Question

Which one of the following is the most important item of expenditure of the Government of India on revenue account?

• A. Defence
• B. Subsidies
• C. Pensions
• D. Interest payments

Answer 1

The correct option is D Interest payments

A revenue account includes all the revenue receipts also known as current receipts of the government. These receipts include tax revenues and other revenues of the government. Revenue expenditure includes expenses which are not used for the creation of assets or repayment of liabilities. These basically include the current expenses of the government. For example, pensions, giving subsidies, interest payments are instances of revenue expenditure. Out of these, interest payments which include interest payments on government debt-including long-term bonds, long-term loans, and other debt instruments--to domestic and foreign residents, is the most important.