(i) Distinguish between Revenue Expenditure and Capital Expenditure of a government, with suitable example. (ii) "Under the 'Production Linked Incentive' scheme, the Government of India offers various benefits like reduced import-export duties, incentives to investors, tax-rebates etc." In the light of above statement, identify and explain the Budget objective and its likely consequences. (i) "Under 'Zero Defect, Zero Effect' (ZED) scheme, the government of India provides up to 80% subsidy to Mini, Small and Medium Enterprises (MSMEs)." Identify and explain the objective of government budget, highlighted in the above text. (ii) Distinguish between Direct tax and Indirect tax with suitable examples.

Question

Accepted Answer

(i) Revenue Expenditure vs Capital Expenditure:

Revenue Expenditure:
- Day-to-day expenses
- Does not create assets
- Example: Salaries, pensions

Capital Expenditure:
- Creates assets or reduces liabilities
- Long-term impact
- Example: Infrastructure, loans

(ii) Production Linked Incentive scheme:
1. Promotes domestic manufacturing
2. Incentivizes production
3. Creates employment
4. Boosts industrial growth
5. Reduces imports

PLI scheme is capital expenditure as it creates productive assets and boosts economic capacity.