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Revenue Expenditure

Updated on July 18, 2023

Revenue expenditure in India refers to the government’s spending on regular and routine expenses that do not result in the creation of long-term assets or investments. It includes expenditures related to salaries, pensions, interest payments, subsidies, maintenance costs, and other day-to-day operational expenses. Unlike capital expenditure, which focuses on long-term investments and infrastructure development, revenue expenditure deals with the recurring costs incurred by the government on a regular basis.

The revenue expenditure is an essential component of the government’s budget as it covers the ongoing costs of running the country, providing essential services, and meeting financial commitments. It is funded through revenue sources like taxes, fees, fines, and other forms of government income. Examples of revenue expenditure include payments made to government employees, such as salaries and allowances, pension payments to retired personnel, interest payments on loans and debts, subsidies given to support specific sectors or groups, maintenance and repair expenses for government buildings and equipment, and various other day-to-day operational expenses.

The government carefully manages its revenue expenditure to ensure that it remains within sustainable limits, avoiding excessive deficits and maintaining fiscal discipline. Balancing revenue expenditure with revenue generation is crucial to achieving financial stability and sustainability.