Question

Public expenditure in India has increased over the years. Explain four principal reasons for its increase.

Mention two causes of increase in public expenditure in recent times.

Give two reasons for an increase in public expenditure in recent times.

Answer 1

The reasons for the growth of public expenditure in India in the modern days:

• Public expenditure tends to increase with the expansion of administrative machinery, maximisation of social and economic welfare, providing of salary and other benefits like old-age pension, sickness benefits, accident benefits, free education to industrial workers etc.
• Public expenditure tends to increase with the huge interest payments on market borrowings.
• Public expenditure tends to increase with infrastructural development activities to improve the production efficiency of industries and increases employment opportunities.
• Public expenditure increases as the government encourage private enterprises by initialising state-owned financial and banking institutions to provide cheap credit.