Public expenditure has increasingly grown over time to fulfill three main roles: protecting society, protecting individuals, and funding public works. The growth can be attributed to several causes like increased income, welfare state ideology, effects of war, increased resources and ability to finance expenditures, inflation, and effects of democracy, socialism, and development. There are also canons that govern public spending like benefits, economy, and approval by authorities. The effects of public expenditure include impacts on consumption, production through efficiency, incentives and allocation, and distribution of resources.

1. Public Expenditure
BSC AGRI 2
PAE
UNIT 4

2. Increasing trend of public expenditure
• - To protect society from violence and invasion
• -to protect every member of society from the
injustice or oppression of every other
member.
• - to create and maintain certain public works
and certain public institutions which can never
be in the interest of any person or group of
persons.

3. Causes of public expenditure growth
• The rising trend of public expenditure in modern times may attributed to a
multitude of causes.
• -Income elasticity and increase in Per Capita Income according to
Musgrave.
• -Welfare State Ideology and Wagner’s Law.
• -Effects of war and need for defence
• -Resource Mobilization and ability to finance
• -Inflation
• -The role of democracy and socialism
• -The Urbanization effect
• -The Rural development Effect
• -The Population Effect
• -The Planning Effect

4. Canons of Public expenditure
• The fundamental rules or principles governing
the spending policy of the government
• - Canon of benefit
• -Canon of economy
• -Canon of sanction, This suggests that no
public spending should be b made without the
approval of proper authority
• -Canon of surplus

5. Effects of public expenditure
• -Effect on consumption
• -Effect on production
• -Following Dalton, we may specify the three inter-
related effects of public expenditure on production,
as under:
• -Efficiency effect,
• -Incentive effect,
• - Allocative effect
• -Effect of public expenditure on distribution

6. SOURCE
• www.up.edu.ps/ocw/upinar/moodledata/248
/Public_Expenditure.ppt