Answer to Question #55723 in Finance for nidhi gambhir

Question

Difference between Current transfer and capital transfer .

Answer 1

Current transfer and Capital transfer can be distinguished from each other in the following manner:
Current transfer is made out of the current income of the donor. But capital expenditure is paid out of the past income, viz. wealth or saving of the donor.
Current transfer is added to the current income of the recipient. But capital transfer contributes to the capital formation of a country.
Current transfer is used for consumption expenditure, which is short-run in nature. But capital transfer is used for the long-term expenditure of the recipient.