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

Public expenditure has grown because of the welfare and development activities of the modern state, rising defence spending, population growth and urbanisation, growth of democracy and administration, inflation (rising prices), increasing public debt and its interest burden, and grants to states/local bodies.

Reasons for the growth of public expenditure

1. Welfare activities of the state — the modern state is a welfare state that spends heavily on education, health, housing, social security, and subsidies for the poor, all of which raise expenditure.

2. Economic development activities — governments invest large sums in infrastructure such as roads, railways, power, irrigation and industries to promote growth, especially in developing countries like India.

3. Rising defence expenditure — the need for modern arms, equipment and a larger defence force, along with growing internal security requirements, greatly increases spending.

4. Growth of population and urbanisation — a rising population and rapid urban growth require more spending on civic amenities, water supply, transport, sanitation and public services.

5. Inflation and rising prices — a general rise in prices increases the money cost of every government activity, salary and purchase, pushing up total expenditure.

6. Growth of democracy and administration — democratic government, elections, a larger bureaucracy and more administrative machinery add to expenditure.

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