In Budget Classification so far in our previous article Budget Classification system Part 1, we tried to understand the structure of Budget
Continuing with that
We will discuss furthermore
NON TAX REVENUE
Comes under Revenue receipt
It is defined as the income government earns with no liability
Few examples are License fee, Gifts and Grants, Fine and penalties, Escheats ( Claim of the government on the property of the person who dies without leaving behind any legal heir or will)
Now that revenue receipts are over lets discus other categories which are
Capital Receipt
Capital receipts are that type of income which either creates liability or cause a reduction in the asset of the government.
Capital is earned either by borrowing or by disinvestment
In case of borrowing the government generally generates capital receipt from the following sources
1. Reserve Bank of India
2. Open Market Operations (Buying or selling of government securities in the open market to expand or contract the amount of money in the banking system)
3. International institutions ( IMF, World Bank)
4. Foreign Governments
And in case of Disinvestments
By selling shares of selected public sector undertakings (PSU) by governments
Post office deposits, National Saving Certificates, Kisan Vikas Patras, and Recovery of loan also come in the category of capital receipts.