Purchasing machines, plots, equipment, etc. In the case of Capital expenditure, money is usually spent on creating new assets. These earnings are mostly generated by raising loans, disposing of assets, or recovering old loans. Notably, Capital receipts are earnings that tend to create a liability or may lead to a reduction in its total share of assets. Capital expenditure, can be divided into two categories – planned and unplanned.

It consists of Capital receipts and Capital expenditure, where the latter, i.e. Such expenses can further be categorized as planned or unplanned. Expenses on subsidies, agriculture, health education, defense, all fall under Revenue expenses. On the other hand, Revenue expenses are mostly incurred while maintaining the Government's everyday operations and its various departments. Tax Revenues are collected through direct and indirect taxes, while non-tax Revenues are collected as fees, penalties, grants, etc. It is further divided into two categories - tax Revenue and non-tax Revenue. Revenue receipts can be defined as income generated from all possible sources.

It comprises Revenue receipts and Revenue expenditure. The Government Budget is Broadly Divided into Revenue Budget and Capital Budget. That being said, this table below represents all significant components of a Government budget. The Government attempts to adopt remedial measures that directly or indirectly tend to influence some components of their budget. For example, the Government may decide to increase revenue-generating opportunities or may decrease certain expenses to Minimise that gap. To elaborate, the lower is the gap between total earnings and total expenses, the better it is for an economy positioned in terms of finances.ĭepending on the current Government Deficit and its type, each year, certain adjustments are made to the budget to remedy such a situation.

Notably, the Deficit plays an essential role in determining the financial health of an economy. Typically, a Deficit can be defined as the amount of money in a budget by which total expenses of a Government exceed its total earnings. Before we delve into such measures to compensate for the budgetary Deficit, let's brush our basics about Government Deficit in general.

Government deficit