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It is the expenditure incurred for purpose other than creation of physical or financial assets
It is a recurring expenditure.
It includes:
Expenses for Normal functioning of govt department
(like Salary to Employees, Office expenses)
Interest Payment on Debt
(Loan taken by Central govt on which it has to pay interest)
Grants given to State Govt and others
(Grants are non returnable, hence they are not asset)
Subsidies
It is a kind of financial aid given by govt to keep price of commodity low
Example - Cooking Gas cylinder whose cost is 600 is sold for 500 in market (as 100 Subsidy is given by govt)
Defense Expenditure
Expenditure on purchase of different weapons and paying salary of army, navy, airforce etc
Classification of Expenses of Budget
The expenditure in Budget is of 2 types:
- Plan Expenditure
- Non Plan expenditure
What is Plan Expenditure
Central Govt makes 5 year plans
Expenditure made as per these plans is called Plan expenditure
State govt also make its own Plans
For this, Central Govt provides assistance which is called Plan expenditure
What is Non Plan expenditure
All expenditure other than plan expenditure is called Non plan expenditure
They include economic and social expenditure such as interest payments, defense services, subsidies,
salary and pension.
NCERT Questions
No questions in this part
Other Books
Question 1
In the following questions, select the correct answers:
Which one of these is a revenue expenditure?
- Purchase of shares
- Loans advanced
- Subsidies
- Expenditure on acquisition of land
C. Subsidies
Explanation
Revenue Expenditure is the expenditure incurred for purpose other than creation of physical or financial assets
It is a recurring expenditure.
It includes:
Subsidies
It is a kind of financial aid given by govt to keep price of commodity low
Example- Cooking Gas cylinder whose cost is 600 is sold for 500 in market (as 100 Subsidy is given by govt)
