The expenditure of the budget of state governments is classified into
- Developmental expenditures and
- Non-developmental expenditures.
1. Developmental expenditure:
Expenditure that provides a direct boost to economic development is known as developmental expenditure. For example, expenditure on irrigation.
2. Non-developmental expenditure:
Expenditure which does not have a direct impact on development is called non-developmental expenditure. For example, expenditure on pensions.