Interest payment on debt incurred by the government is part of the ______.
Revenue expenditure
In government budgeting, expenditure is classified into revenue expenditure and capital expenditure.
Revenue expenditure is spending that neither creates an asset nor reduces a liability; it covers the day-to-day running of the government.
Interest payment on the debt borrowed by the government does not create any asset and does not reduce a liability, so it is treated as revenue expenditure, making the second option correct.
Interest payments are one of the largest components of the government's revenue expenditure every year.
Revenue receipt refers to income like taxes and non-tax revenue; it is a receipt, not an expenditure, so option one is wrong.
Capital receipt involves borrowings or recovery of loans that create liabilities or reduce assets, which is a receipt category, so option three is incorrect.
Capital expenditure creates assets such as roads, buildings or machinery, whereas paying interest creates no asset, so option four is wrong.
Interest payment on government debt is part of revenue expenditure.
Similar Questions
The Union Budget 2025-26 states that total number of students in 23 IITs has increased 100 per cent from 65,000 to 1.35 lakh in the past _____ years.
In the context of economy, if ______ is deducted from the gross value added to obtain the Net value added obtained.
Which of the following statement regarding income is correct?
I. Out of private income, what finally reaches the households is known as personal income.
II. The total national income of the country is composed of two parts private income and public income.
In the context of economy, which of the following is an example of Intermediate good?
In the context of Budget, which of the following statement is correct regarding capital expenditure?
I. It does not creates physical or financial assets.
II. Acquisition of machinery is an example of capital expenditure.
What was the growth target for twelfth five year plan in India?
Which of the following has amalgamated a large number of central and state taxes and cesses?
In the context of Budget, which of the following is included in the revenue expenditure?
I. Salaries of government employees
II. Pensions of government employees
What is the traditional belief about the effect of a government cutting taxes and running a budget deficit?
The Fiscal Responsibility and Budget Management Act-2003 requires the reduction in revenue deficit by _____ of GDP every year.
Important Questions from National Income Accounting
- A Giffen good exhibits an upward-sloping demand curve, a unique characteristic where the Law of Demand is violated. This phenomenon primarily arises when the negative income effect of a price change is so substantial that it outweighs the substitution effect. Based on this, which statement correctly describes the nature of the overall price effect and the income effect for a Giffen good?
In the context of Indian economy, consider the following statements:
1) The growth rate of GDP has steadily increased in the last five years.
2) The growth rate in per capita income has steadily increased in the last five years.
Which of the statements given above is/are correct?
The national income of a country for a given period is equal to the
Which of the following Institutions estimate the national income of India?
During a recession when GDP falls, disposable income _______.
