Public expenditure has to play an important role in economic development of a country. Public expenditure has been classified as below.
1. Defense: the defense of a country has been one of the main factors responsible for increasing public expenditure. Large amounts are spent on preparation or on adopting means for the prevention of a war.
2. Economic development: the state has to give top priority to economic development. Economic development is a costly affair. Lot of money has to be spent on economic development.
3. Social services: there has been a remarkable expansion in social services of a country like education. Health etc. such expenditure builds up human capital.
4. Administration: the modern states are no longer police states concerned with the maintenance of law and order. They are now regarded as welfare states. The law, security and administrative functions are being performed by the state. These functions need expenditure.
5. Grants to provincial governments: the central governments allocate to the provincial government and the provincial governments give grants to local authorities to incur some desirable expenditure.
6. Subsidies: Subsidies have also to be given to encourage the production of certain goods especially for export to earn much-needed foreign exchange.
7. Exploitation of natural resources: the government has to under take schemes of exploration and development of essential resources like coal, oil and other minerals. Public expenditure has to play its role.
1. Defense: the defense of a country has been one of the main factors responsible for increasing public expenditure. Large amounts are spent on preparation or on adopting means for the prevention of a war.
2. Economic development: the state has to give top priority to economic development. Economic development is a costly affair. Lot of money has to be spent on economic development.
3. Social services: there has been a remarkable expansion in social services of a country like education. Health etc. such expenditure builds up human capital.
4. Administration: the modern states are no longer police states concerned with the maintenance of law and order. They are now regarded as welfare states. The law, security and administrative functions are being performed by the state. These functions need expenditure.
5. Grants to provincial governments: the central governments allocate to the provincial government and the provincial governments give grants to local authorities to incur some desirable expenditure.
6. Subsidies: Subsidies have also to be given to encourage the production of certain goods especially for export to earn much-needed foreign exchange.
7. Exploitation of natural resources: the government has to under take schemes of exploration and development of essential resources like coal, oil and other minerals. Public expenditure has to play its role.
