Which of the following is/are included in the capital budget of the Government of India?Expenditure

Question

Which of the following is/are included in the capital budget of the Government of India?Expenditure on acquisition of assets like roads, buildings, machinery, etc.Loans received from foreign governmentsLoans and advances granted to the States and Union TerritoriesSelect the correct answer using the code given below.

Accepted Answer

The Capital Budget is an account of the assets as well as liabilities of the central government, which takes into consideration changes in capital. It consists of capital receipts and capital expenditure of the government. This shows the capital requirements of the government and the pattern of their financing.The main items of capital receipts are:Loans raised by the government from the public, which are called market borrowingsBorrowing by the government from the Reserve Bank and commercial banks and other financial institutions through the sale of treasury billsLoans received from foreign governments and international organisationsRecoveries of loans granted by the central governmentCapital Expenditure: There are expenditures of the government which result in creation of physical or financial assets or reduction in financial liabilities. This includes expenditure on the acquisition of land, building, machinery, equipment, investment in shares, and loans and advances by the central government to state and union territory governments, PSUs and other parties.Source: NCERT: Book For Class XII Economics - Macroeconomics Chapter 5