Now, let us see the expenditure side of the government. Broadly there are two branches of expenditure like income, the Revenue Expenditure and the Capital Expenditure.
Revenue expenditure is the expenditure incurred for the routine, usual and normal day to day running of government departments and provision of various services to citizens. It includes both development and non-development expenditure of the Central government. Usually expenditures that do not result in the creation of assets are considered revenue expenditure.
In general revenue expenditure includes expenditure by the government on consumption of goods and services, expenditure on agricultural and industrial development, expenditure on Scientific research, education, health and social services, expenditure on defense and civil administration, expenditure on exports and external affairs, grants given to State governments, payment of interest on loans taken in the previous year and expenditure on subsidies.