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The Government Budget consists of which main component/s?
  • a)
    Revenue Budget and Capital Budget
  • b)
    Capital Budget only
  • c)
    Revenue Budget only
  • d)
    None of the above
Correct answer is option 'A'. Can you explain this answer?
Most Upvoted Answer
The Government Budget consists of which main component/s?a)Revenue Bud...
Government Budget is the financial plan of the government that outlines its expected revenue and expenditure for a specific period, usually one year. It is an important tool for fiscal management and helps in allocating resources efficiently and effectively. The main components of the Government Budget are as follows:

Revenue Budget:
The revenue budget includes the estimated government revenue from various sources and the proposed expenditure on current or day-to-day expenses. It consists of the following components:

1. Tax Revenue: This includes the revenue collected through direct and indirect taxes such as income tax, corporate tax, goods and services tax (GST), excise duty, customs duty, etc.

2. Non-Tax Revenue: This includes revenue earned by the government through sources other than taxes, such as dividends from public sector enterprises, interest on loans, fees, fines, and penalties.

3. Grants-in-Aid: These are the funds received by the government from other governments or organizations for specific purposes. Grants-in-aid are usually provided to support various developmental projects or to address specific socio-economic needs.

4. Revenue Expenditure: This includes the government's expenditure on salaries, pensions, subsidies, interest payments, defense, education, healthcare, infrastructure development, etc.

Capital Budget:
The capital budget includes the estimated government revenue from capital receipts and the proposed expenditure on capital assets or long-term investments. It consists of the following components:

1. Capital Receipts: These are the funds raised by the government through the sale of assets, borrowings, and recovery of loans. Capital receipts are used to finance capital expenditure and do not create a liability for the government.

2. Capital Expenditure: This includes the government's expenditure on acquiring or creating long-term assets such as infrastructure, buildings, machinery, equipment, etc.

The Government Budget consists of both the Revenue Budget and the Capital Budget to ensure a comprehensive financial plan. The Revenue Budget focuses on the day-to-day functioning of the government, while the Capital Budget focuses on long-term investments and asset creation. Both components are essential for the overall development and functioning of the government.

In conclusion, the correct answer is option 'A' - Revenue Budget and Capital Budget.
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The Government Budget consists of which main component/s?a)Revenue Budget and Capital Budgetb)Capital Budget onlyc)Revenue Budget onlyd)None of the aboveCorrect answer is option 'A'. Can you explain this answer?
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