Budget Classification

Budget Classification System by Government part 2

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In Budget Classification so far in our previous article Budget Classification system Part 1, we tried to understand the structure of Budget

Continuing with that

We will discuss furthermore


Comes under Revenue receipt

It is defined as the income government earns with no liability

Few examples are License fee, Gifts and Grants, Fine and penalties, Escheats ( Claim of the government on the property of the person who dies without leaving behind any legal heir or will)

Now that revenue receipts are over lets discus other categories which are

Capital Receipt

Capital receipts are that type of income which either creates liability or cause a reduction in the asset of the government.

Capital is earned either by borrowing or by disinvestment

In case of borrowing the government generally generates capital receipt from the following sources

1. Reserve Bank of India

2. Open Market Operations (Buying or selling of government securities in the open market to expand or contract the amount of money in the banking system)

3. International institutions ( IMF, World Bank)

Foreign Governments

And in case of Disinvestments

By selling shares of selected public sector undertakings (PSU) by governments

Post office deposits, National Saving Certificates, Kisan Vikas Patras, and Recovery of loan also come in the category of capital receipts.

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