Under Article 112, the Budget comprises the Revenue Budget, which covers routine government income and expenditure, and the Capital Budget, which deals with asset creation and long-term liabilities.
Difference Between Revenue Budget and Capital Budget
Components of the Revenue Budget
Revenue Receipts
Tax Revenue – Income tax, corporate tax, GST, customs, excise, etc.
Non-Tax Revenue – Dividends & profits from PSUs/RBI, fees, fines, interest receipts.
Grants-in-Aid – External grants from other countries/institutions.
Revenue Expenditure
Salaries, Pensions & Administrative Costs
Subsidies – food, fertiliser, petroleum.
Interest Payments on past borrowings.
Grants to States & UTs, grants for social services.
Expenditure on Routine Government Operations – police, defence services (revenue), judiciary.
Components of the Capital Budget
Capital Receipts
Borrowings – Market loans, external loans, treasury bills.
Disinvestment Proceeds – Sale of government equity in PSUs.
Recovery of Loans – Repayment from states, PSUs, and others.
Small Savings & Provident Fund Collections
Capital Expenditure
Creation of Assets – Roads, railways, bridges, irrigation, defence capital.
Loans and Advances – To states, UTs, PSUs, and financial institutions.
Investment in PSUs and Infrastructure Projects
A healthy fiscal structure requires containing revenue expenditure and prioritising capital expenditure to strengthen productivity and economic growth.