Revenue expenditure of the government

Those expenditures of the government that do not lead to the creation of fixed assets are called revenue expenditures. The government spends money under various accounting heads, such as paying interest on loans, salaries and pensions, subsidies, spends on different ministries and departments, etc. Grants made to state governments and other parties are also treated as revenue expenditures, even though these might be used for the creation of fixed assets.