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Budget : Concepts and Terminologies
Budget of a government is
a comprehensive statement of government finances relating to a particular year.
Every Budget broadly consists of two parts- (i) Expenditure Budget and (ii) Receipts
Budget.
The amounts of intended expenditure
by the Government in the next financial year are expressed in the Expenditure Budget.
The entire Expenditure
Budget can be divided into two distinct categories, viz.
i) Capital Expenditure : those expenditures by the government that lead to an increase
in the assets or a reduction in the liabilities of the government. It is
however not necessary that the assets created should be productive or they
should even be revenue generating. Only the charges towards the construction of
the asset are counted as Capital expenditure, while the subsequent charges for
its maintenance are considered as Revenue expenditure. Most capital expenditure
is nonrecurring.
- Examples of Capital Expenditure
causing ‘increase in assets’: construction of a new Flyover, Union Govt. giving
a Loan to a State Govt.
- Examples of Capital Expenditure
causing ‘reduction of a liability’: Union Govt. repays the principal amount of
a loan it had taken in the past.
