Aim/Objectives/ Importance of public expenditure

The main objective of public expenditure are as follow,

i)Developmental work:

Modern governments have also taken up developmental work in addition to their primary functions of administration and defense. Government expenditure plays an important role for the development social and economy infrastructure of the country.

ii) Welfare promotion:

The state is no longer the old law and order state. The modern state is a welfare state. It has to spend increasing amount on such items as social insurance, unemployment relief, free medical aid, free education etc to improve the social and economic welfare of people.

Iii) Resources utilization:

There is under utilization of available resources in developing country. The public expenditure brings into the proper utilization of natural resources as it requires huge amount to spend that the general people cannot afford.

iv) Subsidies and grants:

The governments these days, give subsidies and grants to different industries to enable them to increase the production of essential goods in the country. These subsidies and grants have special place in the government expenditure of under developed & backward countries.

v) Reducing inequalities:

Government expenditure plays a vital role in reducing economic in equalities in the capitalist countries. For eg, the government can levy heavy taxes on the reached sections and spend the income on providing cheap food, cheap housing, free medical aid etc, for the poorer sectors of the society.

vi) check Inflation and Deflation:

Government expenditure as an instrument of fiscal policy, plays an important role in achieving price stability in the country during reception, increase in government expenditure leads to rise the aggregate demand and help to reception. Similarly during inflation, reduction in government expenditure decreases aggregate demand and helps to control inflation.