Question Tag: Economic Goals

The goals of public expenditure are the following:

• Provide social goods: The theory of social goods is important to the economy of the public sector. Public goods like roads, bridges, and educational facilities are necessary for societal welfare but are often underprovided by the market.
• Remove unemployment: Public expenditure helps fight unemployment by creating job opportunities. This can be achieved by government spending, especially during periods of depression when private investment is insufficient.
• Increase production: Public expenditure contributes to production by investing in essential sectors such as agriculture and industries. Government support for infrastructure also boosts productivity.
• Exploitation and development of mineral resources: Public investment in mining and mineral exploitation plays a critical role in the economic development of a country.
• Promote price stability: By varying public expenditure, the government can help stabilize prices. In times of inflation, reduced government spending can control price rises, while increased spending during deflation can stimulate economic activity.
• Promote Balanced Growth: There is a tendency to use economic resources for the further development of already developed regions. But for overall growth, special attention needs to be paid for the development of backward areas and underdeveloped regions. This requires huge amounts for which reliance has to be placed on public expenditure.
• Reduce Inequality of Income: Another objective of public expenditure is to reduce the inequality of income. Expenditure on old age pensions, unemployment relief, free education, free mid-day meals etc. benefits the poorer classes of the community at the expense of the
  rich.

(Any 5 points well explained for 10 marks)