India’s annual budget crosses ₹50 lakh crore for the first time | Explained

SUMMARYThe world’s fifth largest economy by gross domestic product (GDP) plans to spend a little over $580 billion, a quarter of that will be funded by borrowings. For reference, the size of the budget in the world’s largest economy, US, was $6.75 trillion in 2024, with a deficit of $1.8 trillion. 1 / 6The government of India has budgeted for ₹50 lakh crore ($580 billion), crossing the milestone for the first time ever, in annual expenses for the financial year ending March 2026. That’s 7% more than the revised estimate for ongoing financial year that ends on March 31, 2025.2 / 6Nearly a fourth of the amount, about 24%, will be met with borrowings. Again, 24% of this budget goes into paying interest on borrowings and pensions to retired government employees.3 / 6The biggest slice of government expenditure is defence, which got ₹4.91 lakh crore of the budget allocation, followed by rural development (₹2.66 lakh crore), and home affairs (₹2.33 lakh crore).4 / 6Finance Minister Nirmala Sitharaman also announced a rejig of the income tax slabs, effectively reducing the burden on salaried taxpayers, which would cost the government an additional ₹1 lakh crore. Despite the tax cut, the budget assumes a 14% growth in revenue from income tax in the upcoming financial year.5 / 6The government’s annual expenses have increased two and a half times from ₹19.7 lakh crore at the end of March 2017 to over ₹50 lakh crore now. Similarly, the goverment’s total receipts have gone up 2.3 times in the same period.6 / 6The share of tax revenue, which is expected to contribute over 62% of the government’s revenue, has gone up from 5.5% at the end of March 2017 to 6.9% (as per revised estimates) now. The government expects it to rise to 7.1% in the next year.Continue Reading

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