Question

Explain the term capital expenditure of the government.

Answer 1

Capital expenditure refers to the spending by the government that creates assets (such as buildings, roads, and infrastructure) or reduces liabilities (such as repayment of loans).

These expenditures are non-recurring in nature and help in the long-term development of the economy.

Examples include:

• Investment in infrastructure (roads, railways, schools).
• Loans to states and public sector enterprises.
• Repayment of government debt.