Among the following expenditures one expenditure comes under capital expenditure. Choose the correct option.
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Expenditure on construction of Delhi-Mumbai corridor
Capital expenditure is government spending that creates physical or financial assets, or reduces the government’s financial liabilities (what it owes). Spending that creates no such asset is revenue expenditure.
Option (1) Expenditure on Vaccination being provided free of cost to prevent Covid-19 — Incorrect. The vaccine doses are used up when they are given. The spending protects people’s health but leaves the government no asset, so it is revenue expenditure.
Option (2) Expenditure on Ujjwala Scheme — Incorrect. Under this scheme the government helps poor households get cooking gas (LPG) connections. The help goes to the households, and the government gets no asset of its own, so it is revenue expenditure.
Option (3) Free ration to poor people by the Government during Covid-19 — Incorrect. The food is eaten by the families. Like a subsidy, it creates no asset for the government, so it is revenue expenditure.
Option (4) Expenditure on construction of Delhi-Mumbai corridor — Correct. The corridor is a lasting physical asset that will be used for many years, like a building or machinery. So spending on it is capital expenditure.
NCERT (2026-27): “Revenue Expenditure Revenue Expenditure is expenditure incurred for purposes other than the creation of physical or financial assets of the central government. It relates to those expenses incurred for the normal functioning of the government departments and various services, interest payments on debt incurred by the government, and grants given to state governments and other parties (even though some of the grants may be meant for creation of assets).… …Apart from providing implicit subsidies through under-pricing of public goods and services like education and health, the government also extends subsidies explicitly on items such as exports, interest on loans, food and fertilisers.… Capital Expenditure There are expenditures of the government which result in creation of physical or financial assets or reduction in financial liabilities. This includes expenditure on the acquisition of land, building, machinery, equipment, investment in shares, and loans and advances by the central government to state and union territory governments, PSUs and other parties.…” |