Prioritising fiscal prudence Finance Minister Nirmala Sitharaman has brought down the establishment cost of the government as a percentage of the budget size compared to what it was in the last financial year.
Cost of running the administration
If you consider the absolute figures, the cost of running the government has certainly gone up since FY21, when it stood at Rs 5.94 lakh crore. In the next four years it went up in the following manner – Rs 6.93 lakh crore in FY22, Rs 7.15 lakh crore in FY23, Rs 7.82 lakh crore in FY24 and Rs 7.84 lakh crore in FY25.
But as a percentage of the budget, it has shrunk remarkably. While the FY21 expenditure was about 17% of the budget that year, it shot up to 16.9% in the next year FY22. It stood at 16.3% of the budget in FY24 while the establishment cost has been reined in close to 16% in the current financial year for which the budget was tabled on July 23.
Expenditure for pension lowest in 5 years
According to the budget estimates, the cost of pension borne by the government would shrink to 5% of the budget this year – the lowest in the last five years.
Since FY21, the pension has risen in absolute amounts – Rs 2.08 lakh crore in FY21, Rs 1.99 lakh in FY22, Rs 2.42 lakh in FY23, Rs 2.38 lakh crore in FY24 (revised estimate) and it expected to reach Rs 2.43 lakh crore in the current FY25.
However, it has shrunk from 5.9% of the budget in FY21 to 5.2% the next year. Though the expenditure on pension rose to 5.8% in FY23 it dropped to 5.4% in FY24.
It is obvious that all finance ministers wish to have a rein on establishment cost since these are usually fixed in nature and impose a burden on the public exchequer.
Expenditure on police
The expenditure on police, one of the most crucial arms of governance, stood at Rs 86,793 crore (2.47% of the budget) in FY21, Rs 98,284 crore (2.59%) in FY22, Rs 1,07,187 crore (2.56%) in FY23, and Rs 1,15,979 crore (2.61%) in FY24 (RE). The expenditure on police is expected to touch Rs 1,27,789 (2.65% of the budget) in the current financial year.
Cost of establishment of any government is an unproductive cost that any finance minister wants to rein in. Nirmala Sitharaman has brought it down compared to what it was in FY24. Biz News Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
