---
title: "Capital Expenditure: Definition & Budget Role"
description: "Capital expenditure is government spending that builds assets or repays debt, unlike revenue expenditure. Key to India's Union Budget, GS3, and fiscal policy."
url: "https://modeldiplomat.com/learn/glossary/capital-expenditure"
---

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Model Diplomat Research Team · Last reviewed June 22, 2026

TL;DR

- Capital expenditure is government spending that creates assets or reduces liabilities, including infrastructure outlays, loans to states, and equity investments in public enterprises.
- How does capital expenditure differ from revenue expenditure?
- What is 'effective capital expenditure' in the Indian Budget?
- Why is debt repayment counted as capital expenditure if it creates no asset?
- Why do economists favour capital expenditure over revenue expenditure for growth?

[Civil Service & Diplomatic Exams](https://modeldiplomat.com/learn/civil-services/glossary)Updated June 22, 2026

Capital expenditure is government spending that creates assets or reduces liabilities, including infrastructure outlays, loans to states, and equity investments in public enterprises.

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Finance Minister Nirmala Sitharaman, presenting the Union Budget on 1 February 2023, raised budgeted capital expenditure to ₹10 lakh crore—about 3.3 percent of GDP—to drive infrastructure-led growth.

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