Q.Explain various reasons for the growth of public expenditure.

Public expenditure has grown enormously because of the rise of the welfare state, higher defence and security spending, growth of population, rapid urbanisation, inflation/rising prices, spending on economic development and planning, growth of public debt (interest payments) and increased administrative costs. Any several of these explain the growth.

Meaning: Public expenditure means the expenditure incurred by public authorities — central, state and local governments — to satisfy the collective needs of the people and to promote economic and social welfare. In modern times such expenditure has been rising continuously, for the following reasons:

1. Expansion of state functions (welfare state): The modern state is a welfare state that provides education, health, housing, social security and many other services, all of which raise expenditure.

2. Increase in defence expenditure: Growing security needs, modernisation of the armed forces and costly modern weapons have greatly increased defence spending.

3. Growth of population: A rising population increases the demand for public services like schools, hospitals, water and transport, raising government spending.

4. Rapid urbanisation: The growth of towns and cities requires heavy spending on roads, water supply, sanitation, electricity and other civic amenities.

5. Economic development and planning: Governments spend large amounts on infrastructure, irrigation, power, industries and development plans to promote growth.

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