Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Macro Economics: Government Budget and Economy

Question:

Expenditure incurred on the "Relief of earthquake victim" will come under which of the following options?

Options:

Non-plan expenditure

Plan expenditure

Capital Expenditure

None of the above

Correct Answer:

Non-plan expenditure

Explanation:

The correct answer is Option1: Non-plan expenditure

Budget documents classify total expenditure into plan and non-plan expenditure. Within revenue expenditure, a distinction is made between plan and non-plan. According to this classification, plan revenue expenditure relates to central Plans (the Five-Year Plans) and central assistance for State and Union Territory plans. Non-plan expenditure, the more important component of revenue expenditure, covers a vast range of general, economic and social services of the government. The main items of non-plan expenditure are interest payments, defence services, subsidies, salaries and pensions.

Since relief operations like those for earthquake victims are emergency responses rather than planned development projects, they are classified under non-plan expenditure.