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Consider the following statements:
1. Plan expenditures are primarily asset-creating and productive.
2. The classification of expenditures as Plan and Non-Plan was replaced by Revenue and Capital from the fiscal year 2017-18.
3. Non-Plan expenditures include investments in new factories and infrastructure projects.
Which of the statements given above is/are correct?
- a)1 Only
- b)1 and 2 Only
- c)1 and 3 Only
- d)1, 2 and 3
Correct answer is option 'B'. Can you explain this answer?
Verified Answer
Consider the following statements:1. Plan expenditures are primarily ...
1. Plan expenditures are primarily asset-creating and productive. This statement is correct. Plan expenditures are designed to create assets and are considered productive investments. They are intended to support the long-term economic growth of the country by funding projects like new infrastructure, educational programs, and technological advancements.
2. The classification of expenditures as Plan and Non-Plan was replaced by Revenue and Capital from the fiscal year 2017-18. This statement is also correct. The Indian government transitioned from the classification of Plan and Non-Plan expenditures to the more comprehensive categories of Revenue and Capital expenditures starting in the fiscal year 2017-18. This change aimed to simplify and improve the management of public finances.
3. Non-Plan expenditures include investments in new factories and infrastructure projects. This statement is incorrect. Non-Plan expenditures are typically consumptive and non-productive, covering items such as salaries, pensions, interest payments, subsidies, and defense expenses. Investments in new factories and infrastructure projects are categorized under Plan expenditures, not Non-Plan expenditures.
Therefore, the correct answer is Option B: 1 and 2 Only.
Most Upvoted Answer
Consider the following statements:1. Plan expenditures are primarily ...
Explanation of the Correct Answer
The correct answer is option 'B' (1 and 2 Only). Let's analyze each statement:
Statement 1: Plan expenditures are primarily asset-creating and productive.
- This statement is correct. Plan expenditures are typically associated with government initiatives aimed at economic development, such as infrastructure projects, social programs, and other investments that create assets and foster growth.
Statement 2: The classification of expenditures as Plan and Non-Plan was replaced by Revenue and Capital from the fiscal year 2017-18.
- This statement is also correct. In the fiscal year 2017-18, the Indian government discontinued the distinction between Plan and Non-Plan expenditures. Instead, expenditures are now classified as Revenue (which covers day-to-day operational costs) and Capital (which pertains to investment in assets).
Statement 3: Non-Plan expenditures include investments in new factories and infrastructure projects.
- This statement is incorrect. Non-Plan expenditures generally refer to mandatory expenditures that are not associated with specific plans or projects, such as salaries, pensions, and interest payments. Investments in new factories and infrastructure projects typically fall under Plan or Capital expenditures.
Conclusion
- Therefore, the correct statements are 1 and 2, making option 'B' the right choice. Understanding these classifications is crucial for grasping government budgeting and economic planning in India.
The correct answer is option 'B' (1 and 2 Only). Let's analyze each statement:
Statement 1: Plan expenditures are primarily asset-creating and productive.
- This statement is correct. Plan expenditures are typically associated with government initiatives aimed at economic development, such as infrastructure projects, social programs, and other investments that create assets and foster growth.
Statement 2: The classification of expenditures as Plan and Non-Plan was replaced by Revenue and Capital from the fiscal year 2017-18.
- This statement is also correct. In the fiscal year 2017-18, the Indian government discontinued the distinction between Plan and Non-Plan expenditures. Instead, expenditures are now classified as Revenue (which covers day-to-day operational costs) and Capital (which pertains to investment in assets).
Statement 3: Non-Plan expenditures include investments in new factories and infrastructure projects.
- This statement is incorrect. Non-Plan expenditures generally refer to mandatory expenditures that are not associated with specific plans or projects, such as salaries, pensions, and interest payments. Investments in new factories and infrastructure projects typically fall under Plan or Capital expenditures.
Conclusion
- Therefore, the correct statements are 1 and 2, making option 'B' the right choice. Understanding these classifications is crucial for grasping government budgeting and economic planning in India.
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