18 March, 2024
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Meaning:
Public expenditure is expenditure which is incurred by the government for its own maintenance and for prevailing the economic and social welfare of the people. Modern governments have to perform complex functions due to the increase urbanization and industrialized. Public expenditure, like any form of spending, can be driven by various factors, including economic, social, political, and institutional considerations. Here are some common causes of expenditure:
Causes for increasing public expenditure:
- Increase in population: In India the population has increased at an alarming rate .The government has to create the need of the increasing population the demand for various government services like education, public health, transport, administration and maintenance of law and order has increased.
- Defense expenditure: The government has been large defense expenditure to prepare the country for war to defense itself. Even if war is not on .huge amount are spend on preparing for it. The arms race between countries and development of sophisticated armaments has resulted in massive defense expenditure in all the countries.
- Growing state function: Earlier the function of the state was mainly the maintain to law and order in the country. But the modern States have now becomes welfare state which provides social security schemes to the citizen thus a government has to incur huge expenditure on such activities like old age pension, unemployment allowance, sickness benefit etc.
- Developmental functions: A country like India is desires of rising the standard of living of the people much expenditure is incurred on economic and social overheads and to develop agriculture and industry etc. All these development activities of the government results in an increase in public expenditure.
- Providing public utility services: The government has to provide more of public utility services example water, electricity, transport etc. this leads to expansion in the administrative machinery in the country. The expenditure on administration has increased shortly due to the revision of pay scales of the Government employees.
- Increase burden of subsidies: In many countries the government incurs expenditure on subsidies to the various sections of the society. In India the government provides subsidies on food, fertilizers etc. these subsidies have increased shortly in the recently adding to the growth of public expenditure.
- Revenue Constraints: The availability of revenue sources, including tax revenues, grants, loans, and borrowing capacity, can influence government spending decisions. Fiscal constraints may limit the extent to which governments can expand expenditure in certain areas or require prioritization among competing demands.
- Technological Advancements: Technological advancements and innovations can influence government expenditure patterns by creating new opportunities for investment in infrastructure, research and development, digitalization, and modernization of public services.
- Political Considerations: Political factors, including electoral cycles, public opinion, interest group pressures, and bureaucratic dynamics, can shape government spending decisions. Politicians may allocate resources strategically to gain electoral support or satisfy influential stakeholders.
also read: explain the types of public expenditure.
Tags: BA.LLBREASONS FOR INCREASING CENTRAL GOVT EXPENDITURE REASONS FOR INCREASING PUBLIC EXPENDITURE
Category: ECONOMICS3, UNIT-4