Posted by Anjali Kaur on Oct 31, 2020

Budget Expenditure

Budget expenditure refers to the estimated expenditure of the government on its developmental and non-developmental programs. It could also be done on its planned or non-planned programs during a fiscal year.

We will discuss all these expenditure in brief:

 Let’s understand the concept of the budget expenditure in detail.

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Revenue Expenditure

It refers to that expenditure which neither creates assets of the government nor causes a reduction in liabilities of the government.

For example, old-age pensions, salaries, scholarships, etc.

These expenditures are recurring in nature which means they are repetitive in nature.

Capital Expenditure

It refers to that expenditure which either creates an asset of the government or causes a reduction in the liabilities of the government.

For example, the purchase of shares by MNCs, construction of dams, repayment of loans, etc are the example of capital expenditure.

These expenditures are non-recurring in nature because they involve a huge sum of money.

Development Expenditure

It refers to the expenditure which is incurred on the economic and social development of the country.

It relates to the growth and development projects of the country.

For example, expenditure on the development of the agricultural sector, industrial sector, health, and education sector.

Non-development Expenditure

It refers to the expenditure on the general services of the government which do not usually promote economic development.

It relates to the non-developmental activities of the government.

For example, expenditure on the administration, defence, justice, etc.

Planned Expenditure

It is that expenditure that is incurred during the year according to the central plans of the country.

It is incurred on financing objectives of the central plans of the different sectors of the economy.

For example, planned expenditure on health, education, law & order, etc.

Non-planned Expenditure

It refers to all such government expenditure which is not planned.

It is incurred on financing on those projects which are not planned in the central plans of the country.

For example, expenditure as a relief to the earthquake victims, expenditure on constructing the houses demolished due to the floods.

Have a look at the major classification of the government budget. You can download it and add more if you like.

Read more about the budget deficit here:

Thank You for reading.

You can read the related post on macroeconomics:

The Budget Deficit

The Government Budget

Working of the Investment

Investment Multiplier

Types of Employment Equilibrium

Concept of Short-Term Equilibrium

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