2.1.1. Capital and Revenue Expenditure

Capital Expenditures of the government are those expenditures which result in creation of physical or financial assets or reduction in financial liabilities. These include:

♤ Expenditure on the acquisition of land, building, machinery, equipment, investment in shares; and

♤ Loans and advances by the central government to state and union territory governments, PSUs and other parties.

Revenue Expenditure is expenditure incurred for purposes other than the creation of physical or financial assets of the central government. It relates to:

♤ expenses incurred for the normal functioning of the government departments and various services,

♤ interest payments on debt incurred by the government; and

♤ grants given to state governments and other parties