|Consider the following statements:|
|1. Presently, interest payments, defence, subsidies and general, economic and social services together form over 80% of the non-plan expenditure.|
|2. Subsidies has now become the single largest item of non-plan expenditure. Which of the above statements is/are correct?|
A) 1 only
B) 2 only
C) Both 1 & 2
D) neither 1 nor 2
Correct Answer: A
Solution :[a] A major part of the Non-Plan Expenditure is obligatory in nature, like interest payments, pensions, statutory transfers to States and Union Territories governments. Non-Plan Expenditure constitutes the biggest' proportion of the of the government's total expenditure. The biggest items of Non-Plan Expenditure are interest payments and debt servicing, defence expenditure and subsidies. For defence services, both revenue and capital expenditure are incurred.
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