Revenue and capital expenditure

 Revenue and capital expenditure

Public expenditure can be classified as Revenue Expenditure and Capital Expenditure.

Revenue expenditure: It is an ordinary routine type of expenditure incurred in running the administration. It is current expenditure and includes the expenditure incurred in running the administration or in supplying routine services or in the collection of taxes, duties, fees, assessments, etc. as well as interest on public debt.

Revenue expenditure of Government of India;

1) Expenditure on civil administration

2) Defence services

3) Debt services-Pensions

4) Social and development services

5) Other miscellaneous expenditures

Revenue expenditures of States in India;

1) Social; and development expenditure on education

2) Medical and public health

3) Agriculture

4) Veterinary and co-operation

5) Electricity schemes

6) Rural and community development

7) Civil works

8) Industries and supplies

9) Other Developmental expenditure

It also includes non-developmental expenditure as a collection of taxes, debt services, civil administration, famine, etc.

Capital expenditure: This expenditure is of extraordinary nature. The capital expenditure represents

capital outlay both developmental and non-developmental

1) Acquisitions or creation of an asset

2) Undertaking new multipurpose projects.

3) To fight a war

The governments of India incurs the same capital expenditure on defense, payment of the commuted value of pensioners, State trading schemes railway construction extension and improvement of post and telegraph facilities civil aviation, irrigation and discharge of permanent debt, advances to state and other loans, and advances.

Similarly, in the case of State Government capital expenditure includes capital outlay as

1) Multipurpose river valley schemes

2) Irrigation and navigation

3) Schemes of agricultural improvement and research

4) Electricity schemes

5) Road transport

6) Buildings, road, and waterworks

7) Industries development

This is the developmental capital expenditure but there is no n- development capital expenditure as state trading, compensation to landowners, discharge of permanent debt repayment of loans to the central and of other loans as well as loans and advances by the State Government.