In India the population has been increasing at an alarming rate since independence. In most states in India education upto the middle class is free and for higher levels wards of the poor people are either given free education or charged only low fees. This helps to push the economy out of depression and to raise levels of income and employment. Members of the public called for the mayor's resignation. It is equally vital to ensure that the government expenditure is solely in the public interest and does not serve any private interest or that of any group of persons.
During recessions, tax revenue tends to fall, public budget usually degradates. It will be further noticed that the increase in national output i. The size of pubic expenditure was very small. Anti-Poverty Schemes: Another important cause of increasing public expenditure in India is huge expenditure which he Government is incurring on employment generating anti- poverty schemes. India had to fight three wars since independence. It has now been realised that economic growth alone will not eradicate poverty, at least in the short run.
Payments of are not comprehended as well. A poor country like India has to safeguard its hard earned freedom and this involves a lot of expenditure on building up efficient and adequate armed forces. Public funds are state, regional and local Government bodies and social security schemes. Such expenses are classified as unproductive expenditures. Past choices have relevant impact on public expenditure because of inertia and incrementalism. The government collects revenue S by imposing taxes and selling bonds. At a point before P, i.
To conclude with Paul Samuelson and W. Purchase prices :- Purchase prices are expenditures for which the government receives goods and services in return. This seems to be the most important point about the long-run impact of huge amount of public debt on economic growth. It will be useful to discuss this with reference to India. Firms have to decide whether to increase production or in response to demand.
This is why the government transfers income or purchasing power from one section of society to another through various tax-subsidy measures. The general public is in favor of the law. The city council is holding a public meeting. This will be her first public performance in five years. Determinants Public expenditure is determined by political will of the leading forces in the state: their priorities, their desired state model, and their interpretation of current economic and political phase. On the other hand, capital expenditure is incurred on building durable assets.
However, care has to be taken to ensure that taxes are not too high to have unfavourable effects on incentives to produce earn and save. One of the most obvious and significant burdens of the national debt is the interest that must be paid to borrow and maintain a debt of this magnitude. Thus an economy grows much faster without public debt than with debt. But if the deficit happens to be a regular feature every year, then the proper course for the State would be to raise further revenue by taxation or reduce its expenditure. A pertinent question is what the causes of this phenomenal growth are in public expenditure. Both the welfare and developmental state include the items of the minimal state.
Meaning, Definition refers to Government expenditure i. Since, in most cases, taxpayers and bondholders are different entities, a large national debt inevitably involves income redistribution effects. Public capital formation on health includes publicly-financed investment in health facilities plus capital transfers to the private sector for hospital construction and equipment. Internally also in view of clash of linguistic, territorial and political interests, lot of expenditure has to be incurred on maintaining internal security. The tax that they will pay will be revealed by them according to their capacities.
Cost of supplying a good will be taken up by the people. Being labour-intensive, the growth of these industries generates a large number of employment opportunities which improve income distribution. Transfer payments refer to those kinds of expenditure against which there is no corresponding transfer of real resources i. While, under normal conditions, this is not a serious concern, in a period of accelerated repayment it would mean a sizable outflow of rupees from the India. For this, it is necessary to reduce poverty and inequality. Mounting Expenditure on Subsidies: Governments, both in the developed and developing countries, incur a lot of expenditure on subsidies to the various sections of population. This revenue expenditure is of recurrent type which is incurred year after year.