What is the difference between Revenue Budget and Capital Budget?

Read the passage given below and answer the following questions from 1 to 4. India has scaled back expenditure, including on productive assets that aid economic growth, as the government is confronted with the risk of its budget deficit blowing out. Capital expenditure-the money spent on creating, maintaining or improving fixed assets like roads and factories-Stood at 40% of the budgeted amount in the six months to September, down from 55.5% in the year-ago period, data from the government's Controller General of Accounts show. The overall spending during the period was 49% of the budget aim compared to 53% last year. That's despite Prime Minister Narendra Modi's Government outlining measures worth more than 21 trillion rupees (281 billion) to counter the economic and social fallout of the Covid-19 outbreak. A closer look at the numbers shows the bulk of the spending was directed towards the poor and the farmers, with crucial sectors such as coal, power, shipping and steel receiving less than a third of their annual budget allocation. Spending on capital assets has so far trailed the so-called revenue expenditure that includes interest payments and overheads such as salaries, the data released last week showed. Modi's Government placed spending curbs on some ministries from April through December to manage its cash flow. Source: Business Standard, Nov. 5, 2020

1. Capital expenditure of the government ............ the assets of the government:

1. Increases
2. Decreases
3. Both [a] and [b]
4. None of these

2. Expenditure on health due to Covid-19 is ............ expenditure of the government.

1. Direct
2. Revenue
3. Both [a] and [b]
4. None of these

3. The overall spending has......... as compared to last year.

1. Increased
2. Decreased
3. Both [a] and [b]
4. None of these

4. A closer look at the numbers shows the bulk of spending was directed towards the poor and the.............?

1. Farmers
2. Labour
3. Manager
4. None of these

 
 

Explain how can government budget be useful in influencing allocation of resources in an economy.

Explain 'revenue deficit' in a Government budget? What does it indicate?

Differentiate between Revenue Budget and Capital Budget.

Giving reasons, categorise the following into revenue receipts and capital receipts:

1. Recovery of loans.
2. Corporation tax.
3. Dividends on investments made by government.
4. Sale of a public sector undertaking.

Calculate investment expenditure from the following data about an economy which is in equilibrium:
National income = 1000
Marginal propensity to save = 0.25
Autonomous consumption expenditure = 200

Giving reasons, categorise the following into direct of tax and indirect tax:

1. Corporation tax.
2. Sales tax.
3. Wealth tax.
4. Service tax.

If you were to be appointed as the Finance Minister of India, which taxes would you prefer: direct taxes or indirect taxes and why?

Explain the concept of 'fiscal deficit' in a government budget. What does it indicate?