The government is planning to remove the distinction between plan and non plan expenditure from 2017...........

Economic Affairs Tax System

The government is planning to remove the distinction between plan and non-plan expenditure from 2017-18. With regard to the present non-plan expenditure, consider the following statements:

1. Salary Payments and Pensions are a part of Non-plan expenditure.

2. The Non-Plan Expenditure is higher than Plan Expenditure of the government.

3. Interest Payments forms the highest portion in Non-Plan Expenditure.

Which of the statements given above is/are correct?

1 only

1 and 2 only

2 and 3 only

1, 2 and 3

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Explanation:

The government has decided to do away with the classification of Plan and Non-Plan expenditure. From 2017-18, the Central government expenditure will be classified only as capital and revenue spends.

Statement 1 is Correct. Non-plan revenue expenditure is accounted for by interest payments, subsidies (mainly on food and fertilizers), wage and salary payments to government employees, grants to States and Union Territories governments, pensions, police, economic services in various sectors, other general services such as tax collection, social services, and grants to foreign governments.

Statement 2 is Correct. As per the Economic Survey 2015-2016, Non-Plan Expenditure is over 65% to the total expenditure of the government.

Statement 3 is Correct. As per the Economic Survey 2015-2016, Interest Payments account for over 30% of Non-Plan Expenditure and is the highest