With less than 2 days left for Budget 2019, it is imperative to understand India’s revenue and expense system. India’s economy is said to be the 10th richest in the world with the Government earning $15,000 billion, every year. That is a lot of money. And despite that our economy is in a massive deficit with our expenses far exceeding the revenue. Why is that and how does the budget aim to fix it? Here’s a quick rundown on the government’s income vs. expenses.
The government earns revenue from direct and indirect taxes, exports, customs, and excise duties. Consider this the government’s salary. The money that is earned through these sources is then spent on things like infrastructure, development, policies, imports, manufacturing, banking, etc.
If the country’s expenses are more than the incomes, it will borrow money from one of the friendly nations or alternatively increase tax slabs or interest rates on loans. The government also saves some space for pensions which is unplanned and makes plans for the development of the country. Every year, the finance minister presents the budget to the parliament who then has the final say in its approval.
To make it easier to understand, let’s say, we have to make our own plan for the coming year. To do that, we need to minus our expenses from our salary.
If our expenses are more, we would borrow some amount from our friends. Now, we know how much money we have to make other plans like a vacation, redecorating your house or buying something we always wanted. That’s it. We know where the money is going to be spent for the next year.