The term capital expenditure is first used in Budget 2022-2023
Effective capital expenditure can be termed as capital expenditure added with grants to the state governments for creation of capital assets.
Effective capital expenditure = capital expenditure + grants to the state governments for creation of assets
Capital Expenditure
Capital Expenditure can be termed as the expenditure on purchase, upgrade or life extension of an asset.
These expenditures are long term investments i.e., the assets have a useful life for more than a year
Examples of capital expenditure:
- Purchase of property such as land, buildings
- Purchase of manufacturing equipment and furniture
- Purchase of computers and software
- purchase of vehicles
Note: In general, grants to the state government is considered in revenue expenditure.
