Question

Briefly review constituents of the budget.

Answer 1

The main constituents of the budget are as under:

I. Public revenue: This is the income of the government from all sources used to meet public expenditure. Public revenue is classified into:

1. Revenue receipts: These do not create any liability or reduce assets. Revenue receipts are divided into:
   1. Tax revenue: Taxes imposed on income, wealth, or consumption, which may be direct or indirect taxes.
   2. Non-Tax revenue: Other sources such as interest receipts, dividends, profits from public enterprises, and fees for services.
2. Capital receipts: These create liabilities or reduce assets of the government, including borrowings, recoveries of loans, and proceeds from disinvestment.

II. Public expenditure: The government’s spending is categorized into:

1. Expenditure on revenue account: It is the amount of money that the government spends on products and services that are used for group consumption. The government’s tax and non-tax revenues are used to pay for these expenses. Revenue expenditures are repetitive or recurrent in nature. These are temporary expenses.
2. Expenditure on capital account: The government’s construction and planning operations during the Ion period are related to capital account expenditures. As a result, physical or financial capital assets are generated. These expenses are covered by the government’s capital revenues, which include loans, savings, and capital transfers from other countries.