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The math of borrowings and debt

February 16, 2009 13:47 IST

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Borrowings will account for 29 paise of every rupee the government will earn in FY'10 and it would spend 20 paise towards servicing debt, as it battles dwindling tax resources on account of economic slowdown.

As the single largest source, borrowing and other liabilities are placed ahead of corporation tax which is pegged at 22 paise lower from 24 paise last year, according to the interim Budget for 2009-10 tabled in the Parliament on Monday.

In the face of slowdown, income tax is pegged at 12 paise down from 15 paise last year, while indirect tax including service tax and other will contribute 26 paise.

For every rupee that the government will spend next fiscal, 20 paisa will go toward interest payments owing to increased borrowing, while 18 paise would be spent on central plan.

As a part of contra-cyclical measure to boost economy, government will spend 9 paise on subsidies, while on defence the expenditure would be 13 paise against 11 paise last year.

Other non-plan expenditure would account for 14 paise and states' shares of taxes and duties would take away 15 paise of every Rupee earned.

On the earning side, non-tax revenue will contribute 10 paise to a Rupee earned, while one paise would come from non-department capital receipts.

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