**Subject:** Economy The distinction between Capital Budget and Revenue Budget is fundamental to understanding India's fiscal framework, with the **Union Budget 2025-26** projecting a total expenditure of **₹50.65 lakh crore**. ## Key Distinctions between Capital and Revenue Budget ### Nature and Purpose
- **Capital Budget** focuses on creating long-term assets and investments that generate future returns (e.g., **infrastructure projects, defense equipment**).
- **Revenue Budget** deals with day-to-day government operations and recurring expenses (e.g., **salaries, subsidies, interest payments**). ### Components of Capital Budget #### Receipts
- **Market Borrowings**: Government securities and bonds.
- **Recovery of Loans**: Repayment of loans given to states and PSUs.
- **Disinvestment Proceeds**: Revenue from sale of government stakes in PSUs. #### Expenditure
- **Capital Outlay**: Expenditure on infrastructure (**₹11.21 lakh crore in FY26**).
- **Defense Capital**: **₹180,000 crore** allocated for defense services.
- **Loans to States/UTs**: Financial assistance for development projects. ### Components of Revenue Budget #### Receipts
- **Tax Revenue**: Direct and indirect taxes (**₹25.83 lakh crore, 83% of total revenue**).
- **Non-Tax Revenue**: Dividends, interest, fees (**₹5.45 lakh crore, 17% of total revenue**).
- **Grants-in-Aid**: External assistance and contributions. #### Expenditure
- **Social Sector Spending**: Education, health (**19% of total expenditure in 2025-26**).
- **Subsidies**: Food, fertilizer, and fuel subsidies.
- **Interest Payments**: On government borrowings. The systematic classification of budget into capital and revenue components helps in better fiscal planning and monitoring of government expenditure. The **projected 20% increase in social sector spending** for 2025-26 reflects the government's commitment to welfare while maintaining focus on capital formation through increased **CAPEX allocation**.