Public Revenue can be classified as Tax Revenue and Non –Tax Revenue.
Public Expenditure refers to Government Expenditure. It is incurred by Central and State Governments. The Public Expenditure is incurred on various activities for the welfare of the people and also for the economic development.
Capital and Revenue Expenditure:
Capital Expenditure of the Government refers to that expenditure which results in creation of fixed assets.They are in the form of investment. They add to the net productive assets of the economy. Capital Expenditure is also known as development expenditure as it increases the productive capacity of the economy. It is investment expenditure and a non-recurring type of expenditure.
Revenue Expenditures are current or consumption expenditures incurred on civil administration, defense forces, public health and, education, maintenance of Government machinery etc. This type of “expenditure is of recurrent type which is incurred year after year.
Plan and Non – Plan Expenditure:
The plan expenditure is incurred on development activities outlined in ongoing five year plan. Plan expenditure is incurred on Transport, rural development, communication, agriculture, energy, social services, etc. The non – plan expenditure is incurred on those activities, which are not included in five-year plan.
Public debt refers to Government debt. It refers to Government borrowings from individuals, financial institutions, organizations and foreign countries. If revenue collected through taxes and other sources is not adequate to cover expenditure, the Government may resort to borrowings. Thus public debt is one of the instruments to cover deficits in budget.
Instruments of Fiscal Policy
Other Measures of Fiscal Policy: