Define public expenditure. Public expenditure 2022-10-25

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Public expenditure refers to the money that governments at various levels (federal, state, and local) spend on goods and services for the benefit of the general public. It includes the purchase of physical goods, such as infrastructure and equipment, as well as the provision of intangible services, such as education and healthcare.

Public expenditure plays a crucial role in the functioning of modern societies, as it helps to address various social and economic issues. For example, investments in education can improve the skills and knowledge of the workforce, leading to higher productivity and economic growth. Similarly, investments in healthcare can improve the health and well-being of citizens, leading to lower healthcare costs and a more productive population.

There are different types of public expenditure, each with its own set of goals and objectives. For instance, there is current expenditure, which refers to the spending on goods and services that are consumed in the current year, such as salaries, pensions, and welfare benefits. On the other hand, capital expenditure refers to the spending on long-term assets, such as infrastructure and equipment, which are expected to generate benefits over several years.

Public expenditure is typically financed through taxes, borrowing, and other revenue sources. Governments use various tools to manage their expenditure, such as budgeting, forecasting, and performance monitoring, to ensure that resources are allocated efficiently and effectively.

However, public expenditure can also have negative consequences if it is not managed properly. For instance, excessive spending can lead to budget deficits and debt, which can have negative impacts on the economy. It is therefore important for governments to carefully balance the benefits of public expenditure with the costs and ensure that it is sustainable in the long run.

In conclusion, public expenditure refers to the money that governments spend on goods and services for the benefit of the general public. It plays a crucial role in addressing various social and economic issues, but it must be managed carefully to ensure that it is sustainable in the long run.

2022 UPDATED!!! Definition of Public Expenditure

define public expenditure

In India only in recent years some State Governments such as those of Haryana, Punjab, Delhi have introduced old age pension scheme. It is a non-recurring type of expenditure. But this preposition is not supported by historical facts. Shirras, the test of public expenditures not the aggregate expenditure but it is the relative amounts which are as­signed to different heads from time to time. The lowest percentage had Ireland with only 25 percent of its GDP. Such payments are called transfer payments. The non-plan expenditure incurs on those activities, which are not included in the five-year plan.

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Public Expenditure: Meaning, Classification and Effects

define public expenditure

In India, the proportion of urban population to the total population has raised from 11. The poor would not work more when they know whatever their income, the gap between the minimum in­come and there will be filled by the Government. ADVERTISEMENTS: Classification is always done on some logical and rational economic basis. Functional Criteria: Another classification of public expenditure is proposed by H. But once the level of full employment is attained the increase in Government expenditure cannot raise production through raising aggregate demand. In interwar period the average share of the public expenditure was still slightly increasing.

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What is Public Spending?

define public expenditure

Expenditure is the action of spending funds. Similarly, the Governments spend a lot on public hospitals and dispensaries to provide health care to the poor people. Important Causes of Growth in Public Expenditure 1. Moreover, there are areas of economy like provision of basic infrastructures, where market mecha­nism completely fails to distribute the cost of output production among expenditure beneficiaries through the pricing system. Thus, if the govern­ment spends a larger part of the national income on defence, less will remain with the people for their own personal consumption, thereby leading to a reduction in their standard of living. The money involved in these transactions is part of public spending. Public expenditure has far reaching effects on the utili­zation of resources as between alternative uses.

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What is Public Expenditure?

define public expenditure

These debt service charges have resulted in enormous increase in public expenditure. ADVERTISEMENTS: The first was the belief of Adam Smith and his followers that the functions of the state should be restricted to justice, police and arms. In these situations, the state accounts show more money from entering, which can be a problem. Hence a completely satisfactory method is yet to emerge. Managing Debt and Investments The role of government is wide as it manages various aspects like managing and repayment of the timely debt, managing the assets, and the investment by the government to decide the value of holding and benefit from it. Development Schemes and Projects Modern government incurs a huge amount for the development of both rural and urban folks, apart from gender equity. Effects of Public Expenditure on Distribution : In the modern times the Government modifies the free working of market mechanism in re­spect of income distribution not only through devising proper tax structure but also through various forms of public expenditure.

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What is Public Expenditure Management (PEM)?

define public expenditure

Part of the expenditure is obligatory in nature e. Earlier writers attached to the classical school, were opposed to increasing public expenditure for two main reasons. Nicholson classified public expenditure according to the amount of revenue the state realizes in return for the services which it per­forms through public expenditure. Expenditure on postal service is an example of variable expenditure. Variable expenditure varies with the number of people using the service provided by the state.

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What does public expenditure mean?

define public expenditure

Hence in the modern world public expenditure in­fluence the national economy in a manifold manner. . Government must prepare budget to create a surplus. At the same time we would not start from the posi­tive assertion that all public expenditure is good. Voluntary Exchange Theory of Lindhal for Determination of Public expenditure. Canon of Benefit — public spending must be done in a manner that it brings greatest social benefits.


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Public Expenditure: Meaning and Principles

define public expenditure

This calls for more rapid growth of public expenditure. For achieving this canon, public expenditure should be planned according to specific programmes and prioritized as per the availability of funds. Hence the diversion of resources from private to public sector for the con­struction of basic infrastructure and for preservation and conserva­tion of scarce resources is very essential for economic development. All those expenditures of Government which promote economic growth are called developmental expenditure. Effects of Public Expenditure : Public expenditure is an important fiscal instrument to secure many fold social objectives in an economy. It is worthwhile to mention that whereas in case of transfer payments, it is the beneficiaries that decides about the use of resources, in the case of non-transferable type of expenditure, the Government itself decides about the use of real resources, especially whether they are to be used for consumption or investment purposes.

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Public Expenditure: Meaning, Definition, Classification, Types, and Principles

define public expenditure

This is because it will involve governments to re-plan and allocate resources to finance the reconstruction. It is further divided into subsidiary functions. It is fused with public revenues to raise capital for public welfare and creating a balance in the use of resources. Aggregate fiscal discipline refers to the alignment of public expenditures with total revenues domestic revenues plus a sustainable level of foreign borrowing ; roughly speaking, it means keeping government spending within sustainable limits. Economists often recommend that public spending should be limited to activities and functions that fit in the purest role of the government. In India and other developing countries, such development projects are un­dertaken through the planning system. This canon requires that the public authorities should spend money, only after obtaining prior sanction from the concerned authority for the specified purpose.

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