Government expenditure: For the year ending March 2013, the Indian government set a expenditure target of Rs 14,90,925 crore, according to budget estimates. The government expenditure falls into two categories: planexpenditure and non-plan expenditure. Plan expenditure is incurred according to the proposals put in the five-year plans. Non-plan expenditure is maintenance of existing assets, administrative services, interest payments, subsidies, among other things. The spending on defence is part of both plan and non-plan expenditure. less 2. Revenue and Capital expenditure: Both plan and non-plan expenditures include a revenue and capital expenditure component. Revenue expenditure is the money spent to run the day-to-day business of the government. Subsidies and interest payments are a key component of the revenue expenditure. Capital expenditure is the money spent for creating new infrastructure in the economy. So the government investment in education, roads, bridges, airports, urban infrastructure form a part of the capital expenditure. 3. What is the problem: India spends 65% of its total expenditure funds in a year on non-plan expenditure. This means two-thirds of the government revenue is spent on simply maintaining the day-to-day affairs of the government. Over a third of the government expenditure or over Rs 5,10,000 crore goes for repaying loans or paying interest on them

or subsidizing food, fuel and fertilizer for the poor. Experts say that it is essential for India to spend more on creating new assets to build the infrastructure in the economy.

3. Spending right: When governments spend on building a country’s infrastructure, it gives a push to the economic growth. However, the spending for growth in India actually fell over three months to December 2012. “Total expenditure less subsidy and interest payments has decelerated to 3% in the Sep-Dec 2012 period from 11.4% in Apr-Aug 2012,” said Morgan Stanley, a global bank in a note last week. This means India’s spending for creating new assets to stimulate growth has gone down.

What next: When the budget is presented, you need to watch out for the overall expenditure the government proposes to incur. It should relatively lower than the previous year. It is also important to see how the government proposes to allocate resources. If the government allocates more money to stimulate growth by increasing the spending on the infrastructure sector, that would be good news for the economy.

1. United States United States of America is the largest importer of goods and services and tops the list of countries for its highest budget. It has a mixed economy which is backed by natural resources and a very well developed infrastructure. Revenues (million USD): 2,303,000 Expenditures (million USD): 3,599,000

000 .296. Japan Japan is one of the largest economies in the world and has a large industrial capacity. It is also known as the most technologically advanced producers of machines in the world.000 Expenditures (million USD): 2.495. Revenues (million USD): 1.000 2.000 Deficit/Surplus (million USD): -524. 2.Deficit/Surplus (million USD): -1.971. The country leads in scientific machinery. research and technology.

646.2. Well known for its population growth.000 . The country’s rapid economic growth has led to severe consumer inflation. 3.000 Deficit/Surplus (million USD): -83. China China is the world’s fastest growing economy and has an upper hand in the in the manufacturing sector. Revenues (million USD): 1. the country is the largest exporter and manufacturer of goods.729.000 Expenditures (million USD): 1.

588. The country has developed a very high standard of living and is recognized for its small and medium enterprises. The country boasts its highly skilled labour and its level of innovation.000 Deficit/Surplus (million USD): -37.000 Expenditures (million USD): 1.4. Revenues (million USD): 1. 4.000 .551. Germany Germany is a major economic power in Europe and ranks number four for its government budget.

Revenues (million USD): 1.5.000 Expenditures (million USD): 1. financial services and insurance are the key sectors of the country’s economy. France France has a mixed economy in which banking.386. France has been a major economic influence in Europe and also considered to be the wealthiest nation there.000 .535.000 Deficit/Surplus (million USD): -149.

900 .100 Expenditures (million USD): 1.6. Italy Italy is a democratic republic and its economic influence makes it a major regional power.000 Deficit/Surplus (million USD): -86. The nation rapidly transformed from agriculture based economy into one of the world’s most industrialized nations. Revenues (million USD): 1. Italy has a free market economy which focuses on exports of luxury products and niche market.025.112.

United Kingdom United Kingdom is a partially regulated market economy.7. the service sector makes up more than 70 percent of the country’s GDP. in which.188. pharmaceutical and aerospace industries are a significant part of the United Kingdom’s economy. Revenues (million USD): 986.500 .000 Deficit/Surplus (million USD): -201.500 Expenditures (million USD): 1. The automotive.

its economy is growing rapidly.300 . Revenues (million USD): 978. Brazil has a mixed economy.000 Deficit/Surplus (million USD): +77. Since the nation has abundant natural resources. Brazil Brazil is the largest country in South America and is known as one of the fastest growing economies of the world.8. With new generation tycoons and booming exports.300 Expenditures (million USD): 901.

The nation ranks among the highest in economic freedom. Revenues (million USD): 660. Canada Canada has one of the most advanced economies in the world and is recognized as an economic power internationally.9. quality of life and government transparency.600 .200 Expenditures (million USD): 747.800 Deficit/Surplus (million USD): -87.

200 Expenditures (million USD): 672. Spain was admitted into the Eurozone in 1999.900 . Revenues (million USD): 545. Tourism in Spain plays a key role for the country’s economic health.100 Deficit/Surplus (million USD): -126. Spain Spain has a capitalist mixed economy that has a strong economic growth. With a balanced government budget which got inflation under control.10.

Revenues (million USD): 473. education and financial services account to more than 70 percent of the nation’s GDP.800 Deficit/Surplus (million USD): -48. Tourism.11.200 Expenditures (million USD): 521. Australia Australia is recognized as one of the wealthiest and highly developed countries in the world. The nation has a market economy which emphasizes on exporting commodities.600 .

600 .800 Expenditures (million USD): 376. Apart from oil and gas. timber and metals make up for a major portion of the country’s exports. Revenues (million USD): 382. Oil and gas is a major natural economy resource in Russia’s market economy.200 Deficit/Surplus (million USD): +6. Russia Russia has one of the most powerful economies worldwide.12.

Revenues (million USD): 381. banking and fishing are the leading sectors of the Dutch economy. This developed economy is one of the major investors in the United States of America.400 Deficit/Surplus (million USD): -39. shipping.13. Netherlands Netherland is a constituent country which leads European nations in attracting foreign direct investment.300 Expenditures (million USD): 420.100 . Trade.

14. Revenues (million USD): 280.500 Deficit/Surplus (million USD): +71.500 Expenditures (million USD): 209. The revenue that the nation receives from its natural resources adds to be a major contribution to the economic health. Norway Norway is categorized as one of the world’s wealthiest nations and is a perfect example of a mixed economy.000 .

The nation’s engineering sector accounts for more than 50 percent of exports. Sweden Sweden is ranked among other highly developed countries worldwide.500 . Revenues (million USD): 277.100 Deficit/Surplus (million USD): +0. This country is has a mixed economy that is export oriented. Services and manufacturing industries dominate the Swedish economy.15.600 Expenditures (million USD): 277.

South Korea South Korea is a developed country with a high standard of living. machinery.. electronics.900 Expenditures (million USD): 242. It has an export driven economy which mainly focuses on automobiles. The country’s credit rating suffers in times of military crisis with North Korea. ships and pharmaceuticals. Revenues (million USD): 267.900 .000 Deficit/Surplus (million USD): +25.

Revenues (million USD): 263. Mexico Mexico is a regional power as a newly industrialized country. According to Goldman Sachs. The country is known to produce some of the most complex components which are mostly engaged in research and development activities.200 Deficit/Surplus (million USD): -29.17.200 Expenditures (million USD): 292.000 . Mexico will have the fifth largest economy in the world by 2050.

Belgium Belgium is a prosperous commerce and cultural hub.600 Expenditures (million USD): 271. It is a highly industrialized economy with a highly productive work force.600 .18.200 Deficit/Surplus (million USD): -21. Revenues (million USD): 249. The nation’s strong globalized economy and transport infrastructure are integrated with the rest of Europe.

700 Deficit/Surplus (million USD): +2.19. Revenues (million USD): 221. The oil sector in the country has allowed the economy to grow at a rapid pace.100 Expenditures (million USD): 218. Saudi Arabia Saudi Arabia is a wealthy nation with a concentration of large oil reserves.400 . Oil accounts to more than 70 percent of government reserves and 95 percent of exports.

20. Among other economies. Switzerland is high-tech and prosperous economy. Revenues (million USD): 217.900 Expenditures (million USD): 214.400 . Switzerland Switzerland is one of the world’s richest countries and largest exporters. its economy is considered to be the most competitive in the world.500 Deficit/Surplus (million USD): +3.

Revenues (million USD): 202.21.600 Expenditures (million USD): 216. Tourism plays an integral part in terms of the country’s economic revenues. Austria Austria is a developed country with a high standard of living.000 . It has a well developed social market economy that has a major influence on labour politics.600 Deficit/Surplus (million USD): -14.

Textiles. transport. pharmaceuticals.800 Deficit/Surplus (million USD): -112.22. machinery and mining are among the major sectors of the Indian economy.400 . Revenues (million USD): 196. India India is one of the fastest growing economies in the world and is considered to be a newly industrialized country. chemicals. telecommunications.400 Expenditures (million USD): 308.

400 . Turkey Turkey’s growing economy has given it recognition as a regional power.700 Expenditures (million USD): 187. Revenues (million USD): 176.23.100 Deficit/Surplus (million USD): -10. The nation’s economy is becoming dependent on industries in major cities. Tourism is a key industry that attracts revenue for the government and has experienced a rapid growth in the last two decades.

600 Deficit/Surplus (million USD): -1. Finland Finland is ranked among other wealthiest countries in the world despite it being a latecomer to industrialization.24. The economic development was rapid and is considered to be one of the most competitive nations in the world. It is also known to a have high quality of life.400 .200 Expenditures (million USD): 137. Revenues (million USD): 136.

Indonesia Indonesia has a mixed economy and serves as the largest economy in Southeast Asia.900 . The industry sector contributes the most for the country’s GDP.200 Expenditures (million USD): 144. The rapidly developing export oriented sector attracts foreign investment for the nation.25. Revenues (million USD): 134.100 Deficit/Surplus (million USD): -9.

Roads. .Measures taken positively by markets: .Reduction in taxes Measures taken negatively by markets: Added pressure on fiscal deficit New tax measures.Measures to reduce fiscal deficit . Power etc.Any increase in foreign investor participation . mostly higher taxes or change in tax policy .Thrust to infrastructure.

1999. mostly higher taxes or change in tax policy Policy measures that hinder investment climate (AFP PHOTO/Indranil MUKHERJEE) . 2004 . 2011 1.Measures to reduce fiscal deficit .20 year average shows Indian markets are down 2. 2005.5%. .Roads. . 2006. 2001 .Any increase in foreign investor participation .Policy measures that hinder investment climate Budget and market performance .MSCI India outperformed MSCI EM (years): 1997. MSCI India outperformed MSCI EM (MSCI Emerging Markets Index) 8 out of 20 times in the month after budget . Measures taken negatively by markets: Added pressure on fiscal deficit New tax measures. Power etc.Thrust to infrastructure. Measures taken positively by markets: .Reduction in taxes (AFP PHOTO/ Punit PARANJPE) 2.3% in month after Budget underperforming EM by 1. 2010.Last 20 years.

2010. 2004 . 2006.37% . 2011 (REUTERS/Ajay Verma) 4.Indian economy liberalized thorough reforms across the board . 1999.Licences and quotas were abolished . UNION BUDGET 1992-93 Finance Minister: Manmohan Singh Stock market reaction: Feb 29. MSCI India outperformed MSCI EM (MSCI Emerging Markets Index) 8 out of 20 times in the month after budget . Budget and market performance .20 year average shows Indian markets are down 2.3% in month after Budget underperforming EM by 1. .3.5%.Interest rates were made flexible . 1992: Sensex up (+) 9.Foreign investment limit in high-priority industries was raised to 51% .Last 20 years. 2001 .New import-export policy encouraged FDI .Private sector expansion and participation encouraged . 1.MSCI India outperformed MSCI EM (years): 1997. 2005.

Dividend tax on individual investors was abolished .Peak customs duty was reduced to 40% from 50% ..Income tax rate for companies was decreased to 35% per from 40% .Banks got freedom to set lending rates according to risk profile 2.Maximum income tax rate for individuals was cut from 40% to 30% .FII investment limit was raised from 24% to 30% . UNION BUDGET: 1997 -98 Finance Minister: P Chidambaram Stock market reaction: Feb 28. 1997: Sensex up (+) 6.Budget presented a plan for economic reforms in India . UNION BUDGET: 1998 Finance Minister: Yashwant Sinha Stock market reaction: June 1.Budget launched Voluntary Disclosure of Income Scheme or VDS to recover of black money 3.Tax policy (Direct and indirect) was reormed . 1998: Sensex fell (-) 11% .This Budget was called a Dream Budget .54% .

Defence spending was hiked .Gujarat riots were an added pressure 5.Import duties were increased 4.Introduction of GAAR or General Anti Avoidance Rule .Dividend distribution tax was abolished: Dividends were to be taxed in the hands of the investors instead of taxing companies and mutual funds .87% .9% . UNION BUDGET 2012 Finance Minister: Pranab Mukherjee Stock market reaction: March 16. UNION BUDGET: 2002 Finance Minister: Yashwant Sinha Stock market reaction: Feb 28.Budget after India conducted Nuclear tests and US sanctions . 2012: Sensex fell (-) 1..GAAR to counter aggressive tax avoidance sent markets into a tizzy .Budget sought to amend the Income Tax Act retrospectively from 1962 .Allocation for Department of Atomic Energy was hiked by 68% . 2002: Sensex fell (-) 3.

A ballooning fiscal deficit at 5..Lack of clarity on retrospective tax on older deals further dipped market sentiment .1% of GDP further worried investors .

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