Capital Receipts
Capital receipts refer to funds received by the government that either create a liability or reduce an asset. These are non-regular in nature and do not directly arise from routine government operations.
They include:
- Borrowings (market loans, treasury bills, external debt)
- Recovery of loans given by the government
- Disinvestment proceeds from sale of public sector assets
Capital receipts are primarily used to:
- Finance fiscal deficits
- Fund capital expenditure
- Manage public debt
Revenue Receipts
Revenue receipts are government incomes that do not create liabilities and do not reduce assets. These are recurring receipts arising from normal government activities.
They are classified into:
- Tax revenue (income tax, GST, customs duty, excise duty)
- Non-tax revenue (dividends from PSUs, interest receipts, fees, fines)
Revenue receipts are used to:
- Finance day-to-day government expenditure
- Support welfare schemes and administration
- Meet interest payments and subsidies
Effective Capital Expenditure
Effective capital expenditure represents total capital spending after adjusting for grants given to states for capital asset creation.
It includes:
- Direct capital expenditure by the Centre
- Capital grants to states for infrastructure and asset creation
This measure reflects:
- Actual public investment impact
- Government’s role in infrastructure creation
- Long-term growth-oriented spending
Revenue Expenditure
Revenue expenditure refers to government spending that does not result in asset creation and is incurred for current consumption and services.
It includes:
- Salaries and pensions
- Interest payments
- Subsidies (food, fertilizer, fuel)
- Grants for operational purposes
- Administrative and welfare spending
Revenue expenditure is essential for:
- Running government machinery
- Delivering public services
- Social sector support
