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Answer» The difference between revenue and capital components of the union budget are as follows: | Revenue Components | Capital Components | | 1. The revenue component of the union budget comprises revenue receipts and revenue expenditure of the government. The revenue receipts include revenue generated from taxes, excise duty and interest receipts. The revenue expenditures include interest payment, expenditure on salaries and expenditure on defence. | 1. The capital component of the union budget comprises capital receipts and capital expenditure of the government. The capital receipts include loans taken by the government and selling of its shares by the government. The capital expenditures include the purchase of shares, expenditure on machinery, land and building. | | 2. The revenue receipts do not reduce the financial assets or create any liabilities for the government. The revenue expenditure does not create an asset for the government or reduce liabilities of the government. | 2. The capital receipts reduce financial assets and create liabilities for the government. The capital expenditure create assets for the government and reduce liabilities of the government. |
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