Question

“In the recent Budget the Government allocated funds for the construction of new metro lines in smart cities to improve public transportation and reduce pollution.”
Identify the nature of government expenditure and its objective.

Answer 1

The nature of government expenditure in this case is Capital Expenditure because the allocation of funds for the construction of new metro lines involves infrastructure development, which creates long-term assets for the economy. Capital expenditure is a one-time investment that enhances the productive capacity of the country.

Objective of the Expenditure:

1. Improving Public Transportation: The metro lines will provide a faster, more reliable, and more convenient mode of transport, reducing traffic congestion.
2. Reducing Pollution: Metro trains use electricity and reduce the number of private vehicles on the road, leading to lower carbon emissions and better air quality.
3. Urban Development: The project supports the concept of smart cities by modernising transportation infrastructure, enhancing connectivity, and promoting sustainable urban growth.
4. Economic Growth: Large-scale infrastructure projects generate employment, boost industries like construction and manufacturing, and contribute to overall economic development.