Explain various reasons for the growth of government’s public expenditure.

Answer: Public expenditure has grown because of defence needs, welfare state, rising population, urbanisation, development planning, price rise, debt servicing, democracy and disasters.

Public expenditure is the expenditure incurred by the central, state and local governments to perform their functions. It has increased steadily in India for the following reasons:

1. Defence expenditure: Tensions with neighbouring countries and modernisation of the armed forces require huge spending on defence.
2. Welfare state: As a welfare state, the government spends on education, health, housing, social security, pensions and subsidies.
3. Growth of population: Rising population requires more spending on public services such as schools, hospitals, water supply and transport.
4. Urbanisation: Growth of cities needs expenditure on roads, transport, sanitation, electricity, water and law and order.
5. Economic development and planning: The government spends on infrastructure (roads, railways, power, irrigation, communication) and on agriculture and industry.
6. Rise in prices (inflation): Higher prices raise the cost of goods and services bought by the government and its wage bill.
7. Public debt: Repayment of loans and payment of interest on public debt have increased.
8. Democracy: Elections, legislatures and a large administrative machinery cost money.
9. Maintaining law and order: Spending on police, judiciary and internal security has increased.
10. Natural calamities: Relief and rehabilitation after floods, droughts, earthquakes and pandemics need large funds.
11. Employment schemes and rural development: Programmes like MGNREGA and poverty alleviation schemes raise expenditure.