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)
Model answer
Drafted with AI 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. How we build rubrics and answers.
(a) Distinction: The Revenue Budget records regular receipts and expenditure that do not alter the government's asset-liability position. The Capital Budget records transactions that create assets, reduce liabilities or change borrowings and financial assets.
(b) Components of the Revenue Budget: Revenue receipts include tax revenue (income tax, GST, customs) and non-tax revenue (fees, interest, dividends and profits). Revenue expenditure is non-asset-creating spending on salaries, pensions, interest and subsidies.
(c) Components of the Capital Budget: Capital receipts include borrowings, disinvestment proceeds and recovery of loans. Capital expenditure covers physical assets, financial assets such as loans to States and equity infusion, and repayment of debt.
The revenue account shapes the current fiscal position and the revenue deficit, while the capital account shapes the balance sheet and the fiscal deficit under Article 112 and the FRBM Act, 2003.
How this answer will be evaluated
Framework: compare
What earns full marks: Clear distinction with accurate components for both budgets within word limit.
Evaluation rubric
Each sub-part is marked on its own, against the marks and word limit printed on the paper.
- The answer Distinguish Capital and Revenue Budgets and explain their components. 10 marks · 150 words
compare— paired headings or point-wise contrast → key differences → significance → conclusion
Must cover
- Distinguishes Capital vs Revenue based on asset/liability creation
- Identifies Capital Receipts (borrowings, disinvestment, recoveries)
- Identifies Capital Expenditure (asset creation, debt repayment)
- Identifies Revenue Receipts (taxes, non-tax) and Expenditure (services)
Loses marks
- Confusing 'Capital' with 'Development' expenditure
- Listing components without distinguishing the two budgets
- Exceeding the 150-word limit significantly
Earns more
- Mentions 'Net Capital Expenditure' as a key metric
- Notes that Revenue Budget is usually larger than Capital
- Mentions 'effective capital expenditure' (capex plus grants for creation of capital assets)
Extra mark
- Cites specific FY24/25 allocation figures for Capital vs Revenue
- Mentions the 'Fiscal Deficit' formula (Revenue Deficit + Net Capital)
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.
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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