The budget is all about the minutiae of government spending and we’ll be reading a lot of that in the coming days: how do government revenues compare to the previous year, where it’s spending its money and by how many notches has the tax exemption bracket gone up.
Which is all good.
Exploding revenue
It is however fascinating to look at the bigger picture and take a bird’s eye view of how the Indian government’s revenues have progressed. As it so happens, it’s a breathtakingly pretty picture: government revenue has simply exploded since Independence, almost in the manner of a wildly successful tech startup.
In 1950-'51, the central government’s revenue (adjusted for inflation) was a paltry Rs 9,434 crore. To put that in perspective, industrialist Mukesh Ambani’s current worth is Rs 143,960 crore: 15 times as much.
Ever since it was “founded”, however, the Indian government’s revenues have grown at a breakneck speed. From 1951 to 2014, the government of India’s revenues have grown 60 times (inflation adjusted). The Indian government, it seems, has behaved like a super startup.
Not only has the government grown in absolute terms, it’s also grown relative to India’s GDP. In 1950-'51, the government’s revenues were a paltry 3.4% of the GDP. Today, it stands at close to 10%.
More 'socialist' than before
If large amounts of government spending are taken to be a hallmark of a “socialist” economy, India is today far more “socialist” than it was before. Under the Nehru – whose declared aim was to allow the state to control the “commanding heights” of the economy – the central government's revenue as a proportion of the GDP never inched beyond 4.5%. It saw a sharp spike, expectedly, under Indira Gandhi but has remained somewhat constant after that. Significantly, the 1991 reforms have not decreased government spending relative to the GDP.
This hike in government spending isn’t unusual though. Currently the proportion of federal government revenue to GDP in the birthplace of modern capitalism, the US, is 18%: close to double that for India. It seems India still has some way to go before it can be as “socialist” as the US.
India's performance
Unfortunately, India itself hasn’t performed as well as its government. From 1950-'51, the country’s GDP has only grown 21 times (remember, the corresponding figure for central government revenue is 60).
A number of countries have passed us by.
We welcome your comments at
letters@scroll.in.
Which is all good.
Exploding revenue
It is however fascinating to look at the bigger picture and take a bird’s eye view of how the Indian government’s revenues have progressed. As it so happens, it’s a breathtakingly pretty picture: government revenue has simply exploded since Independence, almost in the manner of a wildly successful tech startup.
In 1950-'51, the central government’s revenue (adjusted for inflation) was a paltry Rs 9,434 crore. To put that in perspective, industrialist Mukesh Ambani’s current worth is Rs 143,960 crore: 15 times as much.
Ever since it was “founded”, however, the Indian government’s revenues have grown at a breakneck speed. From 1951 to 2014, the government of India’s revenues have grown 60 times (inflation adjusted). The Indian government, it seems, has behaved like a super startup.
Not only has the government grown in absolute terms, it’s also grown relative to India’s GDP. In 1950-'51, the government’s revenues were a paltry 3.4% of the GDP. Today, it stands at close to 10%.
More 'socialist' than before
If large amounts of government spending are taken to be a hallmark of a “socialist” economy, India is today far more “socialist” than it was before. Under the Nehru – whose declared aim was to allow the state to control the “commanding heights” of the economy – the central government's revenue as a proportion of the GDP never inched beyond 4.5%. It saw a sharp spike, expectedly, under Indira Gandhi but has remained somewhat constant after that. Significantly, the 1991 reforms have not decreased government spending relative to the GDP.
This hike in government spending isn’t unusual though. Currently the proportion of federal government revenue to GDP in the birthplace of modern capitalism, the US, is 18%: close to double that for India. It seems India still has some way to go before it can be as “socialist” as the US.
India's performance
Unfortunately, India itself hasn’t performed as well as its government. From 1950-'51, the country’s GDP has only grown 21 times (remember, the corresponding figure for central government revenue is 60).
A number of countries have passed us by.
