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UPSC Prelims 2014 Q100: Indian Economy – Fiscal Policy & Budget

UPSC Prelims 2014, General Studies Paper I · Indian Economy

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.
  1. (a) 1 only
  2. (b) 2 and 3 only
  3. (c) 1, 2, 3 and 4
  4. (d) None

Answer: (c) 1, 2, 3 and 4

Explanation

Non-Plan Expenditure (as in 2014)

Until 2016-17, the Union Budget split spending into Plan and Non-Plan.

Non-Plan covered the routine, committed spending of the Government.

ItemNon-Plan Expenditure?
1. Defence expenditureYes
2. Interest paymentsYes (the largest item)
3. Salaries and pensionsYes
4. SubsidiesYes

Plan and Non-Plan compared:

TypeMeaningExamples
PlanSpending on schemes of the Five-Year PlanCentral schemes, central assistance to State plans
Non-PlanEverything elseInterest, defence, subsidies, salaries, pensions, police

Note: the Plan and Non-Plan split was abolished from 2017-18.

The Budget now shows only Revenue and Capital expenditure.

Answer: (c) 1, 2, 3 and 4.

Why each option is right or wrong

Key point

Non-Plan expenditure (till 2016-17): interest payments, defence, subsidies, salaries, pensions. The Plan/Non-Plan split ended in 2017-18.

Remember

Non-Plan: interest, defence, subsidies, salaries, pensions.

Common mistakes

Exam tip

Non-Plan = running costs of the Government. The split no longer exists.

Sources

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