Question

Discuss any five reasons for the growth of public expenditure in India.

State any two reasons for the growth of public expenditure in a country like India in recent times.

Answer 1

The growth of public expenditure

1. Public expenditure tends to increase with the expansion of administrative machinery, maximisation of social and economic welfare, providing of salary and other benefits such as old-age pensions, sickness benefits, accident benefits and free education to industrial workers.
2. Public expenditure tends to increase with the huge interest payments on market borrowings.
3. Satisfying the defence needs has further increased the requirement of government revenue.
4. Prevention of monopolisation leads to large demand for government funds. Monopolies affect the economic system and concentration of economic power.

Answer 2

1. Defence: An important factor responsible for the increase in public expenditure is the large defence expenditure. The political situation all over the world is uncertain and insecure. The arms race between countries and the development of sophisticated armaments and nuclear weapons have resulted in massive defence expenditure. In India, the defence expenditure has increased substantially in view of continued aggression by Pakistan and the urgency of national security.
2. Population Growth: Another factor responsible for the increase in public expenditure is the growth in population. In India, the population has increased at an alarming rate. Growth in population on this scale has increased the demand for various government services like education, public health, transport, administration and maintenance of law and order. It has also increased the demand for various development activities of the government.