To address this question, we need to analyze the major components of the central government's expenditure during the fiscal year 2012-13 in India. The options given are:

• Major subsidies
• Defence expenditure
• Interest payment
• Capital expenditure

Let's evaluate each category:

1. Major subsidies: These include subsidies for food, fertilizers, and petroleum. While this is a significant expenditure, it was not the largest in the year 2012-13.
2. Defence expenditure: This covers spending on the military and defense services. Though crucial, it historically constitutes a smaller segment compared to other categories like interest payments.
3. Interest payment: This refers to the interest paid on the outstanding government debt. In 2012-13, this was the largest component of expenditure, as servicing the national debt was a significant priority.
4. Capital expenditure: This involves spending on infrastructure and development projects. While it supports growth, it was not as large as interest payments during this period.

Based on the overview of government expenditures during the fiscal year 2012-13 and the information provided in various government reports, interest payment emerged as the largest item of expenditure. This is because the government had accumulated substantial debt, and hence, a major portion of its revenue was allocated to servicing this debt.

Thus, the correct answer is:

• Interest payment