UPSC Exam > UPSC Questions > Consider the following statements. 1. All ex...
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Consider the following statements.
1. All expenditures of productive nature consumptive kind are developmental.
2. Expenditures which do not involve any production are non-developmental.
Which of these statements is/are correct?
- a)1 Only
- b)2 Only
- c)Both 1 and 2
- d)None of them
Correct answer is option 'C'. Can you explain this answer?
Verified Answer
Consider the following statements. 1. All expenditures of productive ...
Developmental and Non-developmental Expenditure: Total expenditure incurred by the government is classified into two segments-developmental and non-developmental.
- All expenditures of productive nature are developmental such as on the heads of new factories, dams, bridges, roads, railways, etc.—all investments.
- The expenditures which are of a consumptive kind and do not involve any production are non-developmental, i.e., paying salaries, pensions, interest payments, subsidies, defence expenses, etc. This classification is not used in the Indian public finance management now.
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Most Upvoted Answer
Consider the following statements. 1. All expenditures of productive ...
Explanation:
The given statements are as follows:
1. All expenditures of productive nature consumptive kind are developmental.
2. Expenditures which do not involve any production are non-developmental.
Let's analyze each statement individually:
Statement 1: All expenditures of productive nature consumptive kind are developmental.
This statement implies that any expenditure that involves production and consumption is considered to be developmental. In other words, if the expenditure is directed towards creating or enhancing productive capacity, and it also involves the consumption of goods or services, then it is considered to be developmental.
For example, if a government invests in building infrastructure such as roads, bridges, schools, hospitals, etc., and also utilizes goods and services in the process of construction, then this expenditure can be categorized as developmental because it contributes to the long-term growth and development of the economy.
Statement 2: Expenditures which do not involve any production are non-developmental.
This statement suggests that any expenditure that does not involve any production is considered to be non-developmental. In other words, if the expenditure is merely for consumption purposes without any productive outcome, then it is not considered to contribute to development.
For example, if a government spends a significant amount of money on luxury items, entertainment, or other non-productive activities without any tangible benefits in terms of economic growth or development, then this expenditure can be categorized as non-developmental.
Conclusion:
Based on the analysis of the given statements, we can conclude that both statements are correct. Expenditures that involve both production and consumption are considered to be developmental, while expenditures that do not involve any production are considered to be non-developmental.
The given statements are as follows:
1. All expenditures of productive nature consumptive kind are developmental.
2. Expenditures which do not involve any production are non-developmental.
Let's analyze each statement individually:
Statement 1: All expenditures of productive nature consumptive kind are developmental.
This statement implies that any expenditure that involves production and consumption is considered to be developmental. In other words, if the expenditure is directed towards creating or enhancing productive capacity, and it also involves the consumption of goods or services, then it is considered to be developmental.
For example, if a government invests in building infrastructure such as roads, bridges, schools, hospitals, etc., and also utilizes goods and services in the process of construction, then this expenditure can be categorized as developmental because it contributes to the long-term growth and development of the economy.
Statement 2: Expenditures which do not involve any production are non-developmental.
This statement suggests that any expenditure that does not involve any production is considered to be non-developmental. In other words, if the expenditure is merely for consumption purposes without any productive outcome, then it is not considered to contribute to development.
For example, if a government spends a significant amount of money on luxury items, entertainment, or other non-productive activities without any tangible benefits in terms of economic growth or development, then this expenditure can be categorized as non-developmental.
Conclusion:
Based on the analysis of the given statements, we can conclude that both statements are correct. Expenditures that involve both production and consumption are considered to be developmental, while expenditures that do not involve any production are considered to be non-developmental.
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Consider the following statements. 1. All expenditures of productive nature consumptive kind are developmental.2. Expenditures which do not involve any production are non-developmental.Which of these statements is/are correct?a) 1 Onlyb) 2 Onlyc) Both 1 and 2d) None of themCorrect answer is option 'C'. Can you explain this answer?
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