The biggest expenditure is loan interest.
According to the Union Budget 2024-25, the largest expenditure of the government is on loan interest payment, which is 24% of the total budget i.e. Rs 11.57 lakh crore. That is, every fourth rupee goes to repay the old debt. After this, part of the states comes, in which the central government pays 21% i.e. 10.12 lakh crore rupees as taxes and grants to the states. 16% (Rs 7.71 lakh crore) is spent on central development schemes like road construction and rural employment.
8% (Rs 3.85 lakh crore) is allocated for the defense budget, while 6% (Rs 2.89 lakh crore) is spent on subsidy (food, fertilizer, petrol). Apart from this, a large amount is also allocated for pension and other expenses. 2.5% is spent on education and 1.9% on health.
Where does the government’s income come from?
Government revenue mainly comes from three sources: tax, non-tax, and loan. According to the budget of 2025-26, the largest revenue will come from taxes. There are two types of taxes – direct taxes (eg income tax, corporate tax) and indirect tax (eg GST, excise duty). In 2023-24, 18.2 lakh crore rupees were received from direct taxes, which was 54% of the total tax collection. Tax revenue is estimated to reach Rs 35,76,028 crore in 2025-26, with a large part of GST.
Non-tax income includes dividends, fees and royalty. In 2025-26, he is expected to get Rs 2.33 lakh crore from RBI and Rs 56,260 crore from public companies. The total non-tax revenue can be around Rs 3-4 lakh crore.
The third source is capital receipts, including borrowings and disinvestment. In 2025-26, the government will borrow Rs 14.13 lakh crore, which is 25-30% of the total revenue. A target has been set to raise Rs 50,000 crore from disinvestment. Thus, in 2025-26, taxes will get a revenue of Rs 35,76,028 crore, Rs 3-4 lakh crore from non-taxes and Rs 14.13 lakh crore from credit. In this way, the government uses your tax money for the development, security and needs of the country.
