"Government Spending in India increased to 3839.06 INR Billion in the third quarter of 2016 from 3490.59 INR Billion in the second quarter of 2016. Government Spending in India averaged 1832.51 INR Billion from 2004 until 2016, reaching an all time high of 3839.06 INR Billion in the third quarter of 2016" - Trading Economics Blog - tradingeconomics.com
Find out the Revenue of the Government of India and see if we are on the right track in terms of Fiscal health.
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The 2017-18 Union Budget has hardly deviated from the path of fiscal consolidation despite advice from many economists and corporates to show some “flexibility”, especially with no signs of a private investment revival and demand destruction in the wake of demonetisation.
The government is targeting revenues of Rs 29,700 crore from the Clean Environment Cess, Rs 13,300 crore from the Swachh Bharat Cess, Rs 8,800 crore from the Krishi Kalyan Cess and Rs 4,050 crore from the Infrastructure Cess. Apart from these special imposts, it has taken advantage of lower global crude prices during its tenure to hike the excise duty on diesel from Rs 3.56 to Rs 17.33 per litre and from Rs 9.48 to Rs 21.48 per litre for petrol.
Government Revenues in India increased to 9684.98 INR Billion in April-December from 8286 INR Billion in April-November of 2016. Government Revenues in India averaged 2470.38 INR Billion from 1997 until 2016, reaching an all time high of 12409.18 INR Billion in March of 2016 and a record low of 0.82 INR Billion in April of 1999.
Government Spending refers to public expenditure on goods and services and is a major component of the GDP. Government spending policies like setting up budget targets, adjusting taxation, increasing public expenditure and public works are very effective tools in influencing economic growth.
Government Revenues in India increased to 9684.98 INR Billion in April-December from 8286 INR Billion in April-November, 2016. Government Revenues in India averaged 2470.38 INR Billion from 1997 until 2016, reaching an all time high of 12409.18 INR Billion in March of 2016 and a record low of 0.82 INR Billion in April of 1999.
According to me, a budget should be target oriented and should have some broad vision in achieving the goal . We should try to level the economic growth of our neighboring country like China which was at one time equal with us in all sectors.
India is also different from China in some ways: China is a planned economy, the government tries to do the best for its people, but it is a top-down approach. In India, the central government may think that it has a top-down approach, but it doesn’t. It must rely on the incentives of the population across the country and now the environment is very conducive to change at that level
Which ministry gained the most?
Proposed allocation to Ministry of Women and Child Development has increased by 313 per cent, from Rs. 747 crores in 2015-16 to Rs. 3,094 crores in 2016-17.
Ministry of Land Resources has been allocated Rs. 230.51, a 437 per cent increase from Rs. 43.71 crore last year.
Social security and welfare expenses are projected to grow over the forward estimates.
Also, irrespective of whether Modi moves things slowly or quickly, India is moving in the right direction and our budget is the one whose principal message is stability and responsibility.
If we look at last year November, as surge in tax collection has improved the Govt, finances dramatically. According to Controller General Accounts, showed net tax revenue at Rs.6.21 lakh Crore compared to Rs. 5.3 lakh crore a month earlier.Indirect tax collections were up 36% in November from a year earlier, led by a 43.3% increase in excise collections, suggesting little impact of demonetisation on manufacturing.Direct taxes were up over 80% at gross level in November. Overall, taxes were up 47% from a year ago. As a result of the increased tax revenue, the government’s fiscal deficit at the end of November was pegged at 85.8% of the budget estimates for the financial year, marking a significant improvement over the last couple of months and indicating that the target of 3.5% of GDP for the year could be achieved.
At the end of November 2015, fiscal deficit was 87% of the full year target. In absolute terms, the April-November fiscal deficit — the difference between the government’s earnings and spending — was Rs 4.58 lakh crore as against the target of Rs 5.34 lakh crore for the year 2016-17.
The government’s total receipts added up to 57.4% of full year estimates at the end of November, better than the 53.9% recorded at the same point last year.
The government has not had to cut any spending so far. Total expenditure over April-November was 65% of the budget estimate, compared with 64.3% last year.
The data showed April-November tax revenue came in at Rs 6.21 lakh crore, or 59% of the full year budget estimate of Rs 10.54 lakh crore.
Plan expenditure during the period was pegged at Rs 3.64 lakh core, which was 66.2% of the budget estimate for fiscal 2017 and 64.1% a year earlier.
But the progress was slower this year in capital spending. Total plan capital spending was 58% of budget estimate at the end of April-November, compared with 72.3% at the same point last year.
The total expenditure (plan and non-plan) was Rs 12.86 lakh crore, or 65% of the full-year estimate of Rs 19.78 lakh crore.
Yash Mittal
16BAL124
impact of increasing government spending:
It is more likely that the rise in taxes will negate the impact of rising government spending. This would leave Aggregate Demand (AD) unchanged.
However, it is possible increased spending and tax rises could lead to an increase in GDP.
In a recession, consumers may reduce spending leading to an increase in private sector saving. Therefore a rise in taxes may not reduce spending as much as usual.
The increased government spending may create a multiplier effect. If government spending causes the unemployed to gain jobs then they will have more income to spend leading to a further increase in aggregate demand. (e.g. construction workers employed by government increase spending in pubs and transport, causing other sectors of the economy to benefit from the government spending). In these situations of spare capacity in the economy, the government spending may cause a bigger final increase in GDP than the initial injection.
However, if the economy was at full capacity, the increased government spending would tend to crowd out the private sector leading to no net increase in AD from switching from private sector spending to government sector spending.
Some economists would argue increasing government spending through higher taxes would lead to a more inefficient allocation of resources as governments tend to be less effective in spending money.
Another consideration is that an economy may grow at 2.5% a year. If there is higher government spending, this growth rate continues. But, the growth is not due to the rising government spending. The government spending just fails to change the growth rate.
Government Spending refers to public expenditure on goods and services and is a major component of the GDP. Government spending policies like setting up budget targets, adjusting taxation, increasing public expenditure and public works are very effective tools in influencing economic growth.
Government Spending in India decreased to 3165.95 INR Billion in the fourth quarter of 2016 from 3756.26 INR Billion in the third quarter of 2016. Government Spending in India averaged 1864.99 INR Billion from 2004 until 2016, reaching an all time high of 3756.26 INR Billion in the third quarter of 2016 and a record low of 735.82 INR Billion in the second quarter of 2004.
Government Revenues refer to all receipts the government gets, including taxes, custom duties, revenue from state-owned enterprises, capital revenues and foreign aid. Government Revenues are part of government budget balance calculation.
Actual Previous Highest Lowest Dates Unit
10534.65 9684.98 12409.18 0.82 1997 - 2017 INR Billion
A budget should be target oriented, having some broad vision in achieving the goals like trying to level the economic growth of our neighbouring countries like China which was at one time equal with us in all sectors.
This year Union Budget also tends to stick upon India’s stereotypical fiscal consolidation budget policy despite of continuous advice from many economists and corporates to bring a little more “flexibility”. I would also like to add that some signs of private investment revival and demand destruction were expected in the wake of demonetisation.
Government Spending refers to public expenditure on goods and services and is a major component of the GDP. It is anticipated that the increased government spending would create a multiplier effect. If government spending causes the unemployed to gain jobs then they will have more income to spend leading to a further increase in aggregate demand. (e.g. construction workers employed by government increase spending in pubs and transport, causing other sectors of the economy to benefit from the government spending). In these situations of spare capacity in the economy, the government spending may cause a bigger final increase in GDP than the initial injection.
the government is targeting revenues of Rs 29,700 crore from the Clean Environment Cess, Rs 13,300 crore from the Swachh Bharat Cess, Rs 8,800 crore from the Krishi Kalyan Cess and Rs 4,050 crore from the Infrastructure Cess. Apart from these special imposts, it has taken advantage of lower global crude prices during its tenure to hike the excise duty on diesel from Rs 3.56 to Rs 17.33 per litre and from Rs 9.48 to Rs 21.48 per litre for petrol.
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