Revenue expenditure generally finances current operation and transfers: salaries, pensions, maintenance, interest and many service or welfare payments. Capital expenditure creates or acquires assets or reduces financial liabilities, subject to the detailed accounting head. A school building may be capital; teacher salaries are revenue. Both can be necessary for a functioning school. “Revenue” does not mean wasteful, and “capital” does not guarantee a useful asset. Quality depends on design, procurement and delivery.

The AP BE 2026-27 records ₹2,56,142.64 crore of revenue expenditure and ₹48,697.71 crore of capital expenditure in the headline table. It also separately shows ₹5,217.67 crore in loans and advances and ₹22,147.32 crore of capital disbursements. The full total-expenditure figure of ₹3,32,205.33 crore includes those additional parts. Do not add the “sectoral capital” number to capital expenditure without checking its definition; budget summaries can group loans or repayment differently.

For a project question, follow the money from appropriation to release, tender, work, payment and service delivery. An announced allocation is at the start of that chain. Current affairs often report the largest number while a physical-progress report measures what has actually been built. The distinction is especially important in irrigation, roads, housing and urban infrastructure.

Worked example: A government builds a clinic and then hires nurses. The building is ordinarily capital spending; recurring pay and medicines are revenue spending. The clinic works only when both are provided. Calling all revenue spending unproductive or all capital spending effective skips the service-delivery test. In an exam problem, first classify the accounting head, then assess whether the planned allocation became a functioning asset or service.

Active recall: Classify teacher pay, a school building, interest and a loan to a public body. Explain why the full budget total exceeds revenue plus capital expenditure.