Question

Which is not a component of capital expenditure?

Options

• Loans to States

• Acquisition of land

• Repayment of borrowing

• Interest payments

Answer 1

Interest payments

Explanation:

Interest payments are part of revenue expenditure, as they are recurring payments made by the government for servicing its debt. In contrast, capital expenditure involves long-term investments or payments that create or acquire assets (like acquisition of land, loans to states, or repayment of borrowings). Therefore, interest payments are not a component of capital expenditure.