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Questions and Answers
Which of the following is a trend in public expenditure?
What is NOT an objective of public expenditure?
In which classification does regular operational expenses, such as salaries and maintenance, fall under public expenditure?
What is a key challenge related to public expenditure?
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Which classification of public expenditure focuses on routine expenditures like interest payments?
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Which recent initiative aims to enhance infrastructure investment?
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Public expenditure can stabilize the economy through which of the following?
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How does public expenditure primarily contribute to reducing inequalities?
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Study Notes
Indian Public Finance: Public Expenditure
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Definition: Public expenditure refers to the expenses incurred by the government in providing public goods and services.
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Objectives of Public Expenditure:
- Economic development
- Redistribution of income
- Provision of public goods
- Stabilization of the economy
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Classification of Public Expenditure:
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Functional Classification:
- Economic Services: Infrastructure, agriculture, industrial development
- Social Services: Health, education, welfare programs
- General Services: Defense, police, administrative services
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Resource Classification:
- Revenue Expenditure: Regular operational expenses (salaries, maintenance)
- Capital Expenditure: Investments in assets (infrastructure projects, equipment)
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Growth Classification:
- Development Expenditure: Investments aimed at economic growth (development programs)
- Non-Development Expenditure: Routine expenditures (interest payments, subsidy)
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Trends in Public Expenditure:
- Increase in social sector spending (health and education)
- Rising capital expenditure for infrastructure projects
- Growing emphasis on welfare schemes
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Importance of Public Expenditure:
- Promotes economic growth by investing in infrastructure and services
- Reduces inequalities through subsidization and welfare programs
- Stabilizes the economy through fiscal policies
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Challenges:
- Fiscal deficits and sustainability of public debt
- Inefficiencies and wastage in spending
- Balancing growth and social equity
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Recent Initiatives:
- National Infrastructure Pipeline: Boosting investments in infrastructure
- Direct Benefit Transfer Scheme: Reducing leakages in subsidy distribution
- Focus on Sustainable Development Goals (SDGs) through targeted spending
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Impact of Public Expenditure:
- Improvement in living standards through better health and education
- Job creation in various sectors
- Enhanced economic stability and growth prospects
Public Expenditure in India
- Public expenditure: Government spending on public goods and services
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Objectives of Public Expenditure:
- Economic growth by investing in infrastructure and services
- Income redistribution through welfare programs
- Provision of public goods
- Stabilization of the economy through fiscal policies
Classification of Public Expenditure
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Functional classification: Categorizes spending based on its function
- Economic services: Includes infrastructure, agriculture, and industrial development
- Social services: Includes health, education, and welfare programs
- General services: Includes defense, police, and administrative services
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Resource classification: Categorizes spending based on its impact on assets
- Revenue expenditure: Regular operational expenses like salaries and maintenance
- Capital expenditure: Investments in assets, such as infrastructure projects and equipment
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Growth classification: Categorizes spending based on its impact on economic growth
- Development expenditure: Investments aimed at economic development, such as development programs
- Non-development expenditure: Routine expenditures, such as interest payments and subsidies
Trends in Public Expenditure
- Increased social spending
- Higher spending on health and education
- Increased capital expenditure
- Rising investments in infrastructure projects
- Growing emphasis on welfare schemes
- Focus on providing essential services to vulnerable populations
Challenges to Public Expenditure
- Fiscal deficits
- Government spending exceeds revenue
- Sustainability of public debt
- Long-term ability to repay government debt
- Inefficiencies and wastage in spending
- Need to improve transparency and accountability
- Balancing growth and social equity
- Ensuring that public spending benefits all segments of society
Recent Initiatives
- National Infrastructure Pipeline
- Boosts investments in infrastructure to promote economic growth
- Direct Benefit Transfer Scheme
- Reduces leakages in subsidy distribution by transferring funds directly to beneficiaries
- Focus on Sustainable Development Goals (SDGs)
- Targeted spending to achieve social and environmental goals
Impact of Public Expenditure
- Improved living standards through better health and education
- Job creation in various sectors
- Enhanced economic stability and growth prospects
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Description
This quiz explores the concept of public expenditure in India, highlighting its objectives, classifications, and importance in economic development. It covers functional, resource, and growth classifications, helping you understand how government spending affects society. Test your knowledge on this vital aspect of public finance.