Para 3.16.28 — MSO (Audit)
Original Rule Text
3.16.28 Expenditure of a capital nature may be financed from the following sources:
(i) Surplus Revenue.
(ii) Borrowings either specific for a particular purpose or non-specific for all Government purposes or unfounded.
(iii) Sources other than revenue and borrowings; e.g. accumulated balances.
For the purpose of accounts,
(ii) and
(iii) are grouped together, the capital expenditure met from these sources being described as outlay financed outside the Revenue Account and being quite apart in treatment from expenditure met from revenue. On the other hand, expenditure of a capital nature met from revenue is accounted for under the appropriate major head within the Revenue Account, as any other expenditure of a revenue nature.
What This Means
Capital expenditure can be financed from three sources: surplus revenue, borrowings (specific or general), or accumulated balances. For accounting purposes, borrowings and accumulated balances are grouped together as 'outlay financed outside the Revenue Account.' Capital expenditure funded from surplus revenue, however, stays within the Revenue Account and is treated like any other revenue expenditure in the accounts.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Three funding sources: surplus revenue, borrowings, and accumulated balances
- 2Borrowings and balances are grouped as outlay financed outside the Revenue Account
- 3Capital expenditure met from revenue stays within the Revenue Account
- 4The funding source determines accounting treatment, not the nature of the expenditure
Practical Example
A state government decides to construct a new secretariat building costing Rs 100 crore. If the state finances it from market borrowings, the expenditure appears under a capital head outside the Revenue Account. If instead the state uses surplus revenue to fund the same building, the Rs 100 crore is accounted for under the appropriate major head within the Revenue Account, just like regular operational spending.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
Can capital expenditure be funded from revenue surplus?▼
What are 'unfunded borrowings'?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.