Public Finance in India — Economics STD 12 Commerce / Arts — Question

1. Revenue Budget consists of
   (1) Revenue Receipts
   (2) Revenue Expenditure
2. It explains how revenue is generated by government and how it is allocated among various expenditure heads.
3. Revenue receipts consists of
   (1) Tax Revenue
   (2) Non-Tax Revenue
4. Revenue expenditure includes developmental and non – developmental expenditure of Central Government.
5. Revenue Receipts do not create any liability of the government.
6. Revenue expenditure does not lead to the creation of assets.

Capital Budget:

1. Capital Budget consists of
   (1) Capital Receipts
   (2) Capital Expenditure
2. It deals with the capital aspect.
3. Capital receipts consists of
   (1) Borrowing
   (2) Recovery of loans
   (3) Disinvestment, small savings
4. Capital expenditure includes expenditure on land and building machinery, investment in shares, loans granted by Central Government to State.
5. Capital receipt create a liability of the government.
6. Capital expenditure leads to the creation of assets.