Should Revenue and Capital Account Be Shown Separately in the Union Budget?

18 Pages Posted: 31 Jan 2017

See all articles by Charan Singh

Charan Singh

Indian Institute of Management (IIMB), Bangalore

P R Devi Prasad

Independent

K.K. Sharma

Government of Karnataka

Date Written: January 27, 2017

Abstract

Should India retain the distinction between revenue and capital classification in its Budget format? There is a constitutional provision for distinguishing between the two expenditures, revenue and capital, and various committees appointed by the Government of India have expressed their opinion to retain distinct classification.

International experience does not suggest that distinction of expenditure is an absolute necessity. In fact, many advanced countries that were earlier in the emerging/developing stages maintained a distinction between revenue and capital account to allow for better resource allocation. Some of these countries continue to maintain the distinction while others have discontinued with the practice of having separate classification.

The distinction between revenue and capital budget helps in providing transparency in the amount that is being borrowed by the Government. As different departments of the Government are involved in receipts and expenditure, a clear demarcation helps in independent estimation of different variables in the Budget.

Keywords: Revenue Expenditure, Capital Expenditure, Union Budget

Suggested Citation

Singh, Charan and Prasad, P R Devi and Sharma, K.K., Should Revenue and Capital Account Be Shown Separately in the Union Budget? (January 27, 2017). IIM Bangalore Research Paper No. 536, Available at SSRN: https://ssrn.com/abstract=2906760 or http://dx.doi.org/10.2139/ssrn.2906760

Charan Singh (Contact Author)

Indian Institute of Management (IIMB), Bangalore ( email )

Bannerghatta Road
Bangalore, Karnataka 560076
India
080-26993818 (Phone)

P R Devi Prasad

Independent ( email )

K.K. Sharma

Government of Karnataka ( email )

Kengeri Post, Bangalore-Mysore Road
Bangalore, 5600 60
India

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
54
Abstract Views
399
rank
448,451
PlumX Metrics