Question

Why are public expenditures important?

Answer 1

Public expenditure are the expenses or spendings incurred by government be it central, state or local. These expenditures are made for benefit of the society such as in the fields of education, healthcare, infrastructure etc. and the maintenance of the government.

Public expenditure is considered as a very important aspect;

• Growth and development : Public expenditure is required for growth and development of poorer nations. Without its support countries cannot make investments for growth. It has a very positive impact on employment oppurtunities, industrialization etc.
• Distribution of income : Public expenditures are used to bring equal distribution of income and wealth, by providing subsidies, healthcare facilities and free education to poorer sections of the society.
• Instrument of fiscal policy : It is considered as an important instrument of fiscal policy. Public expenditures help economy at the times of recession and depression by providing employment oppurtunities. Also, when economy is facing high inflation government can reduce its expenditure to face this situation.