Hello everyone welcome to the series of economics in four minutes this is dr athman shah in this video i am going to discuss the difference between revenue receipts and capital resets candy subscribe to our youtube channel to find more videos on economics spss and rstudio.
Let's begin with the idea of budget budget is the annual financial statement of estimated receipts and expenditures of the government during a fiscal year so the government budget comprises of revenue budget and capital budget see this chart in budget we have two components receipts and expenditure.
In receipts we have two categories revenue receipts and capital receipts and similarly in expenditure also we have two categories revenue expenditure and capital expenditure now what do we mean by revenue receipts receipts which neither create liability nor reduce assets of the government are called revenue risks.
So government receives them in the normal course of activities now what are the sources of revenue visits so first is tax revenue earnings of direct and indirect taxes so earning of direct and indirect taxes neither create liability nor reduce the assets of the government similarly non-tax revenue.
So fines and penalties interest earnings fees so non-tax revenue neither creates liability nor reduces the asset of the government and therefore tax and non-tax revenue are under the category of revenue receipts let's understand the idea of capital visits.
Receipts that create liabilities or reduce financial assets so they also refer to incoming cash flows so capital receipts can be both non-debt and debt receipts what are the sources of capital receipts so first is borrowings so borrowings create liability of.
Returning loans and therefore they are under the category of capital reserves this investment is the non-debt capital receipt sources so this investment is treated as capital receipts because it reduces the assets of the government.
And third is recovery of loans so this is again non-debt capital visit so recovery of loans also reduces the assets of the government and therefore it is under the category of capital receipts so we have two categories revenue receipts and capital receipts.
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