items of government expenditure

Hence in the modern world public expenditure in­fluence the national economy in a manifold manner.

This classification is also subject to criticism. What Grade Is Freshman, Justify­ing this, J.B. Say observed “the very best of all plan of finance is to spend little”. On the whole, public expenditure exerts a wholesome influence on production.

However, if this expenditure is looked at from a longer point of view then the state pays interest in return for the loans that is secured in an earlier period. India also envisages a more equitable distribution of wealth. Prof. Findlay Shirras classified public expenditure into (a) Primary expenditure and (b) Secondary expenditure. Whereas expenditure on social security measures is optional. In-spite of the fact that public expenditure has increased rapidly during the last two centuries, in almost every state the area of public expenditure re­mains relatively unexplored”. Public expenditure […] Your email address will not be published. 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. It is mandatory on the part of the government to incur obligatory expenditure. Effects. However, the methods differ widely from one an­other. Exercise Games,
Satisfaction of special benefit may lead to generation of com­mon benefit. For instance, Revenue and Capital expenditure indicates the creation of assets by government expenditure and unproductive expenditure. It involves listing the government expenditure by significant economic categories, separating current expenditure from capital expenditure, spending for goods and services from transfers to individuals and institutions, inter-governmental loans from grants etc. Non-transfer expenditure implies the actual using up of com­modities and services which would otherwise have been available for some other purpose. The budget also divides authorized expenditure into that which can be carried out without action by Congress and that which …

Hence the need for expenditure comes first and this in turn gives rise to the need to raise revenue. By ensuring peace and tranquility defence ensures the smooth growth of productive activity and national income. He gives the following four classes of public expenditure: (a) Firstly expenditure without any direct return of revenue, example poor relief and also the losses sustained in war.

As a result, the CPI changes more with the change in the food process as compared to the WPI. Whereas transfer expenditure does not create any income or output. It includes expenditure on defence, maintenance of law and order, civil administration, payment of debt etc. The best example is subsidy and interest offered by the government on public debt. The underlying principle is why should a person work hard and save, when he knows fully, that he will be looked after by the government when he is not in a position to earn any income. Ajith Kumar Son, Nicholson classified public expenditure according to the amount of revenue the state realizes in return for the services which it per­forms through public expenditure. Prudently planned public ex­penditure can certainly bring about diversion of resources as be­tween regions which will improve the economic position of backward areas, and thereby increase production and employment.

It means the expenses of the public authorities – central, state and local governments – either in protecting the citizens or in promoting their social and economic welfare. The expenditure on defence is a clear example for constant expenditure. To meet such expenditure, the government diverts economic resources from the general public to the government. The capital stock of a country depends upon savings or the surplus over consumption. It will increase social welfare and efficiency of production. With the ad­vent of Keynes general theory, public expenditure came to be looked upon as an indispensable fiscal instrument of securing social wel­fare and correcting economic instability. Dalton observes that system of public expen­diture is the best, which has the strongest tendency to reduce the inequalities of income. To quote Dalton, “payments by a public authority to any of its employees by way of salaries and wages or to contractors whom it employs, are pur­chase prices. Government expenditure on public works programmes has also favorable effect on produc­tion and employment. The worldwide depression of Nine­teen thirty’s and the global war made a rethinking in the nature of state activity and the need and necessity for increased public spend­ing. It includes both development and non-development ex­penditure. It the state commits to perform any activity it must incur some expenditure. Dragon Ball Raging Blast Pc Requirements, Jaws Filming Locations Map, Registered office: Venture House, Cross Street, Arnold, Nottingham, Nottinghamshire, NG5 7PJ. Government budget - Government budget - Components of the budget: In the United States the budget for each fiscal year contains detailed information on the outlays intended by the federal government and the receipts expected, including those from trust funds.

In other words, the object of public expenditure may be either to keep social life secure and ordered or to make that secure and ordered life better worth living whether from an economic or non-economic point of view. This classifica­tion is overlapping. How To Prevent Earthquake Damage Home,

Hence Mill, Roscher, Plehn, Nicholson and Bastable have their own methods. The removal of or reduction in inequality in the distribution of wealth has now universally been recognized as an important objective of state policy. They are complementary rather than competitive in char­acter. 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.

(d) Fourthly, those items of expenditure which confer a special ben­efit only on some individuals; e.g., certain industries specially favored by the state (granting subsidy). There is no clear cut dividing line between institutions maintaining law and order and those that promote progress. Justifying this Mrs. Hicks states it is more logical to start with public expenditure. Finally public expenditure, particularly repayment of public debt, will place additional funds at the disposal of those who can invest. She teaches economics at Harvard and serves as a subject-matter expert for media outlets including Reuters, BBC, and Slate. In this context Bastable, a well-known writer of the 19th century remarked that “the rapid development of financial study in recent years has led to a careful examination of the more backward divisions of the subject in-order to bring them into scientific form. Whereas capital expenditure includes all capital transactions. This so­cial problem is undesirable on many grounds ethical, economic and political, among others. Hence a completely satisfactory method is yet to emerge.

The state on the other hand is the custodian of the interest of the future generation. For example, social expenditure on old age pension, poor relief etc. The theory of public expenditure has been more or less confined to that of generalities in terms of the effects of public expenditure on employment and price level.

For example, public expendi­ture on education, medical services, cheap housing facilities etc.

We shall now explain these effects in detail; Public expenditure can influence ability to work, save and invest either favorably or unfavorably. Account Disable 11. As Le-well Haris says “the economists have generally concentrated their attention on the theory of taxation. He also recognized the fact that every item of public expenditure cannot be placed wholly under one or other class and hence a clear cut distinction cannot be drawn between them. Hence public expenditure should be regulated in such a way that it may not adversely affect the incentive to work of the people. Whereas public expenditure is unproductive if it does not add to enhancing the productive capacity of the nation. After reading this article you will learn about:- 1.

This act as a sort of timely help. The tenth five year had an objective of atleast 8% growth rate by providing a boast to power sector spending (26.56%) and increasing social & Community services sector spending to 29.27%.Consumer Price Index (CPI), is defined as the weighted average change over time in the prices of a basket of the good and services consumed by a consumer. Florence, Oregon, Learn how your comment data is processed.


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