Question

What are the classifications of public expenditure?

Answer 1

I. Classification on the basis of benefit

1. Public expenditure benefiting the entire society. Eg: Defence
2. Public expenditure conferring a special benefit on certain people and at the same time common benefit on community Eg: Administration of justice.
3. Public expenditure directly benefiting a particular group of persons and indirectly the entire society. Eg: Public welfare.
4. Public expenditure conferring a special benefit to some individual. Eg: Subsidy.

II. Classification basis of function

1. Protection function: To protect from external invasion and internal disorder. Eg: defense.
2. Commercial function: Development of trade and commerce. Eg: transport and communication
3. Development function: Public expenditure incurred for the development infrastructure and industry.