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Capital Expenditure

Updated on July 18, 2023

Capital expenditure refers to the government’s spending on long-term investments and assets that have lasting benefits for the economy. It refers to the funds allocated by the government for infrastructure development, building new assets, and acquiring fixed assets. The Union Budget sets aside funds under capital expenditure for projects and investments that help in creating or improving the nation’s infrastructure. It includes spending on areas like roads, bridges, railways, airports, power plants, schools, hospitals, and other physical assets that contribute to the long-term development of the country.

The allocation of capital expenditure is an important aspect of the Union Budget as it reflects the government’s priorities and vision for infrastructure development. It plays a crucial role in boosting economic growth, creating employment opportunities, improving connectivity, and enhancing the overall quality of life for the citizens. It is aimed at addressing the infrastructure gaps, promoting economic activity, attracting investment, and supporting various sectors of the economy. It is a key driver in building the physical foundation required for sustainable development and improving the country’s competitiveness.

Difference between capital expenditure and revenue expenditure

Capital expenditure is different from revenue expenditure, as the latter includes the allocation of resources to meet regular expenses like salaries, maintenance costs, and day-to-day operational expenses. Capital expenditure focuses on investments that have a long-term impact and contribute to the growth and development of the nation.