Consider the following 1 Expenditure which are consumptive and do not involve creation of prod...........

Economic Affairs Public Finance and Debt Management

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Consider the following:

1 Expenditure which are consumptive and do not involve creation of productive assets are capital expenditure.

2 Interests payment by the government on the internal and external loans falls in revenue expenditure.

3 subsidies forwarded to all sectors by the government fall in Revenue expenditure.

4 Loan recovery is one of the sources of revenue receipt.

Which of the statements given above are correct?

1 and 2 only

2 and 3 only

3 and 4 only

4 and 1 only

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Explanation:

Revenue Expenditure: All expenditures incurred by the governments are either of revenue kind or current kind or compulsive kind. The basic identity of such expenditures is that they are of consumptive kind and do not involve creation of productive assets. Interests payment by the government on the internal and external loans, subsidies forwarded to all sectors by the government fall under Revenue expenditure.
Capital expenditure: All areas which get capital from the government are part of the capital expenditure.
Loan recovery is one of the source of capital receipts.