Question

What is meant by Public Expenditure? Explain three reasons for an increase in public expenditure in India.

Answer 1

Public Expenditure: Public expenditure is the expenditure incurred by the public authorities (central, state and local governments) to satisfy those common wants which the people in their individual capacity are unable to satisfy efficiently.

Three reasons for an increase in public expenditure in India are as under:

1. Development Work—Modem state has also taken up developmental work in addition to their primary functions of administration and defense.
2. Rise in the price level—As a result of the rise in the price level, the public expenditure has gone up everywhere. The reason is that private individuals and also the government have to buy goods and services from the market at higher prices.
3. Increase in Population—As a result, the government has to incur great expenditure to meet the requirements of an increasing population. In fact, public expenditure increases in the same ratio in which the population increases.