What is the Capital Budget?

The Capital Budget deals with the governmental creation of assets, or the proceeds it receives from the sale of assets. The capital receipts includes loans it has raised from the public, or from foreign governments or institutions.

It also includes loan recoveries from states, and the disinvestment proceeding the government has obtained from public sector undertakings. All capital expenditure by the government leads to the creation or of assets - all payments towards land, buildings, machinery and equipment acquisition falls under this category. This heading also includes when the government invests in shares, and loans granted to states or union territories or to corporations or government companies. Generally, expenditure which does not create assets for the Government of India is treated as revenue expenditure.

All grants (not loans) to states and union territories are also counted as revenue expenditure, even if it does lead towards creation of an asset.