Is it correct that if revenue budget balances, capital budget also balances?
Dear Student,
No, it is not true that if the revenue budget balances, then the capital budget also balances. A balance in the revenue budget means that revenue expenditure = revenue receipts. However, this has no bearing on the capital budget. When the revenue budget balances:
i) If there is a total budgetary deficit, then there will be a deficit in the capital budget, or, total expenditures > total receipts due to capital expenditures > capital receipts
ii) If there is a total budgetary surplus, then there will be a surplus in the capital budget, or, total receipts > total expenditures due to capital receipts > capital expenditures
iii) If the total budget balances, only then the capital budget balances, or, total receipts = total expenditures which implies that capital receipts = capital expenditures.