Has spending really increased?

“Spending increased by 10%” answers only part of the question. Ten percent of what, compared with which year, at which prices, and for how many people?

Nominal means the amount expressed in the money values of the period. A real comparison adjusts for price changes using an appropriate price measure. Per-person divides by a defined population. These adjustments answer different questions; none automatically measures service quality.

A worked example with invented numbers

Everything in this example is hypothetical. It is not an Indian budget series.

Suppose a programme spends ₹100 crore in Year A and ₹110 crore in Year B. The relevant price index rises from 100 to 108, and the covered population rises from 100,000 to 105,000 people.

The nominal total rose, real total spending rose a little, and real spending per person fell. There is no contradiction. The accompanying teaching dataset stores the inputs and calculations, explicitly labelled synthetic.

Choose a price measure that matches the question

Do not automatically use headline consumer inflation to deflate every government programme. The prices relevant to household purchases need not match those for construction, medical equipment or another programme’s inputs.

MoSPI’s September 2026 release distinguishes the overall consumer basket, food measures and detailed divisions, and specifies a 2024 index base. That is a reminder to state the price series and base you actually used, rather than attaching an unexplained “inflation adjusted” label. 1 2

Keep the periods aligned. Comparing a financial-year expenditure with a single month’s year-on-year inflation rate may not answer the intended question.

A GDP ratio is a different adjustment

Spending divided by GDP expresses its size relative to measured economic output. It is not the same calculation as spending per person or a direct purchasing-power adjustment.

The National Health Accounts release illustrates a denominator change: the same 2022–23 government health expenditure is presented as 1.43% of GDP and as 1.48% with the new GDP series. Those figures must not be plotted as successive spending increases. 3

Do not repair one comparison while breaking another

Before doing any price adjustment, check the accounting stage. The Union Budget’s table distinguishes actuals, budget estimates and revised estimates. A real-terms comparison still misleads if an article calls a proposed allocation an achieved expenditure. 4

Also define the population. All residents, eligible applicants, enrolled pupils and actual service users are not interchangeable denominators. A higher per-user figure could reflect fewer users rather than a better service.

Publish the input values, formula, units and rounding. Then state the limited conclusion: spending increased in this defined sense. Whether that money produced better public services remains a separate question.