Capital Budget


 
 
Concept Explanation
 

Capital Budget

Capital Budget: This part of the budget includes receipts & expenditure on capital account projected for the next financial year. Capital budget consists of capital receipts & Capital expenditure.

(a) Capital Receipts: Receipts which create a liability or result in a reduction in assets are called capital receipts. They are obtained by and disposing of assets.government by raising funds through borrowings, recovery of loans The main items of Capital receipts (income) are:

  • Loans raised by the government from the public through the sale of bonds and securities. They are called market loans,
  • Borrowings by government from RBI and other financial institutions through the sale of Treasury bills.
  • Loans and aids received from foreign countries and other international Organisations like International Monetary Fund (IMF), World Bank, etc.
  • Receipts from small saving schemes like the National saving scheme, Provident fund, etc.
  • Recoveries of loans granted to state and union territory governments and other parties.
  • (b) Capital Expenditure: Any projected expenditure which is incurred for creating asset with a long life is capital expenditure. Thus, expenditure on land, machines, equipment, irrigation projects, oil exploration and expenditure by way of investment in long term physical or financial assets are capital expenditure.

     
     


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