Introduction:
Public expenditure refers to the spending made by the government or public authorities to provide goods and services, support economic development, and fulfill various public needs. It includes all the financial outlays by the government at all levels (local, state, and national) for the development and functioning of the economy. In recent times the principle causes for increase in public expenditure with reference to India are discussed below:
Causes for growing public expenditure:
- Increase in population: In India the population has increased at an alarming rate the government has to cater to the needs 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 to spend large defence expenditure to prepare the country for war to defend itself. even if war is not on huge amount are spend on preparing for it arms race between countries and development is sophisticated armaments has resulted in massive defence expenditure in all the countries.
- Growing state functions: Earlier the function of the state was mainly to maintain the law and order in the country but modern States have now become welfare state which provides social security schemes to its citizens. Thus the government has to incur huge expenditure on such activities like old age pension, unemployment allowance, sickness benefits 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 the agricultural and industries etc. all this developmental activities of the government result in an increase in public expenditure.
- Providing public utility services: The government has to provide more of public utility services example water, electricity, transport services etc. this leads to expansion in administrative machinery in the country the expenditure on administration has increased shortly due to revision of pay scale of the Government employees.
- Increase burden of subsidies: In many countries a government incurs expenditure on subsidies to the various section of the society. In India the government provides subsidies on food, fertilizers etc thus subsidies have increased sharply in the recent year adding to the growth of public expenditure.
- Thus public expenditure has increase due to extensive and intensive increase in the activities of the Government public expenditure is required to create and mountain condition necessary for economic growth.
also read: explain the types of public expenditure.