| Which of the following is/are included in the capital budget of the Government of India? |
| 1. Expenditure on acquisition of assets like roads, buildings, machinery, etc. |
| 2. Loans received from foreign governments |
| 3. Loans and advances granted to the States and Union Territories |
| Select the correct answer using the codes given below |
A) Only 1
B) 2 and 3
C) 1 and 3
D) 1, 2 and 3
Correct Answer: D
Solution :
Exp. [d] Capital budgeting, or investment appraisal, is the planning process used to determine whether an organisation's long-term investments such as new machinery, replacement of machinery, replacement of machinery, new products, and research development projects are worth of funding of cash through the firm's capitalisation structure (debit, equity or retained earnings). It is the process of allocating resources for major capital or investment expenditures. One of the primary goals of capital budgeting investments is to increase the value of the firm to the shareholders. Capital budget includes capital receipts and payments of the government. Loans from public, foreign governments and RBI form a major part of the government's capital receipts. Capital expenditure is the expenditure on development of machinery, equipment, building, health facilities, education, etc. Fiscal deficit is incurred when the government?s total expenditure exceeds its total revenue.
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