Meaning:

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. Expenditure incurred by the public authorities’ central, state and local government either for protecting the citizen or for promoting their economic and social welfare is called public expenditure. The types of public expenditure are.

According to Adolf Wagner a German economist, the government activities weather economic or non economic start increasing these results in an increase in the government expenditure.

Types of public expenditure:

• Direct expenditure and transfer expenditure: When the government incurs expenditure on the purchase of goods and services and on current services of factor of production, such expenditure is called direct expenditure it is also known as exhaustive or non transfer expenditure some example of such expenditure, expenditure on defense, civil services, educational services etc. when the government makes payment which are made without any corresponding return of any factor services such expenditure is called transfer expenditure some example of transfer expenditure are expenditure made on payment of interest, on government debt, old age pension, sickness benefit etc. such expenditure do not add anything to the current production.
• Development and Non development expenditure: When the government incurs expenditure on the social and economic development of the country it is termed as developmental expenditure it includes services such as education, public health, transport, communication etc. non development expenditure is the expenditure which is incurred on non development activities of the government such as an administrative services, like police, defense, administration of justice, etc.
• Productive and non productive expenditure: Productive expenditure is incurred to improve the productive capacity of the economy and is in the nature of investment like machinery, factory or investment on human capital. Unproductive expenditure do not have productive capacity of the economy and are in the nature of consumption like expenditure on defense, justice, maintenance of law and order etc. these expenditure may improve the efficiency of the economy.
• Capital and revenue expenditure: Capital expenditure is incurred once and is of non recurring nature such as expenditure on selling up of factories or buying the plant and machinery etc. revenue expenditure is of a recurring nature such as expenditure on administration and maintenance.

also read: explain the effects of taxation on production and distribution.