Which of the following statement is correct regarding the government budget?
I. Subsidies are an important policy instrument which aim at increasing welfare.
II. Defence expenditure, is committed expenditure in the sense that given the national security concerns, there exists little scope for drastic reduction.
Show answer & explanation
Correct answer: C
Explanation
Correct Answer:
Both I and II
Explanation:
The government budget reflects the government's annual plan for income and expenditure.
Subsidies are financial assistance provided by the government, aimed at providing social welfare and economic relief.
They help provide essential commodities at affordable rates to the poor and vulnerable.
On the other hand, defense expenditure is considered committed expenditure.
Due to national security requirements, it is difficult to make sudden major cuts in it.
Therefore, both statements are considered economically correct.
Hence, the correct answer is both I and II.
Key Points:
• Budget: Government’s economic policy tool
• Purpose: Development and welfare
• Defence expenditure: Related to national security
• Cuts: Not always mandatory
• Importance: Proper allocation of resources
Additional Facts:
• The budget is presented annually in the Parliament of India.
• It includes details of income and expenditure.
• It reflects the economic policy of the government.
Important Questions for Exam:
What is the main objective of the government budget?
Answer: Development and welfare
Is reduction in defence expenditure mandatory?
Answer: No
What does the budget show?
Answer: Income and expenditure
Where is the budget presented?
Answer: Parliament of India