Budget 2021: What is Revenue Budget? Here's all you need to know


While the countdown for Union Budget 2021 has already begun, we need to first unpack its components. It is divided in two parts: Revenue Budget and Capital Budget. Below is a breakdown of what Revenue Budget is and entails.

Revenue Budget

According to the Ministry of Finance, Revenue Budget comprises the government’s revenue receipts (tax and non-tax revenues) and the expenditure met from these revenues.

Tax revenues comprise proceeds of taxes and other duties levied by the Centre. The estimates of revenue receipts shown in the Annual Financial Statement take into account the effect of various taxation proposals made in the Finance Bill.

The non-tax receipts mainly comprise interest and dividend on investments made by the government, fees, and other receipts for services rendered by the government.

Revenue expenditure is for the smooth functioning of government departments, and for rendering various services, making interest payments on debt, meeting subsidies, grants in aid, etc.

Broadly speaking, the expenditure that does not result in the creation of assets for the Government of India is treated as revenue expenditure. All grants are given to the state governments/union territories, and other parties are also treated as revenue expenditure even though some of the grants may be used for the creation of capital assets.