Question

Write explanatory note.

Government expenditure.

Answer 1

Government expenditure refers to the total planned expenditure incurred by the government on consumption and investment purposes to enhance the welfare of the society and to achieve higher economic growth rates. The government expenditure comprises of both investment expenditure as well as consumption expenditure.

i. Government consumption expenditure: Such expenditure includes government's expenditure on defence, police, maintenance of law and order, public utilities and more. It also includes expenditure on social security and public administration measures.

ii. Government investment expenditure: Such expenditure includes expenditure on increasing the capital assets of an economy. It includes expenditure on developing transportation and communication facilities, banking and health sector, education and power sector units and more.