| Since Independence, both plan and non-plan expenditure have increased, the increase in non-plan expenditure is little more than the former. Which one of the following expenditure causes the increase in non-plan- expenditure and select the correct answer using the codes |
| 1. Interest payment |
| 2. Subsidy |
| 3. Irrigation |
A) 1, 2 and 3
B) 1 and 2
C) 1 and 3
D) Only 2
Correct Answer: B
Solution :
[b] The government's expenditure is divided under two broad heads-plan and non-plan. The plan expenditure of the government is normally associated with productive expenditure, which helps increase the productive capacity of the economy. It includes outlays for different sectors such as rural development and education. Non-plan expenditure, on the other hand, includes expenses on heads such as interest payment on government debt, subsidies, defence, pensions and other establishment costs of the government. A large part of this is obligatory in nature.
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