Union Budget 2024 | What is Capital Budget?

The Union Budget 2024 is on February 1, and the Capital Budget is a significant part of the annual Union Budget presented by the Finance Minister.

It details the government's planned capital expenditures and the means of financing them. The Capital Budget is distinct from the Revenue Budget, which deals with current revenues and expenses related to the day-to-day functioning of the government. Here's a detailed look at the components of the Capital Budget in India:

Capital Receipts: These are the funds received by the government that either create a liability or decrease its assets. Examples of capital receipts include:

- Loans raised by the Government of India from the public (which are called market borrowings), from foreign governments and international organizations.

- Disinvestment proceeds from selling government stakes in public sector enterprises.

- Loans received by the government.

- Recoveries of loans granted by the government.

Capital Expenditure: This pertains to the government's spending that results in the creation of physical or financial assets or a reduction in financial liabilities. Notable elements of capital expenditure include:

- Expenditure on acquiring or constructing fixed assets like buildings, machinery, equipment, and investment in shares.

- Loans and advances granted by the central government to state and union territory governments, public sector enterprises, and other parties.

The Capital Budget is crucial for a couple of reasons:

Asset Creation: It focuses on investments in infrastructure sectors like roads, railways, power, irrigation, and urban infrastructure, which are essential for sustaining long-term economic growth.

Fiscal Management: It provides an overview of how the government plans to finance its capital expenditures, which is important for understanding the government's fiscal strategy and assessing its impact on the economy.

The effective allocation and utilization of the Capital Budget are vital for boosting the country's infrastructure, enhancing productive capacity, and maintaining sustainable economic growth. The capital budget is also closely watched by various stakeholders, including investors, as it signals the government's commitment to long-term developmental and infrastructural projects.

(Disclaimer: This copy has been written by a generative AI tool and has been reviewed and edited by the DH Web Desk)