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

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)

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Directive word: Distinguish

This question asks you to distinguish. The directive word signals the depth of analysis expected, the structure of your answer, and the weight of evidence you must bring.

See our UPSC directive words guide for a full breakdown of how to respond to each command word.

How this answer will be evaluated

Approach

The directive 'distinguish' requires clear differentiation between Capital and Revenue Budget based on nature, purpose and impact, followed by explanation of their components. Structure as: brief intro defining both → tabular/paragraph distinction on 3-4 parameters → components of each → concluding significance for fiscal management.

Key points expected

Clear distinction based on nature of transactions: capital budget deals with asset creation/liability reduction vs revenue budget with regular income-expenditure
Revenue Budget components: Revenue Receipts (tax/non-tax) and Revenue Expenditure (non-asset creating)
Capital Budget components: Capital Receipts (borrowings, disinvestment, recovery of loans) and Capital Expenditure (asset creation, loans given)
Impact distinction: revenue budget affects current fiscal position; capital budget affects balance sheet and future productive capacity
Constitutional basis: Article 112 and FRBM Act relevance in maintaining revenue deficit and fiscal deficit discipline

Evaluation rubric

Dimension	Weight	Max marks	Excellent	Average	Poor
Demand-directive understanding	20%	2	Demonstrates precise understanding that 'distinguish' requires systematic differentiation on multiple parameters (nature, purpose, impact) before explaining components; does not merely list features	Attempts distinction but conflates some aspects or treats 'distinguish' and 'explain' as separate unrelated tasks without integration	Misinterprets directive as mere definition or provides only components without any comparative framework
Content depth & accuracy	20%	2	Accurately identifies all components with precise constitutional/technical terms; correctly notes revenue receipts include tax (direct/indirect) and non-tax; capital receipts include borrowings, disinvestment, loan recoveries	Covers major components but misses nuances like plan/non-plan distinction (pre-2017) or confuses capital expenditure with revenue expenditure in specific cases	Significant factual errors like treating interest payments as capital expenditure or missing disinvestment as capital receipt; omits major components entirely
Structure & flow	20%	2	Logical progression: definitions → systematic distinction (tabular or bullet points) → components of each → integrated conclusion; maintains 150-word discipline with optimal space allocation	Basic structure present but uneven weightage (over-explains distinction, skimps on components or vice versa); some repetition between sections	Disorganised or fragmented; no clear separation between distinction and components; exceeds word limit significantly or leaves sections incomplete
Examples / case-law / data	20%	2	Includes specific contemporary examples: capital expenditure like PM Gati Shakti, National Infrastructure Pipeline; revenue expenditure like subsidies, salaries; or cites FRBM Act targets for revenue deficit	Generic mention of 'infrastructure' or 'salaries' without specific schemes; or provides outdated pre-2017 plan/non-plan examples without noting abolition	No examples at all; or incorrect examples like treating GST collections as capital receipt or MNREGA as capital expenditure
Conclusion & analytical edge	20%	2	Concludes with analytical insight on interdependence (capital expenditure creates assets that generate future revenue) or FRBM Act's revenue deficit mandate; notes Union Budget 2024-25 priority on capital expenditure push	Routine summary restating distinction without added value; or abrupt ending without conclusion	No conclusion; or factually wrong conclusion suggesting revenue budget is more important for growth; introduces irrelevant aspects like state budgets without context

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