Consider the following statements about revenue expenditure of the central government:
(A) It is incurred for purposes other than the creation of physical or financial assets of the central government.
(B) Grants given to state governments are revenue expenditure even though some of them may be meant for creating assets.
(C) Defence expenditure offers wide scope for drastic reduction.
(D) Plan revenue expenditure relates to central Plans and central assistance for State and Union Territory plans.
(E) Non-plan expenditure is the less important component of revenue expenditure.
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → (A), (B) and (D) only
(A) It is incurred for purposes other than the creation of physical or financial assets of the central government. — Correct. This is the definition of revenue expenditure.
(B) Grants given to state governments are revenue expenditure even though some of them may be meant for creating assets. — Correct. Such grants create no asset for the centre.
(C) Defence expenditure offers wide scope for drastic reduction. — Incorrect. Defence is committed expenditure; given security concerns, there is little scope to cut it.
(D) Plan revenue expenditure relates to central Plans and central assistance for State and Union Territory plans. — Correct. This is what plan revenue expenditure covers.
(E) Non-plan expenditure is the less important component of revenue expenditure. — Incorrect. Non-plan expenditure is the more important component.
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). … 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 …” “… Defence expenditure, is committed expenditure in the sense that given the national security concerns, there exists little scope for drastic reduction. …” |