Identify and explain the concept (any three): Jagruti receives monthly pension of ₹ 5,000 from the state government.

Answer: Public expenditure (a transfer payment)

Concept: Public expenditure is the expenditure incurred by the central, state and local governments on administration, welfare and development. Payments such as pensions, old-age allowances and scholarships, for which the government receives no goods or services in return in the current period, are transfer payments.

Explanation: The monthly pension of ₹ 5,000 paid to Jagruti by the state government is public expenditure of the state government. It is a non-developmental (welfare) expenditure and a transfer payment, so it is not included in national income because it is not a payment for current productive services.