Q19.Distinguish between Capital Budget and Revenue Budget. Explain the components of both these Budgets.

The government budget is an annual financial statement detailing estimated receipts and expenditures for a fiscal year, broadly divided into Revenue and Capital Budgets.

The Revenue Budget handles current income and expenditure, focusing on short-term operations without affecting assets or liabilities. Conversely, the Capital Budget concerns government assets and liabilities, involving long-term investments or disinvestments.

Revenue Receipts

• Tax Revenue: Income tax, corporate tax, GST.
• Non-Tax Revenue: Interest receipts, dividends, fees.

Revenue Expenditure

• Day-to-day functioning expenses: Salaries, pensions, interest payments.
• Subsidies, administrative costs, grants.

Capital Receipts

• Borrowings: Market loans, external loans.
• Disinvestment proceeds, recovery of loans.

Capital Expenditure

• Asset creation: Infrastructure, machinery, land.
• Loans to states/UTs, defense capital outlay.

This distinction is vital for assessing fiscal health, resource allocation, and the government's long-term economic impact.