Budget Classification

Article 112: Budget must distinguish the expenditures on revenue account from other expenditures.

Hence budget has revenue budget and capital budget.

Revenue Receipts

• neither creates liability nor reduces assets
• non-reedemable
• 2 types
  1. Tax revenues
  2. Non tax revenues: loans, dividends, profits on investment, fees, fines

Revenue Expenditure

• expenses which neither create asset nor reduce liability
• expenses incurred for normal functioning of govt

Capital Receipts

• either creates liability or reduces assets
• loans raised by govt from public, borrowing from RBI/commercial banks/FI, sale of G-Sec, loans from foreign govt
• also includes small saving schemes

Capital Expenditure

• either create asset or reduce liability
• acquisition of land, building, machinery, equipment, purchase of share

See also: Government Budgeting