2. Sources of Financial Resources of Government

There are three sources from where the government gets money. The first two are revenue sources, and the last one is borrowings and capital asset sales:

Some Estimates of Financial Resources Required

♤ India will need about USD 4.5 trillion in the next 25 years for infrastructure development. (Economic Survey 2018)

♤ Over the next decade, India requires over USD 1.5 trillion to fill up the infrastructure gap.

♤ Investment on infrastructure needs to increase to INR 50 lakh crore over the next five fiscals through 2022. (CRISIL)

♤ Tax Revenue – This is the tax that the government collects in the form of personal income tax, goods and services tax etc.

♤ Non Tax Revenue – These are things like interests on bonds held, dividends from PSUs, and grants. They are revenue sources meaning they don’t have to be repaid and are smaller than tax revenues.

♤ Capital Receipts – These are borrowings of the government like the market loans, short term borrowings, external commercial borrowings etc. The loans received from foreign governments and bodies, disinvestment receipts and recoveries of loans from State and Union Territory Governments and other parties are also part of capital receipts.