Budget 2025 | What are expenditure & revenue budgets

The Expenditure Budget represents the allocation of funds for distribution to various government ministries and departments. Basically, it highlights how much the government plans to spend and on which sectors, based on the data provided by respective ministries.

It is further divided into two categories: Revenue and capital expenditure.

Basic difference between the two is- Capital expenditures are typically one-time large purchases of fixed assets that will be used for revenue generation over a longer period. Whereas Revenue expenditures are the ongoing operating expenses, which are short-term expenses.

Also Read | Budget 2025: Understanding the basics of India’s Union Budget | A beginner's guide

What is the Revenue Budget?

The revenue budget consists of revenue receipts of the Government and the corresponding  expenditure met using that revenue. It consists of three components: Revenue receipts, Tax revenue and non-tax revenue.

Revenue Receipts include both tax and non-tax revenues; Tax Revenue generates from income tax, corporate tax, customs duties, excise duties, and other forms of taxation; Non-Tax Revenue comes from dividends from government investments, fees for services provided by the government, and interest income.

The revenue budget is important as it gives a clear understanding of how the government generates income and how it further plans to spend it.

Another crucial term is Revenue deficit. It means revenue receipts are less than revenue expenditure. In simple words, the government is spending more than it is earning.