EXPENDITURE AND ITS TYPES- INDIAN ECONOMY

Choose the correct Pairs:

1        Capital expenditure	Bridges and Hospitals construction
2        Revenue expenditure	Energy and Transport development
3        Sectoral expenditure	Salaries Pension and interest
4        Deferred expenditure	Advance payment for goods and services

(A) 1 and 3 are correct
(B) 1 and 2 are correct
(C) 2 and 3 are correct
(D) 1 and 4 are correct

EXPLANATION

1. Capital Expenditure → Bridges and Hospitals Construction

✅ Correct

• Capital expenditure refers to spending on creation of assets or reduction of liabilities.

• Example: Construction of roads, bridges, hospitals, schools, railways, irrigation projects, etc.

• These expenditures increase productive capacity and give long-term benefits.

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2. Revenue Expenditure → Energy and Transport Development

❌ Incorrect

• Revenue expenditure is recurring (day-to-day) expenditure for the normal functioning of the government.

• Examples: Salaries, pensions, subsidies, interest payments, office expenses, etc.

• Energy and transport development are developmental capital works, not revenue expenses.

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3. Sectoral Expenditure → Salaries, Pension and Interest

❌ Incorrect

• Sectoral expenditure refers to expenditure on different sectors of the economy such as agriculture, industry, education, health, energy, transport, etc.

• Salaries, pensions and interest are part of revenue expenditure, not sectoral expenditure.

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4. Deferred Expenditure → Advance payment for goods and services

✅ Correct

• Deferred expenditure means spending done in advance or whose benefit is received in future periods.

• Example: Advance payment for goods and services, prepaid insurance, advertisement costs with long-term benefits, etc.

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Summary Table

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✅ Final Answer: (D) 1 and 4 are correct