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Question
Is the following revenue expenditure or capital expenditure in the context of government budget? Give reason.
Expenditure on a collection of taxes.
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Solution
Expenditure on the collection of taxes is revenue expenditure. This expenditure has no decline in government liabilities and does not create assets for the government. For example, salaries, pensions and interest payments.
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| 1. | Revenue Expenditure | 100 |
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| 1. | Revenue Expenditure | 100 |
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| 3. | Net Borrowings | 38 |
| 4. | Net Interest Payments | 27 |
| 5. | Tax Revenue | 50 |
| 6. | Non-tax Revenue | 15 |
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| S. No. | Content | Rs (in crores) |
| 1. | Revenue Expenditure | 100 |
| 2. | Capital Receipts | 40 |
| 3. | Net Borrowings | 38 |
| 4. | Net Interest Payments | 27 |
| 5. | Tax Revenue | 50 |
| 6. | Non-tax Revenue | 15 |
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| S. No. | Content | Rs (in crores) |
| 1. | Revenue Expenditure | 100 |
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Statement 2: Revenue Expenditure relates to those expenses incurred for the normal functioning of the government departments.
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| 1. Revenue Expenditure | (a) Does not cause any reduction in government liability |
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| 3. Revenue Receipts | (c) Which causes a reduction in assets of the government |
| 4. capital Receipts | (d) Causes reduction in government liability. |
