Public expenditure is considered as an important tool of fiscal policy. Public expenditure creates and increases the scope of employment opportunities during depression . Thus, public expenditure can prevent periodic cyclical fluctuations.
What are the functions of public expenditure?
Public spending is considered to be an important tool of fiscal policy, which includes all consumer goods, investment payments and redistribution of the income. The government uses them to speed up economic growth by increasing the demand for productive public goods (Slemrod, 1995).
What is the role of public expenditure in economic development?
Public expenditure promotes economic development in the following ways: Social and Economic Overheads: Economic development is handicapped kin underdeveloped countries on account of the lack of the necessary infrastructure. ... Public expenditure has to build up the economic and social overheads .
What is the role of expenditure?
Public expenditure can also be used to improve income distribution , to direct the allocation of resources in the desired lines and to influence the composition of national product. In the developing countries also, the role of public expenditure is highly significant.
What is the importance or role of public expenditure?
Public expenditure is considered as an important tool of fiscal policy. Public expenditure creates and increases the scope of employment opportunities during depression . Thus, public expenditure can prevent periodic cyclical fluctuations.
What are the major principles of public expenditure?
- Principles of Public Expenditure:
- These principles are:
- Principle of Maximum Social Benefit:
- Canon of Economy:
- Canon of Sanction:
- Canon of Elasticity:
- No Adverse Influence on Production or Distribution:
- Principle of Surplus:
What are the three major ways of public expenditure?
three major components: spending by government, private investment spending, and spending by consumers .
What are the types of public expenditure?
- 1# Capital & Revenue Expenditure.
- 2# Development & Non-Development Expenditure.
- 3# Transfer & Non-Transfer Expenditure.
- 4# Plan & Non-Plan Expenditure.
What are the classifications of public expenditure?
Classification of Public Expenditure
Prof. Adam Smith has classified public expenditure on the basis of functions performed by the government. They are defence expenditure, commercial expenditure and development expenditure .
What is the means of public expenditure?
Public expenditure is spending made by the government of a country on collective needs and wants such as pension, provisions (such as education, healthcare and housing), security, infrastructure, etc. ... Sources of government revenue include taxes, and non-tax revenues.
What are the sources of expenditure?
Expenditure can include living expenses (e.g. food, clothing, entertainment) , accounts (e.g. water, electricity, telephone), fees (e.g. school fees), insurance (e.g. for a car or house), taxes and loan repayments (e.g. to pay off your store account).
What are the two main canons of public expenditure?
A major canon of public expenditure is the canon of maximum social benefit . It implies that public expenditure should be incurred carefully and economically. Economy here means avoidance of extravagance and wastages in public spending. Public expenditure must be productive and efficient.
Which is the main law of public expenditure?
Wagner’s law of state , is known as the law of increasing state spending, is a principle named after the German economist Adolph Wagner (1835–1917). He first observed it for his own country and then for other countries. The theory holds that for any country, public expenditure rises constantly as income growth expands.
What is the principles of expenditure?
The main principles or canons of public expenditure are as follows: (i) The Principle of Maximum Social Advantage : The government expenditure should be incurred in such a way that it should give benefit to the community as a whole. The aim of the public expenditure is the provision of maximum social advantage.
Who controls public expenditure?
In a parliamentary democracy, the political executive is responsible to the Parliament. The control exercised by the Parliament over the executive is its control on financial expenditure. This is exercised in two ways.
How is public expenditure paid?
Public expenditure can be financed through taxes, public debt, money emission, international aid . First, public expenditure can be classified in terms of the kind of goods and services bought, also with very general items: 1.
