Budget 2025: Where Every Rupee Goes & Where Every Rupee Comes from

The Union Finance Minister Nirmala Sitharaman  presented her record eighth Union Budget  2025-26 in Parliament today ,February 1. Delivering the first full budget of Third Narendra Modi-government, Nirmala Sitharaman has become the only finance minister to present the Union Budget for eight consecutive times.

This year’s Union Budget provides a comprehensive overview of the income and expenditure of the Indian government, highlighting how every rupee is generated and allocated. As the country navigates through economic recovery, infrastructure development, and social welfare, the budget outlines crucial aspects of fiscal prudence and financial planning.

Where Every Rupee Comes From

The government’s revenue is derived from multiple sources, primarily taxes and borrowings. For every Rs.1 the government earns, the breakdown is as follows:

• Borrowings & Other Liabilities – 24 paise
• Income Tax – 22 paise
• GST & Other Taxes – 18 paise
• Corporation Tax – 17 paise
• Non-Tax Receipts – 9 paise
• Union Excise Duty – 5 paise
• Customs Duties – 4 paise
• Non-Debt Capital Receipts – 1 paise

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A significant portion of government revenue comes from direct and indirect taxes, while borrowings continue to play a vital role in financing developmental projects and meeting fiscal obligations. The increasing dependence on income tax and GST collections underscores the importance of an efficient taxation system for economic stability.

Where Every Rupee Goes

For every Rs.1 spent, the government allocates funds across various sectors to maintain governance, boost economic growth, and enhance social welfare programs. The distribution is as follows:

• State Share of Taxes & Duties – 22 paise
• Interest Payments – 20 paise
• Central Sector Schemes – 16 paise
• Defence – 8 paise
• Finance Commission Grants – 8 paise
• Centrally Sponsored Schemes – 8 paise
• Major Subsidies – 6 paise
• Pensions – 4 paise
• Other Expenditures – 8 paise

The largest chunk, 22 paise of every rupee, is transferred to state governments as their share of central taxes and duties. Interest payments on previous borrowings consume 20 paise, highlighting the importance of debt management. Central Sector Schemes, which include infrastructure, agriculture, and health programs, account for 16 paise of expenditure. Defence spending remains a priority at 8 paise per rupee, ensuring national security. Other allocations cover grants, subsidies, and welfare schemes.

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A Near-Balanced Budget with a Small Deficit

The total income (receipts) of the government for 2025-26 stands at seventeen lakh eighty-nine thousand seven hundred sixty-two crore and fifty-seven lakh rupees (₹17,897,625.77 crore), while the total expenditure is seventeen lakh ninety thousand eleven crore and fifteen lakh rupees (₹17,900,110.15 crore). This results in a deficit of two thousand four hundred eighty-four crore and thirty-eight lakh rupees(₹2,484.38 crore).

Although this deficit is relatively small compared to the overall budget size, it reflects the government’s need to balance fiscal discipline with economic growth initiatives. The reliance on borrowings and tax revenues underscores the necessity for sustained economic expansion, tax compliance, and effective debt management.

Conclusion

The Union Budget 2025-26 lays out a roadmap for India’s economic trajectory by carefully balancing revenues and expenditures. With a focus on infrastructure, welfare, and fiscal responsibility, the budget aims to strengthen the economy while ensuring social development. As India continues its growth journey, prudent fiscal management will be essential in achieving long-term sustainability and prosperity.

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