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2 Feb 2026·Source: The Hindu
5 min
EconomyPolity & GovernanceNEWS

Key Allocations and Trends in India's Latest Budget

A detailed look at India's budget allocations reveals shifts in spending priorities across key sectors.

Key Allocations and Trends in India's Latest Budget

Photo by Giorgio Tomassetti

The budget breakdown infographic provides a snapshot of the government's financial allocations and trends. It shows that the total budgeted expenditure for FY25 (BE) is ₹47.66 lakh crore, with revenue expenditure at ₹37.66 lakh crore and capital expenditure at ₹10 lakh crore. Key allocations include: * Defence: ₹6.2 lakh crore (FY25 BE), up from ₹5.94 lakh crore (FY24 RE). * Agriculture & Allied Activities: ₹1.59 lakh crore (FY25 BE), a slight increase from ₹1.49 lakh crore (FY24 RE). * Rural Development: ₹2.65 lakh crore (FY25 BE), down from ₹2.70 lakh crore (FY24 RE). * Education: ₹1.20 lakh crore (FY25 BE), up from ₹1.12 lakh crore (FY24 RE). * Health: ₹90,000 crore (FY25 BE), up from ₹88,952 crore (FY24 RE). * Transport: ₹5.34 lakh crore (FY25 BE), up from ₹5.10 lakh crore (FY24 RE). The infographic also indicates that interest payments constitute 25% of the total expenditure, while subsidies are 9%. States' share of taxes and duties is 20%. The fiscal deficit is projected at 5.1% of GDP for FY25 (BE).

Key Facts

1.

Total budgeted expenditure FY25 (BE): ₹47.66 lakh crore

2.

Revenue expenditure FY25 (BE): ₹37.66 lakh crore

3.

Capital expenditure FY25 (BE): ₹10 lakh crore

4.

Defence allocation FY25 (BE): ₹6.2 lakh crore

5.

Agriculture allocation FY25 (BE): ₹1.59 lakh crore

6.

Rural Development allocation FY25 (BE): ₹2.65 lakh crore

7.

Education allocation FY25 (BE): ₹1.20 lakh crore

8.

Health allocation FY25 (BE): ₹90,000 crore

9.

Transport allocation FY25 (BE): ₹5.34 lakh crore

10.

Interest payments: 25% of total expenditure

11.

Subsidies: 9% of total expenditure

12.

States' share of taxes: 20%

13.

Fiscal deficit FY25 (BE): 5.1% of GDP

UPSC Exam Angles

1.

GS Paper III: Indian Economy - Government Budgeting

2.

Connects to syllabus topics like fiscal policy, taxation, resource mobilization

3.

Potential question types: Statement-based, analytical questions on budget allocations and their impact

Visual Insights

More Information

Background

The Indian budget is a comprehensive statement of the government's estimated receipts and expenditures for a fiscal year, which runs from April 1 to March 31. Its origins can be traced back to British colonial rule, with the first budget presented in 1860 by James Wilson. Over time, the budget has evolved from a mere accounting exercise to a significant policy tool for economic management and social development. The concept of fiscal deficit, which represents the difference between the government's total expenditure and its total receipts (excluding borrowings), has become a key indicator of fiscal health. Post-independence, the Indian budget has undergone several transformations, reflecting the changing economic landscape and policy priorities. The introduction of Five-Year Plans in 1951 influenced budgetary allocations, emphasizing investments in key sectors like agriculture, industry, and infrastructure. The economic reforms of 1991 marked a significant shift towards liberalization and globalization, impacting budgetary policies and priorities. The Goods and Services Tax (GST), implemented in 2017, further streamlined the indirect tax system and altered the revenue-sharing arrangements between the Centre and the states. The legal and constitutional framework governing the Indian budget is enshrined in Article 112 of the Constitution, which mandates the presentation of the Annual Financial Statement (budget) before the Parliament. The Finance Act, passed annually, gives effect to the financial proposals of the government. The Fiscal Responsibility and Budget Management (FRBM) Act, 2003, aims to ensure fiscal discipline and reduce the fiscal deficit to sustainable levels. These provisions ensure accountability and transparency in the budgetary process.

Latest Developments

In recent years, the Indian budget has focused on promoting economic growth, enhancing social welfare, and strengthening infrastructure. The government has launched several initiatives, such as Make in India, Digital India, and Skill India, to boost domestic manufacturing, promote digital literacy, and enhance employability. Increased allocations have been made to sectors like healthcare, education, and agriculture to address social and economic disparities. There are ongoing debates regarding the optimal level of fiscal deficit and the allocation of resources across different sectors. Some economists argue for greater fiscal prudence and debt reduction, while others advocate for increased public spending to stimulate economic growth. The NITI Aayog plays a crucial role in providing policy inputs and recommendations to the government on budgetary matters. The future outlook for the Indian budget is shaped by several factors, including global economic trends, domestic policy reforms, and technological advancements. The government aims to achieve sustainable and inclusive growth by promoting investment, innovation, and entrepreneurship. Key milestones include achieving the fiscal deficit target of 3% of GDP and enhancing the efficiency of public spending. The budget is expected to play a crucial role in achieving these goals.

Frequently Asked Questions

1. What are the key facts about India's latest budget that are important for the UPSC Prelims exam?

For the UPSC Prelims, remember the total budgeted expenditure for FY25 (BE) is ₹47.66 lakh crore. Also, note the allocations for key sectors like Defence (₹6.2 lakh crore), Agriculture (₹1.59 lakh crore), and Rural Development (₹2.65 lakh crore).

Exam Tip

Focus on memorizing the amounts allocated to major sectors and the overall budget size. Questions often involve comparing allocations across different sectors.

2. What is the difference between revenue expenditure and capital expenditure as per the budget?

Revenue expenditure, as per the topic data, is ₹37.66 lakh crore for FY25 (BE), which is used for day-to-day running of the government. Capital expenditure is ₹10 lakh crore for FY25 (BE), and it's used for creating assets like infrastructure.

Exam Tip

Remember that revenue expenditure is recurring, while capital expenditure creates assets.

3. Why is the budget allocation for defence important, and what does the increase from FY24 RE to FY25 BE signify?

Defence allocation is crucial for national security. The increase from ₹5.94 lakh crore (FY24 RE) to ₹6.2 lakh crore (FY25 BE) indicates a strengthening of defence capabilities and modernization efforts.

Exam Tip

Relate the increase in defence spending to geopolitical factors and government priorities.

4. How does the budget impact common citizens?

The budget impacts common citizens through allocations to sectors like agriculture, rural development, education, and health. Increased spending in these areas can lead to better infrastructure, improved healthcare, and enhanced educational opportunities, directly affecting the quality of life.

Exam Tip

Consider how specific allocations translate into tangible benefits for citizens.

5. What are the recent developments related to the Indian budget?

Recent developments include increased allocations to sectors like education and healthcare, alongside a slight decrease in rural development spending, as reflected in the FY25 BE figures compared to FY24 RE.

Exam Tip

Track trends in budget allocations over the years to understand government priorities.

6. What is the significance of 'Make in India', 'Digital India', and 'Skill India' initiatives in the context of the budget?

These initiatives aim to boost domestic manufacturing, promote digital literacy, and enhance employability. The budget often includes allocations to support these initiatives, driving economic growth and development.

Exam Tip

Understand how budgetary allocations support flagship government programs.

7. What is the total budgeted expenditure for FY25 (BE), and how does it break down into revenue and capital expenditure?

The total budgeted expenditure for FY25 (BE) is ₹47.66 lakh crore. Of this, revenue expenditure is ₹37.66 lakh crore, and capital expenditure is ₹10 lakh crore.

Exam Tip

Remember these figures as they are frequently asked in preliminary exams.

8. What are some potential reforms needed in the budget allocation process?

Potential reforms include improving transparency in the allocation process, enhancing accountability in expenditure, and ensuring that allocations align with stated policy priorities. More efficient resource allocation and better monitoring of outcomes are also needed.

Exam Tip

Consider the need for evidence-based budgeting and outcome-oriented approaches.

9. What are the allocations for Agriculture & Allied Activities and how have they changed from the previous year?

The allocation for Agriculture & Allied Activities is ₹1.59 lakh crore (FY25 BE), a slight increase from ₹1.49 lakh crore (FY24 RE).

Exam Tip

Note the percentage increase/decrease to analyze the government's focus on the sector.

10. Why is this budget information in the news recently?

This budget information is in the news due to the annual budget presentation by the government, which outlines the financial plan for the upcoming fiscal year. The allocations and trends reveal the government's priorities and strategies for economic development.

Exam Tip

Follow news articles and analyses to understand the implications of the budget.

Practice Questions (MCQs)

1. Consider the following statements regarding India's Union Budget FY25 (BE) as per the information provided: 1. The total budgeted expenditure is ₹47.66 lakh crore. 2. The allocation for Rural Development has increased compared to the Revised Estimate of FY24. 3. Interest payments constitute 20% of the total expenditure. Which of the statements given above is/are correct?

  • A.1 only
  • B.1 and 2 only
  • C.2 and 3 only
  • D.1, 2 and 3
Show Answer

Answer: A

Statement 1 is CORRECT: The total budgeted expenditure for FY25 (BE) is indeed ₹47.66 lakh crore as per the provided information. Statement 2 is INCORRECT: The allocation for Rural Development has decreased from ₹2.70 lakh crore (FY24 RE) to ₹2.65 lakh crore (FY25 BE). Statement 3 is INCORRECT: Interest payments constitute 25% of the total expenditure, not 20%.

2. With reference to the Union Budget, which of the following constitutes the largest component of the government's expenditure?

  • A.Subsidies
  • B.Defence Expenditure
  • C.States' share of taxes and duties
  • D.Interest Payments
Show Answer

Answer: D

According to the provided information, interest payments constitute 25% of the total expenditure, which is the largest component among the options given. Subsidies are 9% and States' share of taxes and duties is 20%. Defence expenditure, while significant, is not the largest component.

3. Consider the following pairs: List I (Sector) List II (FY25 BE Allocation in ₹ lakh crore) 1. Defence 1. 2.65 2. Agriculture & Allied Activities 2. 6.2 3. Rural Development 3. 1.59 Which of the pairs given above is/are correctly matched?

  • A.1 and 2 only
  • B.2 only
  • C.2 and 3 only
  • D.1, 2 and 3
Show Answer

Answer: C

Pair 1 is INCORRECT: Defence allocation is ₹6.2 lakh crore (FY25 BE), not ₹2.65 lakh crore. Pair 2 is CORRECT: Agriculture & Allied Activities allocation is ₹1.59 lakh crore (FY25 BE). Pair 3 is CORRECT: Rural Development allocation is ₹2.65 lakh crore (FY25 BE).

4. Assertion (A): Capital expenditure in the Union Budget is crucial for long-term economic growth. Reason (R): Capital expenditure leads to the creation of assets and infrastructure, boosting productivity and employment. In the context of the above, which of the following is correct?

  • A.Both A and R are true and R is the correct explanation of A
  • B.Both A and R are true but R is NOT the correct explanation of A
  • C.A is true but R is false
  • D.A is false but R is true
Show Answer

Answer: A

Both the assertion and the reason are true, and the reason correctly explains the assertion. Capital expenditure, such as investments in infrastructure, creates assets that enhance productivity and generate employment, contributing to long-term economic growth. The budget breakdown infographic shows capital expenditure at ₹10 lakh crore for FY25 (BE).

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