Firstpost
  • Home
  • Video Shows
    Vantage Firstpost America Firstpost Africa First Sports
  • World
    US News
  • Explainers
  • News
    India Opinion Cricket Tech Entertainment Sports Health Photostories
  • Asia Cup 2025
Apple Incorporated Modi ji Justin Trudeau Trending

Sections

  • Home
  • Live TV
  • Videos
  • Shows
  • World
  • India
  • Explainers
  • Opinion
  • Sports
  • Cricket
  • Health
  • Tech/Auto
  • Entertainment
  • Web Stories
  • Business
  • Impact Shorts

Shows

  • Vantage
  • Firstpost America
  • Firstpost Africa
  • First Sports
  • Fast and Factual
  • Between The Lines
  • Flashback
  • Live TV

Events

  • Raisina Dialogue
  • Independence Day
  • Champions Trophy
  • Delhi Elections 2025
  • Budget 2025
  • US Elections 2024
  • Firstpost Defence Summit
Trending:
  • PM Modi in Manipur
  • Charlie Kirk killer
  • Sushila Karki
  • IND vs PAK
  • India-US ties
  • New human organ
  • Downton Abbey: The Grand Finale Movie Review
fp-logo
Vote-on-Account 2014-15: 80 percent of borrowings go only to pay interest
Whatsapp Facebook Twitter
Whatsapp Facebook Twitter
Apple Incorporated Modi ji Justin Trudeau Trending

Sections

  • Home
  • Live TV
  • Videos
  • Shows
  • World
  • India
  • Explainers
  • Opinion
  • Sports
  • Cricket
  • Health
  • Tech/Auto
  • Entertainment
  • Web Stories
  • Business
  • Impact Shorts

Shows

  • Vantage
  • Firstpost America
  • Firstpost Africa
  • First Sports
  • Fast and Factual
  • Between The Lines
  • Flashback
  • Live TV

Events

  • Raisina Dialogue
  • Independence Day
  • Champions Trophy
  • Delhi Elections 2025
  • Budget 2025
  • US Elections 2024
  • Firstpost Defence Summit
  • Home
  • Budget
  • Vote-on-Account 2014-15: 80 percent of borrowings go only to pay interest

Vote-on-Account 2014-15: 80 percent of borrowings go only to pay interest

Arjun Parthasarathy • January 20, 2015, 18:27:19 IST
Whatsapp Facebook Twitter

The government hopes to achieve a lower fiscal deficit target through revenues coming in higher than expenditures.

Advertisement
Subscribe Join Us
Add as a preferred source on Google
Prefer
Firstpost
On
Google
Vote-on-Account 2014-15: 80 percent of borrowings go only to pay interest

The government is showing a fiscal deficit of 4.1 percent of GDP for 2014-15 against 4.6 percent of GDP seen in 2013-14. The government hopes to achieve a lower fiscal deficit target through revenues coming in higher than expenditures. Revenues, tax plus non-tax revenues, are expected to grow at 13.4 percent for fiscal 2014-15 while expenditure is expected to grow at 10.9 percent. A marginal rise in the absolute value of fiscal deficit coupled with a projected growth of 13.1 percent in nominal GDP will help the government achieve a lower fiscal deficit ratio.

STORY CONTINUES BELOW THIS AD

Expenditure Analysis

On the expenditure side, the government is projecting a growth of 8.3 percent in non plan expenditure and a growth of 16.8 percent in plan expenditure. Non-plan expenditure grew by 0.4 percent in fiscal 2013-14 while plan expenditure fell by 14.4 percent against budget estimates. The government is effectively projecting non-plan expenditure at budgeted levels of fiscal 2013-14.

More from Budget
RBI guv Urjit Patel's take on LTCG tax: 'Multiple taxes on capital impact investments and savings' RBI guv Urjit Patel's take on LTCG tax: 'Multiple taxes on capital impact investments and savings' Farmers body calls Union Budget 2018 anti-farmer, pro-corporate; alleges govt manipulated input cost figures Farmers body calls Union Budget 2018 anti-farmer, pro-corporate; alleges govt manipulated input cost figures

On the subsidy front, fuel subsidy exceeded budget estimates by 31 percent while food and fertiliser subsidy exceeded estimates by 3 percent and 2 percent respectively. Food subsidy is expected to grow by 21 percent in fiscal 2014-15 to pay for the food security bill while fuel subsidy is expected to fall by 26 percent. The government has consistently missed fuel subsidy targets and if it cannot pass through oil prices to end user, the bill could well be higher in 2014-15.

Interest costs form the bulk of expenditure showing a growth of 12.4 percent in fiscal 2014-15. Government is consistently borrowing to fund its fiscal deficit and interest costs are bound to rise every year. Interest and subsidies as percentage of GDP are at 3.3 percent and 1.9 percent respectively. Interest costs eat up 37 percent of the government’s revenues - and account for 80 percent of the planning borrowings in 2014-15.

Put another way, four out of every five rupees borrowed is going to pay interest. This is not quite a debt trap, but the government is getting there.

Table 1 gives the expenditure estimates for fiscal 2014-15

[caption id=“attachment_76755” align=“aligncenter” width=“600”] ![Table 1](https://images.firstpost.com/wp-content/uploads/2014/02/table1.jpg) Table 1[/caption]

Revenue Analysis

On the revenue side, total tax revenues are expected to rise by 19 percent in fiscal 2014-15 against a drop of 6.2 percent seen in fiscal 2013-14 against budget estimates. The government has not changed direct tax numbers but has cut excise duty on automobiles, capital goods and consumer durables. Government expects an overall economic growth to push up tax collections.

STORY CONTINUES BELOW THIS AD

A tax break up shows service tax growth to be highest at 30 percent while income and corporate taxes are expected to grow at 27 percent and 14.5 percent respectively in fiscal 2014-15. Service tax is emerging as a strong revenue earner for the government. In the absence of implementation of the GST (Goods and Services Tax) and a new direct tax code, the government is finding it tough to raise the tax to GDP ratio that is hovering around 10 percent levels for over 10 years.

On the non-tax revenue side, disinvestment is expected to rise by 120 percent in 2014-15 while revenues from spectrum auctions, interest and dividends are expected to drop. Total non-tax revenue is expected to drop by 6.5 percent.

Table 2 gives the revenue estimates for 2014-15.

[caption id=“attachment_76756” align=“aligncenter” width=“600”] ![Table 2](https://images.firstpost.com/wp-content/uploads/2014/02/table21.jpg) Table 2[/caption]

Fiscal Deficit

Fiscal deficit is expected to come in at Rs 5,287 billion in fiscal 2014-15, a growth of 0.8 percent over fiscal 2013-14. Revenue and primary deficits are expected to grow at 3.4 percent and a negative 29.7 percent respectively. Revenue deficit is slated at 2.97 percent of GDP. Government will have to lower revenue deficit if it has to bring down fiscal deficit as interest costs will continue to rise year on year.

STORY CONTINUES BELOW THIS AD

Table 3 gives the fiscal deficit numbers for 2014-15.

[caption id=“attachment_76759” align=“aligncenter” width=“600”] ![Table 3](https://images.firstpost.com/wp-content/uploads/2014/02/Table3.jpg) Table 3[/caption]

Arjun Parthasarathy is the Editor of www.investorsareidiots.com a web site for investors

End of Article
Written by Arjun Parthasarathy
Email

Arjun Parthasarathy has spent 20 years in the financial markets, having worked with Indian and multinational organisations. His last job was as head of fixed income at a mutual fund. An MBA from the University of Hull, he has managed portfolios independently and is currently the editor of www.investorsareidiots.com </a>. The website is for investors who want to invest in the right financial products at the right time. see more

Latest News
Find us on YouTube
Subscribe
End of Article

Top Stories

Russian drones over Poland: Trump’s tepid reaction a wake-up call for Nato?

Russian drones over Poland: Trump’s tepid reaction a wake-up call for Nato?

As Russia pushes east, Ukraine faces mounting pressure to defend its heartland

As Russia pushes east, Ukraine faces mounting pressure to defend its heartland

Why Mossad was not on board with Israel’s strike on Hamas in Qatar

Why Mossad was not on board with Israel’s strike on Hamas in Qatar

Turkey: Erdogan's police arrest opposition mayor Hasan Mutlu, dozens officials in corruption probe

Turkey: Erdogan's police arrest opposition mayor Hasan Mutlu, dozens officials in corruption probe

Russian drones over Poland: Trump’s tepid reaction a wake-up call for Nato?

Russian drones over Poland: Trump’s tepid reaction a wake-up call for Nato?

As Russia pushes east, Ukraine faces mounting pressure to defend its heartland

As Russia pushes east, Ukraine faces mounting pressure to defend its heartland

Why Mossad was not on board with Israel’s strike on Hamas in Qatar

Why Mossad was not on board with Israel’s strike on Hamas in Qatar

Turkey: Erdogan's police arrest opposition mayor Hasan Mutlu, dozens officials in corruption probe

Turkey: Erdogan's police arrest opposition mayor Hasan Mutlu, dozens officials in corruption probe

Top Shows

Vantage Firstpost America Firstpost Africa First Sports
Latest News About Firstpost
Most Searched Categories
  • Web Stories
  • World
  • India
  • Explainers
  • Opinion
  • Sports
  • Cricket
  • Tech/Auto
  • Entertainment
  • IPL 2025
NETWORK18 SITES
  • News18
  • Money Control
  • CNBC TV18
  • Forbes India
  • Advertise with us
  • Sitemap
Firstpost Logo

is on YouTube

Subscribe Now

Copyright @ 2024. Firstpost - All Rights Reserved

About Us Contact Us Privacy Policy Cookie Policy Terms Of Use
Home Video Shorts Live TV