Concept of Revenue Expenditure

Concept of Revenue Expenditure

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The portion of government spending that does not result in the creation of fixed assets is referred to as revenue expenditure. Examples of revenue expenditure include salaries, wages, pensions, subsidies, and interest payments. Additionally, keep in mind that the government incurs revenue expenses to meet its operational requirements. The government's revenue expenditure is the amount spent on day-to-day operations that is included in its revenue budget. The primary revenue expenditures include interest payments, defense revenue expenditures, salaries, pensions, and other similar items.

Since the majority of revenue expenditures are used to run government machinery, they are considered unproductive. revenue expenditure, in contrast to capital expenditure, will not generate future revenue for the government. Important expenditures from revenue include: Interest payments (for the government's previous borrowing), defense (almost 70% of defense spending is revenue), subsidies (which the government doesn't use because it doesn't make a profit), salaries, and other expenses, etc.

Simply put, what is revenue expenditure?

Huge sums of money are collected by modern governments. The task of spending these large sums has become extremely difficult. The government spends money on schools, colleges, hospitals, roads, bridges, railways, airports, and seaports in addition to salaries and pensions. Securing the nation from both internal and external enemies also costs money. Some of these tasks result in the construction of tangible assets like dams and school buildings, while others are related to the government's operational requirements.

What expenses are included in revenue?

The money spent on the revenue account by the Union government is the amount used to operate its complex machinery. Even if some of the grants are used to build capital assets, all grants given to state governments and Union territories are considered revenue expenditures as well. Subsidies are also accounted for in India's revenue expenditure. Subsidies are provided by the central government in three main categories: fuel subsidy, food subsidy, and fertilizer subsidy. A modern government's functions now include both loan giving and borrowing. Money borrowing, debt repayment, and interest repayment are also broken down into two categories: the revenue account and the capital account.