Which one of the following is the largest component of revenue expenditure in the Union Budget 2022-23?

Correct — A, Interest payments. Budget at a Glance 2022-23 puts expenditure on Revenue Account at ₹31,94,663 crore and, two lines below it, interest payments at ₹9,40,651 crore — close to 29 paise in every rupee spent on revenue account, and by a wide margin the largest single identified head. The Budget's own 'Rupee Goes To' chart for 2022-23 makes the gap unmissable: interest payments take 20 paise of every rupee the Union spends, against 8 paise each for defence and subsidies and 4 for pensions.

• (b)Defense expenditure — Defence took 8 paise of the 2022-23 rupee against interest payments' 20, and that 8 paise still includes capital acquisition of aircraft, ships and vehicles, so defence spending on revenue account alone is smaller again. Defence is the largest ministry-wise allocation, which is what makes it the tempting answer, but a ministry total is not an expenditure head.
• (c)Expenditure on healthcare — Health is not large enough to earn a slice of its own in the Budget's rupee chart. The Ministry of Health and Family Welfare's allocation in 2022-23 was under ₹90,000 crore, roughly a tenth of the interest bill, and health is in any case largely a State subject.
• (d)Subsidies — Subsidies took 8 paise of the 2022-23 rupee to interest payments' 20 — less than half. Food, fertiliser and petroleum subsidies had already been pulled back from their pandemic peak by the time this Budget was framed.

Revenue expenditure is spending that neither creates an asset nor reduces a liability — salaries, pensions, subsidies, grants and, above all, interest on past borrowing. Interest payments are the sharpest example of committed expenditure: they are contractually due on debt already raised, so no minister can compress them in a given year. That is exactly why they sit at the top of the list.

The reason interest dominates is arithmetic, not policy preference. Every year's fiscal deficit adds to the debt stock, and the interest on that stock has to be paid before anything else. In BE 2022-23 the fiscal deficit was ₹16,61,196 crore while interest payments were ₹9,40,651 crore, so the primary deficit — the deficit stripped of interest — was only ₹7,20,545 crore. Read the other way, more than half of the year's fresh borrowing went to service borrowing already done. The trap in this question is the difference between a ministry and a head: defence is the largest ministry-wise allocation in almost every Union Budget, which makes option (b) feel right, but that allocation mixes revenue spending with capital acquisition and sits well below the interest bill either way.

• Budget at a Glance 2022-23: total expenditure ₹39,44,909 crore, of which ₹31,94,663 crore on Revenue Account and ₹7,50,246 crore on Capital Account.
• Interest payments, BE 2022-23: ₹9,40,651 crore — about 29% of revenue expenditure and 24% of total expenditure.
• The Budget's own 'Rupee Goes To' chart for 2022-23: interest payments 20 paise, States' share of taxes and duties 17, Central Sector Schemes 15, Finance Commission and other transfers 10, Centrally Sponsored Schemes 9, other expenditure 9, defence 8, subsidies 8, pensions 4.
• Primary deficit = fiscal deficit − interest payments. BE 2022-23: ₹16,61,196 crore − ₹9,40,651 crore = ₹7,20,545 crore.
• The interest bill has kept climbing since this exam: ₹11,62,940 crore in BE 2024-25, roughly 31% of revenue expenditure that year.

• Treating the largest ministry-wise allocation (Defence) as the largest expenditure head.
• Forgetting that the defence figure quoted in headlines bundles capital acquisition and defence pensions with revenue spending.
• Assuming subsidies must dominate because of the pandemic-era food subsidy spike; by 2022-23 they were back to 8 paise in the rupee.

Asked as a one-line 'largest component' item that is decided entirely by whether you know interest payments outrank everything else on the revenue account.

• practice — not a real PYQ

  Primary deficit is obtained by subtracting which one of the following from the fiscal deficit?

  • (a)Subsidies
  • (b)Interest payments
  • (c)Defence expenditure
  • (d)Grants to States

  Answer(b) Interest payments — primary deficit strips out the cost of servicing past debt to show the current year's own borrowing need.

• practice — not a real PYQ

  Which one of the following is not a revenue expenditure of the Union Government?

  • (a)Interest payments
  • (b)Salaries of central government staff
  • (c)Construction of a national highway
  • (d)Food subsidy

  Answer(c) Construction of a national highway — it creates a physical asset, so it is capital expenditure; the other three neither create an asset nor reduce a liability.