Watch the video to know how the government decides where to spend the money it has and more.
The government, like you and me, makes a budget every year, but how exactly does it decide where to spend the money it has? The government's financial plans, like households, are about prioritising spending. It has to give funds for infrastructure, welfare schemes like NREGA, subsidies and salaries among other requirements.
From 2017-18, all government spendings have been listed under two head: Revenue Expenditure and Capital Expenditure. Revenue expenditure is the amount spent on the day-to-day running of departments, interest payments, subsidies and salaries. Capital Expenditure, on the other hand, is basically funds spent on creating assets and investments in land, machinery and projects.
Another question often asked is what is the size of the government's budget? The budget size is what the government spends during the year. It has risen sharply over the years, reflecting the economy's growing size. From Rs. 5,05,791 crore in 2004-2005, it now stands at Rs 24,42,213 crore in 2018-19.