Question 66 from UPSC CSE 2014 - Economy

Question

With reference to Union Budget, which of the following is/are covered under Non-Plan Expenditure?
1. Defence expenditure
2. Interest payments
3. Salaries and pensions
4. Subsidies
Select the correct answer using the code given below.

Accepted Answer

Correct Option: C. 1, 2, 3, and 4

Strategy: Expenditure related to defence, interest payments, salaries, pensions, and subsidies are recurring, operational, and are not linked to specific development programmes — making them classic examples of Non-Plan Expenditure. Spotting these routine or obligatory payments helps quickly identify all statements as covered.

Key Info: ### Historical Classification
In the Indian Union Budget, expenditure was historically classified as Plan and Non-Plan until the system was discontinued from 2017-18.

### Definition and Components
Non-Plan Expenditure referred to all routine, obligatory, and operational expenses of the government, not connected to Five-Year Plans or development schemes. While Plan Expenditure related to new projects and programs under Five-Year Plans, Non-Plan was the baseline administrative, functional cost.

Major components of Non-Plan Expenditure include:
- Defence expenditure: Covers salaries, operations, maintenance, procurement, and modernization of the armed forces.
- Interest payments: Outflows for servicing government debt (internal and external), a large fixed portion of annual expenditure.
- Salaries and pensions: Remuneration and retirement benefits provided to central government employees.
- Subsidies: Direct government payments to reduce the price of essentials like food (food subsidy), fertilizers, fuel, and other welfare items.

Key examples also include grants to states (other than Plan grants), loans, and expenditures on statutory or fundamental obligations.

### Current Classification
Since 2017-18, the classification has changed to Capital and Revenue Expenditure, following recommendations of the Rangarajan Committee.

Answer

Option A: 1 only

Answer

Option B: 2 and 3 only

Answer

Option D: None

With reference to Union Budget, which of the following is/are covered under Non-Plan Expenditure? Defence expenditure Interest payments Salaries and pensions Subsidies Select the correct answer using the code given below.

With reference to Union Budget, which of the following is/are covered under Non-Plan Expenditure?

Defence expenditure

Interest payments

Salaries and pensions

Subsidies
Select the correct answer using the code given below.