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Volume IconWhat is Expenditure Budget?

When FM Nirmala Sitharaman presents the Budget tomorrow, the focus will be on a document that shows total expenditure of the govt. It is classified as Expenditure Budget. This report tells about it

ImageBhaswar Kumar New Delhi
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Part of the Union budget, Expenditure Budget offers a complete picture of the government’s expenditure in any financial year. This exhaustive document tells us about various types of outlay and reasons for the variations in estimates. It shows the funds allocated for disbursement to the different ministries and departments during a financial year. These allotments are made under plan and non-plan estimates.

Expenditure Budget is classified into two broad categories -- capital expenditure and revenue expenditure.

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Capital expenditure is the amount spent on creating assets. It is a cause for a reduction in the government’s liabilities. It adds to the capital stock of the economy and is non-recurring in nature. It also includes loans given to states and Union Territories, along with repayment of borrowings.

And any expenditure that neither creates assets nor causes a reduction in liability for the government is known as revenue expenditure. It is recurring in nature and is incurred on the normal functioning of the government.

While the former results in the creation of a physical asset or investment, the latter comprises mainly operational expenses. Payment of salaries, pension, interests, expenditure on administration, defence, health, and other services in the country come under Revenue Expenditure.

The government prepares its expenditure-related information in three separate documents. The first is the expenditure profile. It compiles data from all the ministries and departments to draw a complete picture of the financial performance of the Union government.

It serves as an explanatory document that aids economic analysis. The statements contained in this document are based on data provided by the ministries. Some of the statements are also based on the data provided in the Expenditure Budget.

The second is the Demand for Grants. The Demand for Grants is a document in which the estimates of expenditure made from the Consolidated Fund of India are submitted in pursuance with Article 113 of the Constitution. Included in the annual financial statement, they are required to be voted upon in the Lok Sabha.

And the third and final one is the Expenditure Budget. It deals with both capital expenditure and revenue expenditure.  

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First Published: Jan 31 2022 | 8:45 AM IST

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