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Public Expenditure

Public Expenditure Meaning - Need/Importance/Significance 1.Collective wants and social welfare 2.Socio-economic overheads 3.Balanced Regional Growth 4.Development of Agricultural and Industrial Sectors

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Public Expenditure

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  1. Public Expenditure • Meaning - • Need/Importance/Significance • 1.Collective wants and social welfare • 2.Socio-economic overheads • 3.Balanced Regional Growth • 4.Development of Agricultural and Industrial • Sectors • 5. To promote Trade and Commerce • 6.Rural Development

  2. 7. Full Employment 8. Price Stability 9. Equal Distribution of Income 10. Rapid Economic Development Classification/Types of Public Expenditure Revenue and Capital Expenditure Productive and Unproductive Expenditure Transfer and Non-Transfer Expenditure Plan and Non-Plan Expenditure Dalton’s Classification

  3. Revenue and Capital Expenditure Revenue Expenditure –Consumption Expenditure- Public administration, defenceforces, public health and education, maintenance of Govt. machinery, subsidies and interest payments Classified – i. Development Expenditure Contributes to the development of the country. Example- maintenance of education and public health infrastructure –

  4. Human Development, Productive of Capital ii. Non-Development Expenditure Not directly contribute to economic development Example –Administrative expenditure, interest payments. Capital Expenditure –Form of investment-Add net productive assets- Classified- i. Development Expenditure -

  5. Example- Agricultural and Industrial Development, Public Enterprises. ii. Non-Development Expenditure- Example- Expenditure on Defence and Administration b) Productive and Unproductive Expenditure- Productive Expenditure-Social-Economic Overhead, Infrastructure Facilities, Public

  6. Utilities – Electricity, Water Supply, Educational and Health Facilities etc. Tax and Non-Tax Revenue Unproductive Expenditure – Example – Expenditure on Defence and Administration c) Transfer and Non-Transfer Expenditure- Transfer of resources from one group to another – Equality and Social Justice- No output and Income

  7. Example – >Subsidies >The Tax Revenue raised from the rich and distributed to the poor > Pensions > Financial aid between countries Non-Transfer Expenditure – Purchases current services of productive resources – creates output and income Example – Public Administration, Defence, Development Plans etc.

  8. d) Plan and Non-Plan Expenditure – Plan Expenditure - Included in ongoing five - year plan Example – Implementation of NREGS, Sarva Shiksha Abhiya ect. Non-Plan Expenditure - Not included in ongoing five - year plan Example – Defence and Internal Security. e) Dalton’s Classification-

  9. i. Administrative Expenditure – To maintain the general administration ii. Security Expenditure - To maintain the armed forces and police forces iii. Development Expenditure – To promote growth and development iv. Social Expenditure – On public health, welfare, social security.

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