A worker who retires from a government department gets a pension, one…

A worker who retires from a government department gets a pension, one of the social security benefits of formal sector workers. In the government budget, this pension payment is a:

Answer & explanation

Correct answer: option 2

The correct answer is Option (2) → Revenue expenditure

A pension creates no asset for the government. It is a regular expense of running government departments. Such spending is revenue expenditure, and pensions are named among its main items.

Option (1) Capital expenditure — Incorrect. Capital expenditure creates physical or financial assets, such as land, buildings or loans given.

Option (2) Revenue expenditure — Correct. Pensions are part of non-plan revenue expenditure.

Option (3) Capital receipt — Incorrect. A receipt is money the government gets. Paying a pension is spending.

Option (4) Revenue receipt — Incorrect. Here too, the government is paying out, not receiving.

This question uses Employment and Government Budget and the Economy together.

NCERT (2026-27): Glossary: “Social Security – A government or privately established system of measures, which ensures material security for the elderly, disabled, destitute, widows and children. It includes pension, gratuity, provident fund, maternal benefits, health care etc.”

Introductory Macroeconomics - Chapter 5: Government Budget and the Economy, 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). … 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. …”