(i) "In the recent times, the Government of India has incurred a lot of expenditure on acquisition of indigenous defence items under 'Make-in-India' programme." Identify and discuss the two types of budget expenditures which may by undertaken by the Government as suggested in the above statement. (ii) State any two examples of revenue expenditure of the Government. (i) Two friends, Deepak and Krish were discussing the impact of increase in GST rates on luxury items, as recently undertaken by the Government. Krish was of the view that most of the luxury items (like foreign travel, imported cigarettes, etc.) should be taxed exorbitantly, while the items related to daily consumption of poor and middle class should be tax-free. Identify and explain the objective of the Government budget Krish is suggesting. (ii) State the meaning of 'primary deficit' in the government budget.

Question

Accepted Answer

(i) Two types of budget expenditure:

1. Revenue Expenditure:
- Day-to-day government expenses
- Does not create assets
- Examples: Salaries, pensions, subsidies

2. Capital Expenditure:
- Creates assets or reduces liabilities
- Long-term impact
- Examples: Infrastructure, loans, defence equipment

(ii) Make-in-India programme:
1. Promotes domestic manufacturing
2. Reduces imports
3. Creates employment
4. Boosts industrial growth
5. Saves foreign exchange

Defence expenditure under Make-in-India is capital expenditure as it creates assets and boosts domestic industry.