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Government expenditure

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india's public expenditure and its growth, should india go for expansionary fiscal policy, areas affected

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Government expenditure

  1. 1. GOVERNMENT EXPENDITURE AND ITS RELATION WITH OTHER ECONOMIC VARIABLES
  2. 2. GOVT. EXPENDITURE  Agriculture (irrigation, flood control,subsidies)  Rural development  Energy  Population Growth and Urbanisation  Maintaining Economic Stability (inflation and employment)  Capital formation  Mounting Debt Service Charges (return of loans and borrowings)  Anti-Poverty Schemes  Improving overall GDP
  3. 3. Types of govt. expenditure Public expenditure REVENUE EXPENDITURE DEFENCE ADMINISTRATION SUBSIDIES SALARIES INTEREST PAYMENTS CAPITAL EXPENDITURE R&D TRANSPORT HEALTH EDUCATION INDUSTRIAL UNITS IRRIGATION PROJECTS INVESTMENT
  4. 4. Should India go for expansionary fiscal policy? Two ways to revive economy- A) lowering interest rates B) expansionary fiscal policy FACTS: 2013-2014 - combined fiscal deficit was 6.78 percent of the GDP Total liabilities of the Central government- 46.3 percent of GDP Falling revenues- 2013-2014: tax revenue:9.06% of GDP non-Tax revenue: 1.70 % of GDP The important fact is though our liabilities are decreasing our revenue sources are also decreasing. Our interest payments have however increased to 3.79% in 2013-14. The big question?
  5. 5.  "Many big emerging nations including China, Russia and Brazil just tried a full- throttle experiment in stimulus spending, and it failed. The average growth rate for emerging economies excluding China has fallen to 2.5% today, from more than 7% at the height of the spending campaign in 2010. That is the lowest growth rate in four decades, outside of a global recession.“ Ruchir Sharma of Morgan Stanley At the end of the day what matters is not the quantity of spending but the quality of spending.  Increasing public spending by the government may not be the best way to go about reviving economic growth.
  6. 6. UNEMPLOYMENT AND POVERTY INDICATORS 1973-74 1983-84 1993-94 2004-05 2011-12 Population growth (in crores) 54.8 68.3 84.6 102.8 121+ PER CAPITA INCOME (2004-05) (RS) 10688 12894 16736 26629 41225 POVERTY RATIO (%) 54.9 44.5 36 27.5 21.9 Unemployment rate (%) 4.86 9.60 6.91 5.54 8.93 PUBLIC EXPENDITURE (IN BILLIONS) 118.38 332.48 880.81 1931.14 10304.61 INCREASE IN PUBLIC EXPENDITURE (%) - 280.86 264.92 219.25 533.60 Labor Force Statistics from the Current Population Survey
  7. 7.  VARIOUS SCHEMES- Indira Awas Yojana, Anantodaya, minimum needs programme, Integrated urban poverty eradication programme, MGNREGA, JRY, etc.  Definitely in terms of percentage poverty has come down, but in absolute terms the question is still unanswered?  The fault lies not in policies as India has so many poverty schemes and a very large amount Govt. spends on these. Fault lies in the implementation of these schemes.  Middle men do not let the schemes to reach the grass-root level.
  8. 8.  EDUCATION  HEALTH  WATER SUPPLY AND SANITATION  FAMILY WELFARE etc. SOCIAL SERVICESAND PUBLIC EXPENDITURE INDICATORS 1990-91 1994-95 2000-01 2004-05 2010-11 GDP(IN BILLIONS) 5862.12 10455.90 21774.13 32422.09 77953.13 %OF EXP ON EDUCATION/GDP 4.01 3.56 4.33 3.69 GROWTH RATE OF PUBLIC EXP ON HEALTH 1.94 17.59 10.76

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