What is Public Expenditure ? Meaning, Definition
Public expenditure refers to Government expenditure i.e. Government spending. It is incurred past times Central, State together with Local governments of a country.
Public expenditure tin endure defined as, "The expenditure incurred past times populace authorities similar central, province together with local governments to satisfy the collective social wants of the people is known equally populace expenditure."
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Throughout the 19th Century, most governments followed laissez faire economical policies & their functions were exclusively restricted to defending aggression & maintaining law & order. The size of pubic expenditure was real small.
But at nowadays the expenditure of governments all over has significantly increased. In the early on 20th Century, John Maynard Keynes advocated the role of populace expenditure inwards decision of degree of income together with its distribution.
In developing countries, populace expenditure policy non exclusively accelerates economical growth & promotes occupation opportunities but equally good plays a useful role inwards reducing poverty together with inequalities inwards income distribution.
Classification of Public Expenditure
Classification of Public expenditure refers to the systematic organisation of dissimilar items on which the authorities incurs expenditure.
Different economists choose looked at populace expenditure from dissimilar signal of view. The next classification is a based on these dissimilar views.
1. Functional Classification
Some economists sort out populace expenditure on the footing of functions for which they are incurred. The authorities performs diverse functions similar defence, social welfare, agriculture, infrastructure together with industrial development. The expenditure incurred on such functions autumn nether this classification. These functions are farther divided into subsidiary functions. This sort of classification provides a clear thought nearly how the populace funds are spent.
2. Revenue together with Capital Expenditure
Revenue expenditure are electrical flow or consumption expenditures incurred on civil administration, defence forcefulness forces, populace wellness together with education, maintenance of authorities machinery. This type of expenditure is of recurring type which is incurred twelvemonth later year.
On the other hand, uppercase expenditures are incurred on edifice durable assets, similar highways, multipurpose dams, irrigation projects, buying mechanism together with equipment. They are non recurring type of expenditures inwards the cast of uppercase investments. Such expenditures are expected to meliorate the productive capacity of the economy.
3. Transfer together with Non-Transfer Expenditure
A.C. Pigou, the British economist has classified populace expenditure equally :-
- Transfer expenditure
- Non-transfer expenditure
Transfer Expenditure :-
Transfer expenditure relates to the expenditure against which at that spot is no corresponding return.
Such expenditure includes populace expenditure on :-
- National Old Age Pension Schemes,
- Interest payments,
- Subsidies,
- Unemployment allowances,
- Welfare benefits to weaker sections, etc.
By incurring such expenditure, the authorities does non instruct anything inwards return, but it adds to the welfare of the people, peculiarly belong to the weaker sections of the society. Such expenditure basically results inwards redistribution of coin incomes inside the society.
Non-Transfer Expenditure :-
The non-transfer expenditure relates to expenditure which results inwards creation of income or output.
The non-transfer expenditure includes evolution equally good equally non-development expenditure that results inwards creation of output straight or indirectly.
- Economic infrastructure such equally power, transport, irrigation, etc.
- Social infrastructure such equally education, wellness together with menage unit of measurement welfare.
- Internal law together with monastic tell together with defence.
- Public administration, etc.
By incurring such expenditure, the authorities creates a salubrious weather condition or environs for economical activities. Due to economical growth, the authorities may endure able to generate income inwards cast of duties together with taxes.
4.1 Productive together with Unproductive Expenditure
This classification was made past times Classical economists on the footing of creation of productive capacity.
Productive Expenditure :-
Expenditure on infrastructure development, populace enterprises or evolution of agriculture increment productive capacity inwards the economic scheme together with convey income to the government. Thus they are classified equally productive expenditure.
Unproductive Expenditure :-
Expenditures inwards the nature of consumption such equally defence, involvement payments, expenditure on law together with order, populace administration, practice non practice whatever productive property which tin convey income or returns to the government. Such expenses are classified equally unproductive expenditures.
4.2 Development together with Non-Development Expenditure
Modern economists choose modified this classification into distinction betwixt evolution together with non-development expenditures.
Development Expenditure :-
All expenditures that promote economical growth together with evolution are termed equally evolution expenditure. These are the same equally productive expenditure.
Non-Development Expenditure :-
Unproductive expenditures are termed equally non evolution expenditures.
5. Grants together with Purchase Price
This classification has been suggested past times economist Hugh Dalton.
Grants :-
Grants are those payments made past times a populace authorization for which their may non endure whatever quid-pro-quo, i.e., at that spot volition endure no receipt of goods or services. For example, quondam historic menses pension, unemployment benefits, subsidies, social insurance, etc. Grants are transfer expenditures.
Purchase prices :-
Purchase prices are expenditures for which the authorities receives goods together with services inwards return. For example, salaries together with reward to authorities employees together with purchase of consumption together with uppercase goods.
6. Classification According to Benefits
Public expenditure tin endure classified on the footing of benefits they confer on dissimilar groups of people.
- Common benefits to all : Expenditures that confer mutual benefits on all the people. For example, expenditure on education, populace health, transport, defence, law together with order, full general administration.
- Special benefits to all : Expenditures that confer special benefits on all. For example, direction of justice, social safety measures, community welfare.
- Special benefits to some : Expenditures that confer lead special benefits on for sure people together with equally good add together to full general welfare. For example, quondam historic menses pension, subsidies to weaker section, unemployment benefits.
7. Hugh Dalton's Classification of Public Expenditure
Hugh Dalton has classified populace expenditure equally follows :-
- Expenditures on political executives : i.e. maintenance of ceremonial heads of state, similar the president.
- Administrative expenditure : to hold the full general direction of the country, similar authorities departments together with offices.
- Security expenditure : to hold armed services together with the police delineate forces.
- Expenditure on direction of justice : include maintenance of courts, judges, populace prosecutors.
- Developmental expenditures : to promote growth together with evolution of the economy, similar expenditure on infrastructure, irrigation, etc.
- Social expenditures : on populace health, community welfare, social security, etc.
- Pubic debt charges : include payment of involvement together with repayment of regulation amount.
Articles On Public Expenditure
- blogspot.com//search?q=causes-for-growth-of-public-expenditure">Causes for the Growth of Public Expenditure inwards India
- blogspot.com//search?q=causes-for-growth-of-public-expenditure">Effects of Public Expenditure On Economy
- blogspot.com//search?q=causes-for-growth-of-public-expenditure">Wagner's Law of Increasing State Activity
