Public Expenditure

The rising trend of public expenditure has been a common phenomenon in modem times both in developed and underdeveloped countries. The earlier social philosophy of laissez faire stands discredited under the impact of Keynesian revolution. Again public expenditure is the starting point of all activities of the state. Other branches of public finance depend on the nature and scope of public expenditure. A lower public expenditure necessitates lower revenue to be collected. The government borrows less and governmental activities become limited. Increase in public expenditure increases the activities of the state and necessitates higher resource mobilization through taxation and public borrowing. Public expenditure plays the same role in public finance as consumption plays in economics.

Meaning of Public Expenditure

Public expenditure refers to the expenditure incurred by the public authorities (central, state and local governments) to satisfy the collective wants of the people and to promote their economic and social welfare.