This Article is From Jul 10, 2014

Budget 2014: For Every Rupee in Government Kitty, 24 Paise to Come from Borrowing

New Delhi:

For every rupee in government kitty, as much as one-fourth will come from market borrowing in 2014-15 while 20 paise would be spent towards interest payment.

The government's dependence on debt has come down from 27 paise in the previous Budget to 24 paise in the coming year, reflecting ease of pressure on revenue collections.

As per the proposals presented by Finance Minister Arun Jaitley in Parliament today, the gross borrowings of the government in 2014-15 are pegged at Rs 6 lakh crore against Rs 5.63 lakh crore for the last fiscal.

On the expenditure side, central plan allocation has been reduced sharply from 21 paise to 11 paise in 2014-15.

However, the interest payment would go up to 20 paise compared to 18 paise in the 2013-14.

Defence allocation has been maintained at 10 paise. As the single largest source of revenue income, the collection from corporate tax has been maintained at 21 paise as a percentage of every rupee earned.

However, income tax mobilisation will go up marginally to 13 paise as compared to 12 paise in 2013-14 indicating more individual tax payers coming under the tax net.

Putting stress on raising resources, Mr Jaitley said, "the focus of any tax administration is to broaden the tax base."

On indirect tax front mobilisation, excise and customs would earn 19 paise for the government, while the government expects revenue collection from service tax and others to go up to 10 paise against nine paise in 2013-14.

"In recent times, among indirect taxes, service tax has shown the highest rate of growth....the twin objectives in this sector of indirect taxes are to widen the tax base and enhance compliance," he said

Even as the government plans to overhaul subsidy regime, it has been kept intact at 12 paise for year ended 2015.

"I also propose to overhaul the subsidy regime, including food and petroleum subsidies, and make it more targeted while providing full protection to the marginalised, poor and SC/STs. A new urea policy would also be formulated," he said.

At the same time, other non-plan expenditure is expected to account for 11 paise of every rupee spent by the government in 2014-15, while the states' share of taxes and duties would amount to 18 paise of every rupee earned.

Plan assistance to states and Union Territories has been more than double to 15 paise in 2014-15.