Q. Consider the following:
1.Capital expenditure
2.Salaries of employees
3.Borrowings by PSUs
Which of the above will increase the liability of central Government?
Answer: C
Notes:
Borrowings by PSUs would increase the liabilities of the government. Capital expenditure creates assets for the government and causes reduction in liabilities for the government.
Unlike capital expenditure, revenue expenditure is one that neither creates assets nor reduces any liability of the government. Salaries of employees, interest payment on past debt, subsidies, pension, etc, fall under the category of revenue expenditure.
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