Public Finance

1. Public Expenditure
-To satisfy collective social wants.
We have current expenditure and developmental
expenditure?
-Importance and objects of public expenditure
-Building economic overhead, etc.
-Bringing about balanced regional growth.
-Augmenting the development of agriculture and
industry.
-Bring about rural development

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