Budget Basics: What do the big numbers in the Budget actually mean?

Interim Budget 2024: Amid a cascade of numbers and tables that the Union Budget is, which numbers are the most important and why? Below are the key numbers on which the whole budget rests and which reveal what the budget stands for.

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Budget size

It is the headline number in the budget as it reveals the government's fiscal support to the economy and various welfare programmes because the budget size effectively means the money that will be spent by the government. It also becomes a reference point to measure various allocations as the percentage of total spending. In 2023-24, the budget size was Rs 45,03,097 crore, an increase of 7.5% over the revised estimate of 2022-23. It was Rs 26.9 lakh crore in FY 20.

Capital expenditure
Capital expenditure or the government capex, the spending on creation of productive assets such as infrastructure, has a high multiplier effect on the economy. It has helped spur investment-led growth in the absence of a broad-based resurgence in private investment. It was Rs 10 lakh crore in the Budget 2023-24, up from Rs 3.4 lakh crore for FY20.

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Fiscal deficit
The most talked about number in the budget season. It is the gap between income and expenditure and indicates how much the government has to borrow from the market. The government has been struggling to meet its fiscal deficit target after the deficit ballooned during the pandemic. It is 5.9% of the GDP for the current year, and is expected to be pegged lower for which the government will have to reduce subsidies or capital expenditure..

Nominal GDP growth
This is the projection of GDP growth for the next financial year, minus the inflation, and becomes the basis of other projections such as tax collection. The budget is based on a set of projections for the next year of which nominal GDP is the basis. The nominal GDP growth for the current year is estimated at 8.9% and on the basis of this estimation, the nominal GDP growth for the next financial year will be projected.

Net tax collection
Tax and other receipts, net of refunds, are looked at to assess the government's ability to spend without widening the fiscal gap. If they fall short, borrowing will have to be raised or spending will have to be cut.

Disinvestment
This number will signal the government's privatisation goals as it adds to the government's income besides taxes. It often falls short of the target.

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RBI dividend
The money that the RBI gives to the government. There is no special mention of the RBI dividend in the Budget but it’s part of “dividends and profits”. Generous RBI dividends have helped the government narrow its fiscal gap.

Market borrowings
The money the government raises to fill the fiscal deficit gap. It has a bearing on interest rates and bond yields. Excessive market borrowing by the government can crowd out private players.