Consider the following statements about Union Government's Expenditure on revenue account and effective capital expenditure : 1. Effective capital expenditure as percentage of GDP has increased from 2020 - 21 to 2023 - 24. 2. Expenditure on revenue account as percentage of GDP has increased from 2020 - 21 to 2023 - 24. Which of the statements given above is/are correct ?

Statement 1 is correct as the Union Government's 'Effective Capital Expenditure' has seen a significant upward trend. For the 2023-24 budget, it was estimated at 4.5% of GDP , compared to approximately 3.3% in 2020-21. This increase reflects the government's strategy to spur infrastructure investment through enhanced outlays and grants-in-aid to states for asset creation [1]. Statement 2 is incorrect because Revenue Expenditure as a percentage of GDP has generally declined from its peak in 2020-21. In 2020-21, the fiscal and revenue deficits were exceptionally high (9.5% and 7.5% of GDP respectively) due to pandemic-related spending [3]. By 2023-24, while absolute revenue expenditure remained high at approximately Rs. 35.0 lakh crore [2], its share as a percentage of GDP decreased as the economy recovered and the government pursued fiscal consolidation to reduce the revenue deficit from its 2020-21 levels [3].

Sources

1. [1] Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 15: Budget and Economic Survey > 3. Infrastructure and Investment > p. 446
2. [3] Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 5: Indian Tax Structure and Public Finance > PRESENT TREND IN DEFICITS > p. 112
3. [2] Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 4: Government Budgeting > Effective revenue deficit' and 'effective capital expenditure' > p. 153