SSC CPO 2025 PYQ — Question 90

Answer: Interest paid on government debt.
Explanation:

• In economics, revenue expenditure refers to government spending that neither creates any assets nor reduces the government's liabilities. It is a 'recurring' expenditure incurred for the normal operations of government departments and for the various services provided by the government.
• Interest paid on government debt is a prime example of revenue expenditure because it is paid to service past debts; it neither creates any new physical assets—such as roads or bridges—nor does it reduce the principal amount of the debt. It is merely an administrative and financial obligation that must be met on a regular basis.

Analysis of Other Options:

• Construction of a railway terminal: This creates a physical asset; therefore, it is capital expenditure.
• Purchase of land: This also constitutes the creation of a fixed asset; hence, it falls under the category of capital expenditure.
• Financing of a National Highway project: Being an investment in infrastructure, this is capital expenditure.

Additional Points:

• Other Revenue Expenditures: Salaries of government employees, pensions, subsidies (fertilizers, food, etc.), and expenditure incurred on the maintenance of defense services.
• Budget 2024-25 Data: A significant portion of the Government of India's expenditure (exceeding 20%) goes solely towards interest payments, making it the largest component of revenue expenditure.

Potential Exam Questions and Answers:
Question: Which of the following is considered 'non-developmental expenditure'? Answer: Interest payments and defense expenditure (as part of revenue expenditure).
Question: Are subsidies part of revenue expenditure? Answer: Yes, because they promote consumption but do not create any productive assets.
Question: What does a revenue deficit indicate?
Answer: It indicates that the government's revenue receipts are insufficient to cover its regular revenue expenditures.