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development of the country. These functions production, employment and overall growth
include spread of education, public health, in the economy. Hence, the government
public works, public recreation, social makes huge efforts for implementing
welfare schemes etc. It is observed that various schemes and programmes for
new functions are continuously being industrial development. This results in
undertaken and old functions are being increase in government expenditure.
performed more efficiently on a large scale
by the government. This leads to increase in 8) Disaster Management : Many natural and
public expenditure. man-made calamities like earthquakes,
floods, cyclones, social unrest etc. are
2) Rapid Increase in Population : Population occurring more frequently. The government
of developing countries like India is has to spend a huge amount for the
increasing fast. In 2011 Census, it was disaster management which increases total
121.02 crores. As a result, the government expenditure.
has to incur greater expenditure to fulfil the Modern governments are working for
needs of the increasing population. ‘welfare state’. Hence, there is a continuous
3) Growing Urbanization : Spread of increase in the public expenditure.
urbanization is a global phenomenon
of the day. This leads to increase in the Find out :
government expenditure on water supply, Reasons for growth in public expenditure
roads, energy, schools and colleges, public other than given above.
transport, sanitation etc.
Find out :
4) Increasing Defence Expenditure : In Important social welfare schemes by the
modern times, defence expenditure of Govt.
the government is increasing even in the
peace time due to unstable and hostile II) Public Revenue :
international relationships.
Public revenue means the aggregate
5) Spread of Democracy : Majority of the collection of income with the government
countries in the world are democratic in through various sources. Public revenue holds
nature. A democratic form of government is the permanent position in the study of public
expensive due to regular elections and other finance which is part of study of economics.
such activities. This results in the increase Thus, the necessity of public revenue arises due
in total expenditure of the government. to public expenditure.
6) Inflation : Just like a private individual, the The main sources of public revenue are as
government has to buy goods and services follows.
from the market for the spread of economic Sources of Public Revenue :
and social development. Normally, prices A) Taxes B) Non-tax Revenue :
show a rising trend. Due to this, the
government has to incur increasing costs. A) Taxes :
1) According to Prof. Taussig : “The essence
7) Industrial Development : Industrial of a tax as distinguished from other charges
development leads to an increase in
by government is the absence of a direct
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