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A grant given by the Central Government to a State Government for constructing hospital buildings is, in the Central Budget, treated as:

Such a grant is revenue expenditure of the Centre. Although the State may create hospital assets, the grant does not create an asset for the Central Government, so the budget classifies it as revenue expenditure rather than capital expenditure.

  1. ARevenue expenditure of the Centre, even though it creates assets for the StateCorrect
  2. BCapital expenditure of the Centre, because assets are created
  3. CA capital receipt of the Centre
  4. DA loan recoverable by the Centre

Explanation

Under the budget classification, grants given to States are treated as revenue expenditure of the Centre even when the State uses them to create capital assets, because the Centre itself does not own the asset. The Centre's books therefore show it as revenue expenditure, not capital expenditure.

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