Revenue Expenditure

Revenue Expenditure refers to the estimated expenditure of the government in a fiscal year that does not affect the assets and liabilities status of the government. These expenses are incurred to ensure that government departments run efficiently and cover their ongoing costs, e.g. interest payments, pensions, salaries, subsidies, grants, etc. Also, it is recurring in nature.

Revenue Expenditure shows the following characteristics; i.e., an expenditure will be considered as a revenue expenditure if it fulfils the following two conditions:

1. If an expenditure does not result in a decline in government liabilities, then it is a revenue expenditure. For example, expenditure in the form of grants to the state government to deal with natural disasters does not reduce the liability of the government. Therefore, it is considered a Revenue Expenditure.
2. If an expenditure does not create any government assets, then it is a revenue expenditure. For example, the expenditure on old-age pensions, salaries, and scholarships by the government is considered a Revenue expenditure as it does not create any assets. 

Revenue Expenditure can be further classified into:

(i) Plan Revenue Expenditure

It concerns centralized plans and centralized support for state and union territory plans. For example, expenditure on education, health, law, and order, etc.

(ii) Non-Plan Revenue Expenditure

It includes a vast range of general, economic, and social services of the government. For example, expenditure as a relief to earthquake victims, etc. Non-plan expenditure relates to the expenditure on the government’s everyday operations.

The Government Budget is a statement of expected receipts and expected expenditures of the Government (for the coming fiscal year) that reveals the budgetary policy of the Government to achieve the twin objective of growth and stability. The financial/fiscal year is taken from 1st April to 31st March. The Budget unfolds (i) the financial performance of the Government during the past year and (ii) the expected financial performance and Government policies for the coming year. The financial performance is an explanation of what happened during the past year. The budget’s emphasis is more on the other side., i.e. Government programs and policies for the upcoming year. The government budget has two aspects; Revenue and Capital. Revenue consists of transactions that are regular and recurring, and the government receives them in the ordinary course of business. Capital consists of transactions that are non-recurring and not routine. 

The revenue budget displays the government’s current receipts and the expenditures that may be covered by those receipts. The statement of anticipated revenue receipts and expenditures for a fiscal year is known as a Revenue Budget. The Revenue Budget consists of Revenue Receipt and Revenue Expenditure.