Visualising the Indian Budget

india-budget-comparisonThe last Indian budget stood at Rs 1,020,838 crores (about 227 billion US dollars). Take a look at this picture to get a sense of how big that is. It’s slightly more than Africa’s debt to the Western world, a bit under the cost of a manned mission to Mars, and half the Chinese government’s stimulus package. It’s two-thirds of Wal-Mart’s revenues, and over 4 times Bill Gates’ net worth. (See The Billion Dollar-o-gram.)

Put another way, it’s the income tax collected from 10 lakh Sehwags or Dhonis, 1,600 Van Gogh portraits, or just 100 residences like Antilia, Mumbai.

We decided to take a closer look at the budget to see how this money was being spent, and how this has changed over the last 10 years, based on data from the Union Budget.

Here’s a short video giving an overview of the budget and some observations.

Let’s take a closer look:

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The budget has tripled over the last 10 years in nominal terms, from 338 thousand crores to 1,020 thousand crores. But if you adjust for inflation (using WPI), it’s doubled In 2010 terms, the budget in 2000-2001 was Rs 493 thousand crores. That’s a 6% growth in real terms (12% nominal) — about in line with the GDP growth. The graph also shows acceleration. The growth over the last 4 years was 12% in real terms — twice that over the last 10 years.

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The top expense, interest payments, is over a fifth of the budget. It has more than doubled in nominal terms over the last 10 years. But in real terms, that’s not too big — just a 3% growth. The bulk of this growth has happened in the last 4 years. Interest payments only accounts for 14% of the real increase in the budget.

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The Central Plan has a different story, however. It’s grown to the second largest item, but 10 years ago, it was just 10%. It has experienced the fastest growth: 16% in real terms. In terms of contribution to the real budget increase, this is the single largest contributor, at 29%.

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Subsidies have grown considerably as well, though not as much as the Central plan. They contribute 16% — about as much as interest payments — to the real budget increase, but what’s interesting is the surprisingly large growth in recent times.

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A pattern that is emerging is the recent growth in expenditure. Many items have had a substantial increase in the recent past. Defence revenue expenditure, pensions, police, social services, etc. have had a marked increase in the last year. Many others, like interest payments, subsidies and central assistance have grown considerably over the last few years. This may be a pattern worth investigating further.

NREGA financial performance

The Mahatma Gandhi National Rural Employment Guarantee Act funds rural employment. Their website provides reports regarding NREGA’s financial performance. Below is a visualisation of their performance for the year 2009-10 (as of March 2010).

Summary of funds and spending

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About 60% of the Rs 46,000 crores available was funded by the Centre this year, with the States contributing only 12%. The bulk of the rest are from the previously available balance. This 46K crores translates roughly to Rs 600 per person in the rural areas (based on the rural population of 74 cr in the 2011 census).

The majority of the spend goes towards unskilled labour, followed by materials. The total spending so far accounts for 83% of the available funds. Based on current estimates, the actual spend will be 18% in excess of the available funds.

Visualisation of the State-wise data

The Visualization chart below shows the spending by state, sorted by available funds. The first column shows the % Spend as a ratio of available funds. Other than Karnataka, all other states have stayed within their funding limits.

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The next column is a chart that shows a number of things, as given in the legend below, which helps with the way to read the actual chart.

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You can see, based on this, that

  • Karnataka and Orissa were funded entirely by State funds rather than Central funds, while most other states were funded predominantly by Central funds.
  • Most states have spent more than the funds released in the current year, and are eating into their balance.
  • Some states are in danger of of exceeding the available funds, and quite significantly. Rajasthan, Madhya Pradesh, Andhra Pradesh, Bihar and Jharkard in particular.

The spend per capita column shows the amount spent per person in the rural areas, and the estimated spend per person. The rural population for the state is based on the 2011 census data.

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The North-Eastern states of Tripura, Nagaland, Manipur and Mizoram are the ones that receive the highest assistance per-capita. Outside of these, Rajasthan and Himachal Pradesh too have a fairly high level of per-capita assistance.

The last column shows the mix of spending. Most states spend on unskilled labour and materials, and very little else. The only exceptions are:

  • Jammu and Kashmir, which has a reasonable expenditure on skilled labour, followed by Maharashtra and Nagaland
  • Goa, which has a fairly large component of recurring administrative expenses
  • Tamil Nadu, which seems to be spending almost nothing on materials, and focuses entirely on unskilled labour

For the raw data, please visit the NREGA website.