Definition
Revenue Receipts vs Capital Receipts
Revenue receipts are government income that creates no liability or reduces no asset, while capital receipts either create a liability, like borrowing, or reduce an asset, like disinvestment.
The Budget splits incoming money into two streams. Revenue receipts — taxes, interest, dividends and fees — recur and do not change the government's asset-liability position. Capital receipts include borrowings (which create a liability) and proceeds from disinvestment or loan recoveries (which reduce assets).
The distinction matters for assessing fiscal health: financing day-to-day spending from capital receipts like borrowing is less sustainable than funding it from revenue receipts. It also underlies the calculation of the revenue deficit and the overall fiscal deficit.
Related terms
- Revenue DeficitThe revenue deficit is the excess of the government's revenue expenditure over its revenue receipts, indicating that day-to-day running costs are being met partly through borrowing.
- DisinvestmentDisinvestment is the sale by the government of part or all of its stake in a public sector enterprise to raise resources or improve efficiency.
- Fiscal DeficitThe fiscal deficit is the gap between the government's total spending and its total revenue, showing how much it must borrow in a year.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.