Correct Answer: Grants to states

Solution : The correct answer is (D) Grants to states.

The government's revenue expenditure includes various types of expenses, such as salaries and wages of government employees, pensions, subsidies, grants to states, interest payments on debt, and day-to-day operational expenses. Grants to states are a significant component of revenue expenditure as they involve transfers of funds from the central government to state governments for various purposes, such as social welfare programs, infrastructure development, and education.