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General Studies 2021 GS Paper III 10 marks 150 words Compulsory Distinguish

GS Paper III — Q2

Distinguish between Capital Budget and Revenue Budget. Explain the components of both these Budgets. (Answer in 150 words)

हिंदी में प्रश्न पढ़ें

पूँजी बजट तथा राजस्व बजट के मध्य अंतर स्पष्ट कीजिए । इन दोनों बजटों के संघटकों को समझाइए । (150 शब्दों में उत्तर दीजिए)

Q2 of the 2021 UPSC Mains General Studies GS Paper III, as printed
The question as printed in the 2021 General Studies paper
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Model answer

Written by UPSC Answer Check against this question's marking rubric, to the 150-word length. UPSC does not publish answers for Mains — this is one way to score well, not an official key.

Capital and Revenue Budgets are distinguished by the nature of transactions. Revenue Budget records regular income and expenditure that do not alter the government’s asset-liability position; Capital Budget records capital transactions—asset creation, liability reduction, borrowings and changes in financial assets.

Revenue Budget comprises revenue receipts—taxes like income tax, GST, and non-tax receipts like fees and dividends—and revenue expenditure, i.e. non-asset-creating spending on salaries, interest and subsidies. Capital Budget comprises capital receipts—borrowings, disinvestment proceeds and recovery of loans—and capital expenditure, i.e. asset creation or liability reduction, including physical assets, financial assets like loans advanced to States, capital infusion, and debt repayment.

Revenue Budget affects the current fiscal position; Capital Budget affects the balance sheet; asset-creating items may enhance future productive capacity, while debt repayment only reduces liabilities. Thus, under Article 112 and the FRBM Act, 2003, the distinction is vital for revenue and fiscal deficit discipline.

What "Distinguish" is asking you to do

Name the property that separates the items and say which side holds it. Distinguish is marked exactly as differentiate is, with no difference in expectation, but its stems more often line up three terms rather than two — gender equality, gender equity and empowerment — and every pair in the set has to be separated.

Structure that answers it

The category they all sit in → the property dividing the first pair → the second pair → the third → why the boundary matters in practice

Where marks are lost

Separating the two obviously different items and leaving the middle term unplaced. A description of each side from which the line must be inferred is marked as description, not as a distinction.

All UPSC directive words, compared →

How this answer will be evaluated

Approach

Framework: null. compare: paired headings or table > key differences > significance > conclusion Full marks: Clear distinction with specific examples of components for both budgets.

Key points expected

  • Define Capital Budget (assets/liabilities)
  • Define Revenue Budget (income/expenditure)
  • List Capital components (capital receipts/expenditure)
  • List Revenue components (revenue receipts/expenditure)

Evaluation rubric

Each sub-part is marked on its own, against the marks and word limit printed on the paper.

  1. The answer Distinguish Capital vs Revenue Budget and explain their components.  · 150 words

    compare— paired headings or table → key differences → significance → conclusion

    Must cover

    • Define Capital Budget (assets/liabilities)
    • Define Revenue Budget (income/expenditure)
    • List Capital components (capital receipts/expenditure)
    • List Revenue components (revenue receipts/expenditure)

    Loses marks

    • Confusing capital expenditure with revenue expenditure
    • Failing to distinguish between receipts and expenditure
    • Vague definitions without specific examples

    Earns more

    • Mention specific capital receipts (disinvestment, borrowings)
    • Mention specific revenue receipts (taxes, duties)
    • Mention specific capital expenditure (infrastructure, grants)
    • Mention specific revenue expenditure (salaries, subsidies)

    Extra mark

    • Reference to Fiscal Responsibility and Budget Management Act (FRBM)
    • Mention of specific current year budget figures

Practice this exact question

Write your answer and it is marked point by point against the model answer above — what you covered, what you missed, what you got wrong.

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