- The budget is classified into Revenue Budget and Capital Budget.
- This distinction is mandated by Article 112 of the Constitution.
Revenue Budget
- Deals with revenue receipts and revenue expenditures.
- Revenue Receipts: Neither create liability nor reduce assets. (e.g., taxes, non-tax revenues).
- Revenue Expenditure: Neither create assets nor reduce liabilities. (e.g., salaries, pensions, interest payments).
Capital Budget
- Deals with capital receipts and capital expenditures.
- Capital Receipts: Either create liability or reduce assets. (e.g., borrowings, loan recoveries, disinvestment).
- Capital Expenditure: Either create assets or reduce liabilities. (e.g., land acquisition, building, machinery, loans to states).