With reference to Union Budget, which of the following is/are covered under Non-Plan Expenditure? 1. Defence expenditure 2. Interest payments 3. Salaries and pensions 4. Subsidies Select the correct answer using the code given below.

In the context of the Union Budget, prior to the abolition of the Plan/Non-Plan distinction from Budget 2017-18, expenditures were broadly classified into Plan Expenditure and Non-Plan Expenditure.

Non-Plan Expenditure referred to the recurring and essential expenditures of the government that were not directly linked to specific development plans or schemes. These expenditures were necessary for the day-to-day functioning of the government and included:

1. Defence expenditure: This includes spending on defense services, equipment, and maintenance, which is a regular and essential part of government spending, not typically tied to a specific five-year plan scheme.

2. Interest payments: The government pays interest on its borrowings (internal and external debt). These are statutory and unavoidable payments, constituting a significant portion of non-plan expenditure.

3. Salaries and pensions: Payments to government employees (salaries) and retired government employees (pensions) are fixed, recurring liabilities essential for maintaining the government machinery and are classified as non-plan expenditure.

4. Subsidies: Various subsidies, such as food subsidies, fertilizer subsidies, and petroleum subsidies, are provided by the government to achieve social and economic objectives. These are recurring expenditures aimed at welfare or price stabilization and fall under non-plan expenditure.

All the items listed—Defence expenditure, Interest payments, Salaries and pensions, and Subsidies—were indeed covered under Non-Plan Expenditure in the Union Budget prior to the change in classification.