Which one of the following is the largest component of revenue expenditure in the Union Budget 2022 - 23 ?
- A.Interest payments
- B.Defense expenditure
- C.Expenditure on healthcare
- D.Subsidies
Correct answer
Explanation
The correct answer is A, Interest payments. In the Union Budget 2022-23, interest on past borrowing was the single largest item of revenue expenditure.
Revenue expenditure is spending that creates no assets, such as salaries, pensions, interest, subsidies and grants. Because the Union Government has built up a large public debt over the years, the interest it must pay every year is huge. In 2022-23 interest payments were budgeted at about 9.4 lakh crore rupees, close to 30 per cent of revenue expenditure and more than any other head. Interest also takes a large share of the Centre's revenue receipts, which is why reducing the fiscal deficit is stressed in every budget.
B is wrong: defence spending is large, but much of it is capital expenditure, and its revenue part is far smaller than interest.
C is wrong: the Union Government's health spending is small, as health is mainly a State subject.
D is wrong: food, fertiliser and petroleum subsidies together came second to interest payments.
Exam tip: The largest item of the Centre's revenue expenditure is interest payments; the largest source of its receipts is borrowings.
Practice Questions
View allIn India, which of the following can be considered as public investment in agriculture?
1. Fixing Minimum Support Price for agricultural produce of all crops
2. Computerization of Primary Agricultural Credit Societies
3. Social Capital development
4. Free electricity supply to farmers
5. Waiver of agricultural loans by the banking system
6. Setting up of cold storage facilities by the governments
Select the correct answer using the code given below :
- A.1, 2 and 5 only
- B.1, 3, 4 and 5 only
- C.2, 3 and 6 only
- D.1, 2, 3, 4, 5 and 6
Show answer
Public investment means government spending that creates lasting assets or capacity, while support prices, free power and loan waivers are subsidies or transfers.
Read the full explanation →Consider the following activities :
I. Production of crude oil
II. Refining, storage and distribution of petroleum
III. Marketing and sale of petroleum products
IV. Production of natural gas
How many of the above activities are regulated by the Petroleum and Natural Gas Regulatory Board in our country?
- A.Only one
- B.Only two
- C.Only three
- D.All the four
Show answer
The Petroleum and Natural Gas Regulatory Board covers the downstream chain, refining to sale, but not the production of crude oil and natural gas.
Read the full explanation →Which one of the following equals Personal Disposable Income ?
- A.Personal Income - Direct taxes paid by households and miscellaneous fees, fines, etc.
- B.Private Income - Saving of Private Corporate Sectors - Corporation Tax
- C.Private Income - Taxes
- D.Total expenditure of Households - Income Tax - Gifts received
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In national income accounting the steps run from private income to personal income to personal disposable income. Private income is the factor income of the private sector plus transfers.
Read the full explanation →With reference to India, consider the following pairs:
Organization : Union Ministry
I. The National Automotive Board : Ministry of Commerce and Industry
II. The Coir Board : Ministry of Heavy Industries
III. The National Centre for Trade Information : Ministry of Micro, Small and Medium Enterprises
How many of the above pairs are correctly matched?
- A.Only one
- B.Only two
- C.All the three
- D.None
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Each organisation is paired with the wrong ministry. The National Automotive Board works under the Ministry of Heavy Industries; it supports the automobile sector with testing and certification work and helps run schemes for the industry.
Read the full explanation →If the RBI decides to adopt an expansionist monetary policy, which of the following would it not do?
1. Cut and optimize the Statutory Liquidity Ratio
2. Increase the Marginal Standing Facility Rate
3. Cut the Bank Rate and Repo Rate
Select the correct answer using the code given below:
- A.1 and 2 only
- B.2 only
- C.1 and 3 only
- D.1, 2 and 3
Show answer
An expansionist policy aims to make money cheaper and more plentiful, so the RBI would not raise the Marginal Standing Facility rate, which makes borrowing dearer.
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