Question

Distinguish between revenue expenditure and capital expenditure.

Answer 1

Basis	Revenue expenditure	Capital expenditure
Creation of Assets	It does not create assets for the government.	It results in the creation of assets.
Reduction of Liability	These expenditures do not result in the reduction of liability.	These expenditures cause a reduction of the liability of the government.
Items	(a) Aids given to states and others (b) Interest payments (c) Expenditure on defence	(a) Purchase of shares (b) Expenditure on land, building, etc. (c) Grants by the central government to the state government