UPSC PracticeUPSC Practice
UPSC Notes

Defence Expenditure and Fiscal Policy

PYQs

8

Articles

1

Momentum

21

Phase IFoundation

Background

Overview

UPSC examines government budgeting, fiscal policy challenges, the economic impact of defence spending, and the balance between security needs and developmental priorities in the context of public finance.

Defence expenditure refers to the financial resources allocated by a government for its military forces and related activities, forming a significant component of public finance. It impacts fiscal policy through its demands on national budgets, often leading to trade-offs with other sectors like social welfare or infrastructure development.

Phase IIStatic core

Facts & tables

Key facts

Budgetary Impact

Forms a significant portion of national budgets globally, influencing fiscal deficits and resource allocation.

Influencing Factors

Driven by geopolitical realities, national security threats, and technological advancements in military hardware.

Economic Effects

Can have both stimulative effects (job creation, R&D) and crowding-out effects on other economic sectors.

Accountability

Subject to parliamentary or congressional scrutiny for transparency, efficiency, and adherence to national priorities.

Reference table

Static syllabus anchors

TypeReference
Conceptual areaPublic Finance
Phase IIIExam lens

Prelims angle

Overview

Prelims angle: Multi-statement analysis

Prelims angle: Conceptual understanding

Quick revision

  • Major component of government expenditure.
  • Impacts fiscal deficit and resource allocation.
  • Influenced by geopolitical tensions and security needs.
  • Requires legislative oversight for accountability.
  • Can lead to economic trade-offs.

High-confidence PYQs

2025Conceptual understanding, Application of economic principles

Suppose the revenue expenditure is ₹80,000 crores and the revenue receipts of the Government are ₹60,000 crores. The Government budget also shows borrowings ...

EconomyOpen question

A country’s fiscal deficit stands at ₹50,000 crores. It is receiving ₹10,000 crores through non-debt creating capital receipts. The country’s interest liabil...

EconomyOpen question

With reference to the Government of India, consider the following information: | Organization | Some of its Functions | It Works Under | |--...

Indian PolityOpen question
2025Conceptual understanding, Terminology-based question

Suppose the revenue expenditure is ₹80,000 crores and the revenue receipts of the Government are ₹60,000 crores. The Government budget also shows borrowings ...

EconomyOpen question

A country’s fiscal deficit stands at ₹50,000 crores. It is receiving ₹10,000 crores through non-debt creating capital receipts. The country’s interest liabil...

EconomyOpen question

With reference to the Government of India, consider the following information: | Organization | Some of its Functions | It Works Under | |--...

Indian PolityOpen question
2025Multi-statement analysis, Institutional roles and functions

Suppose the revenue expenditure is ₹80,000 crores and the revenue receipts of the Government are ₹60,000 crores. The Government budget also shows borrowings ...

EconomyOpen question

A country’s fiscal deficit stands at ₹50,000 crores. It is receiving ₹10,000 crores through non-debt creating capital receipts. The country’s interest liabil...

EconomyOpen question

With reference to the Government of India, consider the following information: | Organization | Some of its Functions | It Works Under | |--...

Indian PolityOpen question
2023Factual recall, Institutional roles and functions

Consider the following: 1. Demographic performance 2. Forest and ecology 3. Governance reforms 4. Stable government 5. Tax and fiscal efforts For the horiz...

EconomyOpen question
2018Conceptual understanding, Application of economic principles

If a commodity is provided free to the public by the Government, then

EconomyOpen question
2017Multi-statement analysis, Factual recall

Consider the following statements : 1. Tax revenue as a percent of GDP of India has steadily increased in the last decade. 2. Fiscal deficit as a percent of...

EconomyOpen question
2016Multi-statement analysis, Conceptual understanding

There has been a persistent deficit budget year after year. Which action/actions of the following can be taken by the Government to reduce the deficit? 1. R...

EconomyOpen question

Which of the following is/are included in the capital budget of the Government of India? 1. Expenditure on acquisition of assets like roads, buildings, machi...

EconomyOpen question
2016Multi-statement analysis, Conceptual understanding

There has been a persistent deficit budget year after year. Which action/actions of the following can be taken by the Government to reduce the deficit? 1. R...

EconomyOpen question

Which of the following is/are included in the capital budget of the Government of India? 1. Expenditure on acquisition of assets like roads, buildings, machi...

EconomyOpen question

Topic timeline

Public Finance
Prelims 2016· Multi-statement analysis, Conceptual understanding

There has been a persistent deficit budget year after year. Which action/actions of the following can be taken by the Government to reduce the deficit? 1. R...

Open question

Which of the following is/are included in the capital budget of the Government of India? 1. Expenditure on acquisition of assets like roads, buildings, machi...

Open question
Prelims 2016· Multi-statement analysis, Conceptual understanding

There has been a persistent deficit budget year after year. Which action/actions of the following can be taken by the Government to reduce the deficit? 1. R...

Open question

Which of the following is/are included in the capital budget of the Government of India? 1. Expenditure on acquisition of assets like roads, buildings, machi...

Open question
Prelims 2017· Multi-statement analysis, Factual recall

Consider the following statements : 1. Tax revenue as a percent of GDP of India has steadily increased in the last decade. 2. Fiscal deficit as a percent of...

Open question
Prelims 2018· Conceptual understanding, Application of economic principles

If a commodity is provided free to the public by the Government, then

Open question
Prelims 2023· Factual recall, Institutional roles and functions

Consider the following: 1. Demographic performance 2. Forest and ecology 3. Governance reforms 4. Stable government 5. Tax and fiscal efforts For the horiz...

Open question
Prelims 2025· Conceptual understanding, Application of economic principles

Suppose the revenue expenditure is ₹80,000 crores and the revenue receipts of the Government are ₹60,000 crores. The Government budget also shows borrowings ...

Open question

A country’s fiscal deficit stands at ₹50,000 crores. It is receiving ₹10,000 crores through non-debt creating capital receipts. The country’s interest liabil...

Open question

With reference to the Government of India, consider the following information: | Organization | Some of its Functions | It Works Under | |--...

Open question
Prelims 2025· Conceptual understanding, Terminology-based question

Suppose the revenue expenditure is ₹80,000 crores and the revenue receipts of the Government are ₹60,000 crores. The Government budget also shows borrowings ...

Open question

A country’s fiscal deficit stands at ₹50,000 crores. It is receiving ₹10,000 crores through non-debt creating capital receipts. The country’s interest liabil...

Open question

With reference to the Government of India, consider the following information: | Organization | Some of its Functions | It Works Under | |--...

Open question
Prelims 2025· Multi-statement analysis, Institutional roles and functions

Suppose the revenue expenditure is ₹80,000 crores and the revenue receipts of the Government are ₹60,000 crores. The Government budget also shows borrowings ...

Open question

A country’s fiscal deficit stands at ₹50,000 crores. It is receiving ₹10,000 crores through non-debt creating capital receipts. The country’s interest liabil...

Open question

With reference to the Government of India, consider the following information: | Organization | Some of its Functions | It Works Under | |--...

Open question

U.S. Secretary of Defence Pete Hegseth estimates cost of Iran war at $37.5 billion

22 Jul 2026 · Defence expenditure is a key fiscal policy tool reflecting national priorities and security concerns, with significant economic and budgetary implications requiring robust oversight.

Read article

Related topics

Current topic

Defence Expenditure and Fiscal Policy

Practice writing on this topic

UPSC has asked 8 linked questions on Defence Expenditure and Fiscal Policy in Mains. Write an answer to one — and get it evaluated.

See Mains PYQsEvaluate an answer
Browse all topics