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  Revenue and Capital Budget

Revenue Budget and Capital Budget:

Budgeting is the most significant constituent of the financial administration. The preparation of budget is one of the major operations of budgeting. This is obligatory for the government to make a statement of expected receipts and expenditures that should be laid before the Parliament of every financial year. It has to distinguish expenses on revenue account and capital account from other expenditures. Therefore government budget includes Revenue Budget and Capital Budget.

Revenue Budget:

Revenue budget includes of revenue receipts of the government (i.e., tax revenue and non-tax revenue) and the expenditure met from such revenues. Expenditures that do not outcome in creation of assets are termed as revenue expenditure. (Example, current revenues and current expenditure for normal functioning of the Government departments, interest charges on debt acquired by Government and other non-developmental expenses).

Capital budget:

Majority of the government expenses form the capital expenditure. The capital budget comprises of receipts and payments. Capital receipts are loans mounted by government from the public that are termed as market loans. Capital payments are expenses on assets creation like land, machinery, buildings, equipment investment loans to government companies and state governments and other developmental expenses.

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