Question

Q. Consider the following statements with reference to subsidies:

Which of the above given statements is/are correct?

• A.
  1 only
• B.
  2 only
• C.
  Both 1 and 2
• D.
  Neither 1 nor 2

Answer 1

The correct option is B

2 only
Explanation:

Statement 1 is incorrect:
In 2020-21, the total expenditure on subsidies is estimated to be Rs 2,62,109 crore, a decrease of $0.5\%$ from the revised estimate of 2019-20. This is largely due to a decrease in expenditure on fertiliser subsidy. Allocation to food subsidy is estimated at Rs 1,15,570 crore in 2020-21, a $6.3\%$ increase as compared to the revised estimate of 2019-20.
The highest expenditure on subsidy was attributed to the food sector followed by fertilisers and petroleum.

Statement 2 is correct: Revenue Expenditure is an expenditure incurred for the basis other than the creation of physical or financial assets of the central government. It associates to those expenses incurred for the normal operations of the government divisions and various services, interest payments on debt sustained by the government and grants given to state governments and other parties (even though some of the endowments may be meant for creation of assets).
Non-plan expenditure, the more significant component of revenue expenditure, covers a broad degree of general, economic and social services of the government. The main objects of non plan expenditure are interest payments, defence services, subsidies, salaries and pensions.