The correct answer is (c) Interest Payments.
Interest payments are the largest item of revenue expenditure in the Union Budget. In 2022-23, the government is expected to spend Rs 6.06 lakh crore on interest payments, which is more than the combined expenditure on defence, subsidies, and grants to states.
Interest payments are the amount of money that the government pays to its creditors, such as banks and bondholders, on the loans that it has taken. The government’s debt has been increasing in recent years, due to a combination of factors, such as the economic slowdown and the COVID-19 pandemic. This has led to an increase in interest payments, which are now a major drain on the government’s finances.
The government has taken a number of measures to reduce its debt and interest payments, such as selling assets and raising taxes. However, these measures have not been enough to stop the debt from growing. As a result, interest payments are likely to continue to be a major item of expenditure in the Union Budget for the foreseeable future.
Here is a brief explanation of each option:
(a) Defence expenditure is the amount of money that the government spends on its armed forces. In 2022-23, the government is expected to spend Rs 5.25 lakh crore on defence, which is the second largest item of revenue expenditure.
(b) Major subsidies are the amount of money that the government gives to certain sectors, such as agriculture and food, to keep prices low for consumers. In 2022-23, the government is expected to spend Rs 2.83 lakh crore on major subsidies.
(c) Interest Payments are the amount of money that the government pays to its creditors, such as banks and bondholders, on the loans that it has taken. In 2022-23, the government is expected to spend Rs 6.06 lakh crore on interest payments, which is the largest item of revenue expenditure.
(d) Grants to States are the amount of money that the government gives to the states to help them meet their expenditure. In 2022-23, the government is expected to spend Rs 4.71 lakh crore on grants to states.