li   inan e in ndia      18.7
           The term was innovated by the Government          of a government as the case had been with India.
     of the time to show some rationale in its high          The capital receipts in India include the following
     revenue deficit by bringing the logic that all of       capital kind of accruals to the government:
     it were not like a typical revenue expenditure
     (which are consumptive in nature) and some of           (i) Loan Recovery
     it were used to create ‘capital assets’ also (though    This is one source of the capital receipts. The
     they cannot be shown in the ‘capital’ heads of          money the government had lent out in the past
     expenditures). Though, the new Government at            in India (states, UTs, PSUs, etc.) and abroad their
     centre does not give the same significance to the       capital comes back to the government when the
     term, it has been releasing data related to it.
                                                             borrowers repay them as capital receipts. The
           The Union Budget 2017-18 has committed            interests which come to the government on such
     to reduce the effective revenue deficit to 0.7 per cent loans are part of the revenue receipts.
     in 2017-18 and 0.2 per cent in 2018-19 (it was
     estimated to be 1.2 per cent for 2016-17). While        (ii) Borrowings by the Government
     the revenue deficits for 2017-18 and 2018-19 have
                                                             This includes all long-term loans raised by the
     been set at 1.9 per cent and 1.4 per cent by the
     budget.                                                 government inside the country (i.e., internal
                                                             borrowings) and outside the country (i.e., external
     revenue buDget                                          borrowings). Internal borrowings might include
                                                             the borrowings from the RBI, Indian banks,
     The part of the Budget which deals with the income
                                                             financial institutions, etc. Similarly, external
     and expenditure of revenue by the government.
                                                             borrowings might include the loans from the
           This presents the annual financial statement
                                                             World Bank, the IMF, foreign banks, foreign
     of the total revenue receipts and the total revenue
                                                             governments, foreign financial institutions, etc.
     expenditure—if the balance emerges to be positive
     it is a revenue surplus budget, and if it comes out     (iii) Other Receipts by the Government
     to be negative, it is a revenue deficit budget.
                                                             This includes many long-term capital accruals
     cAPitAl buDget                                          to the government through the Provident Fund
                                                             (PF), Postal Deposits, various small saving
     The part of the Budget which deals with the
     receipts and expenditures of the capital by the         schemes (SSSs) and the government bonds sold
     government. This shows the means by which the           to the public (as Indira Vikas Patra, Kisan Vikas
     capital is managed and the areas where capital is       Patra, Market Stabilisation Bond, etc.). Such
     spent.                                                  receipts are nothing but a kind of loan on which
                                                             the government needs to pay interests on their
     cAPitAl receiPts                                        maturities. But they play a role in capital raising
     All non-revenue reciepts of a government are            process by the government.
     known as capital receipts. Such receipts are for
     investment purposes and supposed to be spent
                                                             cAPitAl exPenDiture
     on plan-development by a government. But the            All the areas which get capital from the government
     receipts might need their diversion to meet other       are part of the capital expenditure. It includes so
     needs to take care of the rising revenue expenditure    many heads in India —