Capital Expenditures: There are the expenditures of the government that result in the creation of physical or financial assets, or depletion in financial liabilities. • It consists of: • the long-term investments by the government on creating assets such as roads and hospitals, and • the money given by the government in the form of loans to states or repayment of its borrowings All the areas which get capital from the government are part of the capital expenditure. It includes so many heads in India: • Loan Disbursals by the Government: The loans forwarded by the government might be internal (i.e., to the states, UTs, PSUs, FIs, etc.) or external (i.e., to foreign countries, foreign banks, purchase of foreign bonds, loans to IMF and WB, etc.). • Loan Repayments by the Government • Plan Expenditure of the Government • Capital Expenditures on Defence by the Government: This consists of all kinds of capital expenses to maintain the defence forces, the equipment purchased for them as well as the modernisation expenditures. Defence is a non-plan expenditure which has capital as well as revenue expenditures in its maintenance. The revenue part of expenditure in the defence is counted in the revenue expenditures by the government. • General Services: These also need huge capital expenditure by the government—the railways, postal department, water supply, education, rural extension, etc. Hence, option C is correct.