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Q100 (IAS/2014) Economy â€ș Government Finance & Budget â€ș Budget classification Official Key

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.

Result
Your answer: —  Â·  Correct: C
Explanation

Non-plan expenditures were related to obligatory yet routine functioning of the Central Government such as interest payment, subsidies, defence expenditure, salaries and pension, etc.[2] This classification was part of the Indian budget system during the era of the Planning Commission.

The main items of non-plan expenditure are interest payments, defence services, subsidies, salaries and pensions.[4] Therefore, all four items mentioned in the question—defence expenditure, interest payments, salaries and pensions, and subsidies—were covered under Non-Plan Expenditure.

Since this question is from 2014, it pertains to the budget classification system that was in use at that time. This classification has been scrapped and now the budget is classified only in terms of revenue expenditure and capital expenditure.[1] However, for the reference year of this question, all four components were indeed part of Non-Plan Expenditure.

The correct answer is option C: 1, 2, 3 and 4.

Sources
  1. [1] Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 5: Indian Tax Structure and Public Finance > Classification as Plan and Non-Plan Expenditure - Scrapped after abolishment of Planning Commission > p. 109
  2. [2] Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 5: Indian Tax Structure and Public Finance > Classification as Plan and Non-Plan Expenditure - Scrapped after abolishment of Planning Commission > p. 109
  3. [3] Macroeconomics (NCERT class XII 2025 ed.) > Chapter 5: Government Budget and the Economy > Revenue Expenditure > p. 70
  4. [4] Macroeconomics (NCERT class XII 2025 ed.) > Chapter 5: Government Budget and the Economy > Revenue Expenditure > p. 70
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Q. With reference to Union Budget, which of the following is/are covered under Non-Plan Expenditure? 1. Defence expenditure 2. Interest pa

At a glance
Origin: From standard books Fairness: High fairness Books / CA: 10/10 · 0/10
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This is a 'Sitter' directly lifted from NCERT Class XII Macroeconomics. It tests the fundamental classification of the Union Budget (pre-2017 reforms). The question demands rote memory of standard examples provided in basic textbooks, not advanced economic analysis.

How this question is built

This question can be broken into the following sub-statements. Tap a statement sentence to jump into its detailed analysis.

Statement 1
Is defence expenditure included under Non-Plan Expenditure in the Union Budget of India?
Origin: Direct from books Fairness: Straightforward Book-answerable
From standard books
Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 5: Indian Tax Structure and Public Finance > Classification as Plan and Non-Plan Expenditure - Scrapped after abolishment of Planning Commission > p. 109
Presence: 5/5
“It included both revenue expenditure (like grant-in-aid to states, etc.) and capital expenditure (expenditure on construction of highways, hospitals, etc.). Non-plan expenditures were related to obligatory yet routine functioning of the Central Government such as interest payment, subsidies, defence expenditure, salaries and pension, etc. However, this classification has been scrapped and now the budget is classified only in terms of revenue expenditure and capital expenditure.”
Why this source?
  • Explicitly lists 'defence expenditure' among examples of non-plan expenditures.
  • Frames non-plan expenditures as routine/obligatory items (interest, subsidies, salaries, pensions, defence).
Macroeconomics (NCERT class XII 2025 ed.) > Chapter 5: Government Budget and the Economy > Revenue Expenditure > p. 70
Presence: 5/5
“government. The main items of non-plan expenditure are interest payments, defence services, subsidies, salaries and pensions. Interest payments on market loans, external loans and from various reserve funds constitute the single largest component of non-plan revenue expenditure. Defence expenditure, is committed expenditure in the sense that given the national security concerns, there exists little scope for drastic reduction. Subsidies are an important policy instrument which aim at increasing welfare. Apart from providing implicit subsidies through under-pricing of public goods and services like education and health, the government also extends subsidies explicitly on items such as exports, interest on loans, food and fertilisers.”
Why this source?
  • NCERT explicitly states defence services are a main item of non-plan expenditure.
  • Emphasises defence as 'committed expenditure' with little scope for drastic reduction — consistent with non-plan characterization.
Politics in India since Independence, Textbook in political science for Class XII (NCERT 2025 ed.) > Chapter 3: Politics of Planned Development > The Early Initiatives > p. 49
Presence: 3/5
“As in the USSR, the Planning Commission of India opted for five year plans (FYP). The idea is very simple: the Government of India prepares a document that has a plan for all its income and expenditure for the next five years. Accordingly the budget of the central and all the State governments is divided into two parts: 'non-plan' budget that is spent on routine items on a yearly basis and 'plan' budget that is spent on”
Why this source?
  • Explains the budget division into 'non-plan' for routine yearly items and 'plan' for five-year plans.
  • Supports the interpretation that routine/state-obligatory items (such as defence) fall under non-plan.
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