What is a Revenue Budget?
The revenue budget consists of revenue receipts of the government
(revenues from tax and other sources), and its expenditure.
Revenue receipts are divided into tax and non-tax revenue. Tax revenues
are made up of taxes such as income tax, corporate tax, excise, customs
and other duties that the government levies. In non-tax revenue, the
government's sources are interest on loans and dividend on investments
like PSUs, fees, and other receipts for services that it renders.
Revenue expenditure is the payment incurred for the normal day-to-day
running of government departments and various services that it offers to
its citizens.
The government also has other expenditure like servicing interest on its
borrowings, subsidies, etc.
Usually, expenditure that does not result in the creation of assets, and
grants given to state governments and other parties are revenue
expenditures.
The difference between revenue receipts and revenue expenditure is usually
negative. This means that the government spends more than it earns. This
difference is called the revenue deficit.
What is a Capital Budget?
The capital budget is different from the revenue budget as its components
are of a long-term nature.
The capital budget consists of capital receipts and payments.
Capital receipts are government loans raised from the public, government
borrowings from the Reserve Bank and treasury bills, loans received from
foreign bodies and governments, divestment of equity holding in public
sector enterprises, securities against small savings, state provident
funds, and special deposits.
Capital payments are capital expenditures on acquisition of assets like
land, buildings, machinery, and equipment. Investments in shares, loans
and advances granted by the central government to state and union
territory governments, government companies, corporations and other
parties.
Image: Indian bank employee counts rupee currency notes in Mumbai.
Photograph: Indranil Mukherjee/AFP/Getty Images
Also read: Dear FM, please tax me!
Advertisement
