The Diet on Thursday enacted a record ¥96.34 trillion ($803.45 billion) budget for fiscal 2015 as it aims to achieve economic recovery while pursuing fiscal rehabilitation.
Enactment was delayed by the snap election on Dec. 14 called by Prime Minister Shinzo Abe to seek public backing for delaying a second consumption tax hike originally planned for 2015, until 2017.
The Upper House approved the budget with support from the ruling coalition led by Abe's Liberal Democratic Party, following its passage through the House of Representatives on March 13.
"The economy is beginning to enter a virtuous cycle," Abe said at an Upper House Budget Committee meeting earlier in the day, referring to wholesale salary hikes that encouraged consumer spending.
"We'd like to receive taxes from people making profits and spend them in areas including education."
The initial general-account budget for fiscal 2015, which took effect April 1, is aimed at ending Japan's long-standing deflation while pursuing fiscal rehabilitation amid an increase in social security costs caused by an aging population.
Despite the delay in hiking the sales tax to 10 percent, the government is likely to attain its key goal of halving the ratio of its primary balance deficit to gross domestic product by fiscal 2015, from the fiscal 2010 level.
Of the ¥96.34 trillion in expenditures, ¥23.45 trillion will be allocated to pay off Japan's growing debt-servicing costs.
Social security costs, including for pensions and medical costs, will rise 3.3 percent from fiscal 2014 to a record ¥31.53 trillion in fiscal 2015.
Defense expenditures will climb 2.0 percent to a record ¥4.98 trillion, up for the third consecutive year, as Abe aims to bolster surveillance and defense capabilities to counter China's growing assertiveness.
A ¥5.76 trillion stopgap budget was enacted to fund government spending for 11 days from April 1.