The Union Budget 2025-26 presents a detailed allocation of how each rupee earned and spent by the government will be distributed. Finance Minister Nirmala Sitharaman outlined that 66 paise in every rupee will be generated through direct and indirect taxes, reflecting the critical role of taxation in funding India’s growth, welfare programs, and infrastructure projects.
The remaining revenue sources include 24 paise from borrowings and liabilities, 9 paise from non-tax revenue (such as disinvestment), and 1 paise from non-debt capital receipts.
Breakdown of Revenue Sources
The largest revenue stream comes from direct taxes, which account for 39 paise per rupee. Of this, income tax contributes 22 paise, while corporate tax adds 17 paise.
Indirect taxes, including GST, excise duty, and customs, provide 27 paise in total. GST is the largest contributor among these, bringing in 18 paise per rupee, followed by 5 paise from excise duty and 4 paise from customs duties.
Allocation of Government Spending
On the expenditure side, the budget prioritizes allocations for states’ share of taxes and interest payments:
- 22 paise is allocated to states’ share of taxes and duties.
- 20 paise will be spent on interest payments to service government debt.
Other key allocations include:
- 16 paise for central sector schemes, which cover national infrastructure and social welfare programs.
- 8 paise for centrally-sponsored schemes targeting regional development.
- 8 paise for Finance Commission and other transfers.
- 8 paise for other expenditures.
- 6 paise for subsidies on essential items like food, fuel, and fertilizers.
- 4 paise for pensions.
- 8 paise allocated to various government operational needs.
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Borrowings and Fiscal Deficit Management
To finance these expenditures, the government plans ₹11.54 lakh crore in net market borrowings, with gross borrowings pegged at ₹14.82 lakh crore for the fiscal year. Despite these borrowings, the government aims to continue fiscal consolidation by targeting a 4.8% fiscal deficit for FY 2024-25, with a plan to reduce it below 4.5% by FY 2025-26.
These fiscal strategies emphasize the government’s focus on maintaining macroeconomic stability while pursuing self-reliance and economic growth. The budget reflects efforts to balance developmental priorities, social welfare, and debt sustainability amid domestic and global uncertainties.
This report was first published by PTI.
