Question

State with reason whether you agree or disagree with the following statement:

Public expenditure includes only revenue expenditure.

Answer 1

I disagree with this statement.

Reason:

Public expenditure is the expenditure incurred by the government (Central, State and Local bodies) for protection of citizens and for promoting economic and social welfare.

1. Revenue Expenditure: It is incurred for day-to-day administration and services. Example: salaries, pensions, administrative expenses, public health services.
2. Capital Expenditure: It is incurred for development and creation of assets. Example: development projects, loans to states, repayment of government loans.
3. Developmental and Non-Developmental Expenditure: Developmental expenditure promotes growth (health, education, industrial development), while non-developmental expenditure does not create direct productive impact (administrative and defence expenses).