Q. Which of the following is/are part of “revenue expenditure”?
1. Subsidies forwarded to all sectors by the government.
2. Postal Deficits of the government.
3. Grants given by the government to Indian states and foreign countries.
Select the correct answer using the codes given below:

[A] 1 only

[B] 1 and 2 only

[C] 2 and 3 only

[D] 1, 2 and 3

Answer: D
Notes:

All expenditures incurred by the government are either of revenue kind or current kind or compulsive kind. The basic identity of such expenditures is that they are of consumptive kind and do not involve creation of productive assets. They are either used in running of a productive process or running a government. A broad category of things that fall under such expenditures in India are: 

  • Interest payment by the government on the internal and external loans; 
  • Salaries, Pension and Provident Fund paid by the government to government employees; 
  • Subsidies forwarded to all sectors by the government; 
  • Defense expenditures by the government; 
  • Postal Deficits of the government; 
  • Law and order expenditures (i.e., police & paramilitary); 
  • Expenditures on social services (includes all social sector expenditures as education, health care, social security, poverty alleviation, etc.) and general services (tax collection, etc.); 
  • Grants given by the government to Indian states and foreign countries. 

Source: Ramesh Singh