Question

Differentiate between 'Revenue Expenditure' and 'Capital Expenditure' of government budget.

Hint:

Capital expenditure enhances future capacity, while revenue expenditure meets current needs.

Answer 1

Step 1: Define Revenue Expenditure.
Revenue expenditure refers to the government's spending on goods and services that are consumed in the short term. This includes expenditure on salaries, subsidies, and routine administrative costs.
Step 2: Define Capital Expenditure.
Capital expenditure refers to the government's spending on long-term investments such as infrastructure, machinery, and buildings. These expenditures are meant to create future assets or improve the productive capacity of the economy.
Step 3: Comparison.
- **Revenue Expenditure:** Current, short-term spending (e.g., salaries, subsidies). - **Capital Expenditure:** Long-term investment in physical assets (e.g., infrastructure, education).
Step 4: Conclusion.
Thus, the key difference is that revenue expenditure is for day-to-day functioning, while capital expenditure is aimed at long-term growth and development. Final Answer: \[ \boxed{\text{Revenue Expenditure is for daily operations, while Capital Expenditure is for long-term investments.}} \]