Which one among the following items comprises the major portion of revenue expenditure of the Union Government of India ?

The correct answer is  Interest Payments.

Key PointsRevenue Expenditure of the Union Government of India

• Revenue expenditure refers to the expenditure incurred for the normal functioning of government departments and various services, interest payments on debt, subsidies, etc.
• The Union Government of India spends a significant portion of its budget on revenue expenditure to maintain and operate the administrative machinery of the country.
• Among the given options, Interest Payments form the major portion of the revenue expenditure of the Union Government of India.
• The government borrows funds from both domestic and international sources to finance its deficit. The interest payments on these borrowings constitute a significant part of the revenue expenditure.
• According to the Union Budget 2022-23, interest payments account for approximately 24% of the total revenue expenditure, making it the largest component.
• Other components of revenue expenditure include salaries, defense services, and subsidies, but none of these individually account for as large a share as interest payments.

Additional Information

• Interest Payments:
  • Interest payments are the cost incurred by the government on its borrowings.
  • These payments are mandatory and non-negotiable, meaning the government must prioritize them to maintain its creditworthiness and financial stability.
  • The high level of interest payments is a result of the accumulated debt over the years.
• Salaries:
  • This component includes the salaries and pensions of government employees.
  • Although significant, salaries do not surpass interest payments in terms of revenue expenditure.
• Road Transport and Highways:
  • This expenditure is part of the government’s capital expenditure and is aimed at building and improving infrastructure.
  • It does not form a major part of revenue expenditure.
• Defence Services:
  • Defence expenditure includes both revenue and capital components.
  • While substantial, the revenue component of defense expenditure is still less than the interest payments.