Define public expenditure. What is Public Spending? 2022-12-23

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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.

What is Public Expenditure? Causes, Effects, Causes of Public Expenditure

define public expenditure

This classification is also subject to criticism. Government expenditure: ADVERTISEMENTS: Public expenditure refers to the expenditure incurred by the central government. Development Schemes and Projects Modern government incurs a huge amount for the development of both rural and urban folks, apart from gender equity. Explanation Every country needs money to run. In what follows, we shall study the types of public expenditure, the causes of growth of public expenditure and its effects on production, distribution and economic growth in both the devel­oped and the developing countries. ADVERTISEMENTS: Duplication of expenditure and over­lapping of authorities should be avoided.

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What does public expenditure mean?

define public expenditure

Second half of the 20th century. Public expenditure refers to the expenses which the Govern­ment incurs for its maintenance as also for the economy as a whole. Thinkers said government should stay with their traditional functions of spending on defence and maintaining law and order. The term can also refer to the amount that is spent. What Does Public Spending Mean? Such expenditure helps to reduce the glaring inequality existing in the distribution of income. Public expenditure designed to increase the efficiency of the people will certainly improve their ability to work. Functional classification is based on a classification of the various functions actually performed by public authorities.

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

define public expenditure

It is the duty of the state to make adequate provision for the future generation. This division is not free from imperfections. He also considered all public expen­diture as unproductive and private expenditure as productive. Democracy A democratic political system tends to increase government expenditure. Scope The scope of public finance is not limited to managing the finance.

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Public Expenditure: Meaning, Importance, Classification and Other Details

define public expenditure

This inflation hurts the poor most and will therefore cancel out the desired distributive effects of public expenditure. ADVERTISEMENTS: Hence a completely satisfactory method is yet to emerge. It is otherwise called ornamental expenditure. Most of this increase was given by growth of military spending caused by World War II. This principle is more beneficial in those countries where a huge disparities is found in income distribution. The latter includes expenditure on the payment of interests on governmental debt, pen­sion etc.

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Public Finance

define public expenditure

Allocative efficiency on the other hand refers to the consonance of budgetary allocations with strategic priorities: are budgetary resources being allocated to programs and activities that promote the strategic priorities of the country? However, it is fair to mention that part of this increase of public expenditure share was caused by GDP fall. However recently there occurred a rethinking about the budgetary policy. We discuss the public finance functions, objectives, scope, components, and importance. The United States increased its public expenditure with the New Deal. Hence Mill, Roscher, Plehn, Nicholson, and Bastable have their methods. Such variation in public expenditure is necessary to control business cycles.

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Public Expenditure: Meaning, Classification and Effects

define public expenditure

These are unproductive in nature. When the state incurs expenditure and does not get any commodity or service in return, the expenditure is classified as a grant. Expenditures carried out for benefiting the poor people such as those on social services like free medical treatment, free education, unemployment benefit etc. It is recurrent in nature, that is, it has to be incurred almost every year. Existing cities expand and new cities come up.

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2022 UPDATED!!! Definition of Public Expenditure

define public expenditure

It is fused with public revenues to raise capital for public welfare and creating a balance in the use of resources. At times of depression in an industrialised developed economy, there is idle productive capacity on the one hand and unemployed manpower on the other. Mehta made a two way classification of public expendi­ture. One of its major effects includes redistribution of resources among the underprivileged classes and maintaining a balance in the economy. It can be considered as a redistribution of income within the society, for the society. Economists often recommend that public spending should be limited to activities and functions that fit in the purest role of the government.

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What is Public Expenditure Management (PEM)?

define public expenditure

Corresponding to the principle of minimum sacrifice in taxation, there is the principle of maximum benefit in public expenditure. This gain can be given in the form of medical help, education, house construction and old age pension. It should be noted that the Government in India has not only been bor­rowing from within the country but also from abroad through foreign aid or commercial loans from private capital markets to finance her development plans. In the 17th and the 18th centuries public expenditure was considered as a wastage of money. Hence public expenditure in the form of subsidies and grants is helpful in directing the resources of the people to establish new industries as well as to accelerate production of existing industries. Economists have proposed various methods of classifying pub­lic expenditure.

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Public Expenditure

define public expenditure

Alternatively, public expenditure may bring about a better allo­cation of economic resources between the present and the future. These debt service charges have resulted in enormous increase in public expenditure. It has now been realised that the expenditure on education and public health promotes the growth of what is called human capital which promotes economic growth as much as physical capital, if not more. The provision of free residence only to higher paid gov­ernment employees and not to low paid employees is a typical ex­ample of regressive expenditure. Too large inequalities in income distribution as produced by the free working of market system are not only socially unjust, but also not conducive to the maximisation of social output.

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