What is Capital Budget and Revenue Budget?
By Balaji
Updated on: February 17th, 2023
While the revenue budget includes items that do not impact the government’s assets and liabilities, the capital budget includes items that do affect the government’s assets and liabilities. The government creates an annual budget that includes capital and revenue budgets.
Table of content
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1. Capital Budget and Revenue Budget
Capital Budget and Revenue Budget
The government’s assets and liabilities are affected by capital revenues and expenditures. Capital receipts refer to borrowings, loans from a public or foreign government, or borrowings from the central bank made by the government of a country. Here are some factors about revenue budget and capital budget:
|
Type of Budget |
Components |
Examples |
|
Revenue Budget |
Revenue Receipts, Revenue Expenditure |
Excise Duty, Income Tax, Dividend Income, Salaries, Administrative Costs |
|
Capital Budget |
Capital Receipts, Capital Expenditure |
Disinvestments, Long-term Investments, etc. |
Difference between Revenue Budget and Capital Budget
The key differences between Revenue Budget and Capital Budget are as follows:
| Revenue Budget | Capital Budget |
| Revenue receipts are money earned by the government as taxes and non-taxes like dividend income, profits, etc. | Capital receipts cause a decrease in the assets of the government or increase its liabilities. |
|
Revenue expenditure includes administrative expenses, salaries, pensions, etc. |
Capital expenditure creates or reduces liabilities. |
| Revenue and spending have no effect on the government’s assets and liabilities. |
Assets like hospitals are a part of capital expenditure for the government. |
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