-year plans and social and welfare schemes. Under Plan Expenditure the government will spend Rs 4.19 lakh cr on Central Plan (which includes spending on all social schemes and economic services) and Central Assistance to State and Union Territories will come at a cost of Rs 1.36 lakh cr. As a developing country, central government expenditure on social services and social sector schemes has remains high.

  • Non-Plan Expenditure: The government will spend Rs 11,09,97 cr on Non-plan Expenditure, according to budget estimates for 2013-14. Non-plan expenditure is divided into two heads: Revenue and Capital. Revenue Expenditure for the year 2013-14 is pegged at 9.93 lakh. This includes all spending on subsidies, defence, grants to states, pensions, police etc. The Budget pegs Capital Expenditure at 1.17 lakh cr.

Economists and analysts are wary of a large increase in public spending at a time when managing the fiscal deficit should be the priority of the government. While the Finance Minister resisted from announcing any ambitious social sector schemes, a 16.5% increase in expenditure for a country reeling under a huge revenue deficit is being seen a negative by some analysts.
Source : franklin templeton

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