Correct Option
The correct option is 2 and 3 only.
Explanation
Prior to the Union Budget 2017-18, government expenditure in India was classified into Plan and Non-Plan Expenditure. Plan Expenditure was associated with productive assets and schemes under the Five-Year Plans, while Non-Plan Expenditure covered the maintenance of assets, administrative costs, and obligatory payments.
Statement 1 is Incorrect:
Plan revenue expenditure was not exclusively for the defence sector. Plan revenue expenditure primarily related to Central assistance for State and Union Territory plans and funding for Central schemes. In contrast, Defence expenditure was historically a major component of Non-Plan Expenditure, as it involves recurring operational costs, salaries, and maintenance not tied to developmental planning cycles.
Statement 2 is Correct:
Non-Plan expenditure was comprehensive and covered a vast range of general, economic, and social services. It included the operating costs of the government, such as salaries, pensions, and the maintenance of assets created during previous Five-Year Plans. It essentially covered the committed liabilities required to keep the administrative and service machinery functional.
Statement 3 is Correct:
Interest payments and Defence services were the largest components of Non-Plan expenditure. Other significant components included subsidies (food, fertilizer, fuel) and pensions. These expenditures are obligatory and recurring, forming the bulk of the government's total spending.
Key Takeaway:
The distinction between Plan and Non-Plan expenditure was abolished in 2017 to shift focus to the Revenue and Capital classification. Non-Plan expenditure typically constituted the majority of the budget, driven by committed liabilities like interest payments and defence.