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Government Budget and Economy — Economics STD 12 Humanities & Commerce — Question

Rajasthan BoardEnglish MediumSTD 12 Humanities & CommerceEconomicsGovernment Budget and Economy3 Marks
Question
Differentiate between Developmental and Non-Developmental Expenditure.
✓

Answer

S.No.
Basic
DeveloprneltalE p.rdlture
Non-Developmental Expenditure
1.
Meaning
Developmental expenditure is the expenditure on activities which are directly related to economic and social development ofthe country.
Non-developmental expenditure of the government is the expenditure on the essential general services of the government.
2.
Inclusion
Developmental expenditure includes:
2.1 Plan expenditure on departmental enterprises of the government, like railways and post and telegraph.
2.2 Plan expenditure on non-departmental enterprises of the government like Air India and Indian Airlines.
2.3 Loans by the govemment to non-departmental enterprises for the purpose of development.
Non-Developmental expenditure includes:
2.1 Expenditure on defense. 
2.2 Expenditure on interest payments by the government.
2.3 Expenditure on tax collection.
2.4 Subsidies on food and controlled cloth for the benefit of poorer sections of the society.
3.
Contribution
Developmental expenditure directly contributes to the development of the economy as it directly adds to the flow ofgoods and services.
Non Developmental expenditure does not directly contributes to the development as it indirectly contributes to economic development.

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