Public expenditure and Public revenue

 *Public expenditure and public revenue*

1) What is the public Expenditure?

- The expenditure incurred by the government is known as public expenditure.

 - Government undertakes many activities for the welfare of the people.

 - Expenditure increases with an increase in the activities of the government.

2). What are the classification of public expenditure?

- Developmental expenditure,

 - Non-developmental expenditure.

➡️  *Developmental expenditure*

-  The expenditure incurred by the government for constructing roads, bridges and harbours, starting up new enterprises, setting up educational institutions, etc. are considered as developmental expenditure.

 -  The government will receive future revenue from development expenditure.

➡️ *Non-developmental expenditure*

- Expenditure incurred for war, interest, pension, etc. are considered as non-developmental expenditure. 

- The government will not get any revenue from its non-development expenditure.

-Population growth,

-Welfare activities,

-Urbanization, 

-Natural calamities, -Infectious diseases.

3) What is Public revenue?

-The income of the government is known as public revenue.

4). What are the sources of revenue to the government?

- Tax Revenue.

- Non Tax Revenue.

5). What is tax (What is tax revenue)

- Taxes are the main source of income to the government.

- Tax is a compulsory payment to the government made by the public for meeting expenditure towards welfare activities, and developmental activities etc.

-The person who pays tax is called tax payer.

-The reduction in the income the taxpayer receives by paying taxes is known as the tax burden. 

5)  Taxes can be divided into two categories on the basis of bearing tax burden

 -Direct Tax

- Indirect Tax 

*Direct Tax*

- When a person pays taxes on himself, it is called direct tax. (Eg : Land Tax) 

- The unique feature of direct tax is that the tax payer undertakes the burden of the tax.

➡️ Major direct taxes in India

a) Personal Income Tax

- It is the tax imposed on the income of individuals.

- The rate of tax increases as the income increases.

-Income tax is applicable to the income that is above a certain limit.

- In India the income tax is collected by the central government as per the Income. 

b) *Corporate tax*

- This is the tax imposed on the net income or profit of the companies.

*Indirect tax*

- In the indirect tax the tax burden can be shifted from the person on whom it is imposed to another person.

- in the case of sale tax the tax burden initially falls on the trader.

- But the trader transfers the burden of the tax along with its price to the consumer.

- The tax is included in the price paid by the consumer.

 6. What is the difference between Surcharge and Cess?

*Surcharge* :

 Additional tax imposed by the government on tax for a specific period 

*Cess*:

Additional tax imposed by the government on tax for certain specific purpose. It will be discontinued when enough money is received.

7. Source of Non - tax revenue. 

a) *Fees*

Fees is the reward collected for the government's services. 

License fees, registration fees, tuition fees, etc. are examples.

b) *Fines and penalties*

 Fines and penalities are punishments for violating the laws.

C) *Grants*

Grants are the financial aid provided by one government to another. 

For example, grants are provided by central and state governments to local self governments.

d) *Interest*

 

Interest is the amount received for the loans provided by the government to various enterprises, agencies, and countries.

e) *Profit* 

Profit is the income received from the enterprises operated by the government. 

For example, profit from the Indian Railways.

8.  What is called public debt? 

Public debts are loans taken by the government.

9. Differentiate internal debt and external debt ?

*Internal debt*: 

These are the loans availed by the government from individuals and institutions

within the country.

*External debt*: 

These are the loans availed from foreign governments and international

institutions.

9. List out the reasons for the increase in India's public debt?

- Increased defence expenditure

 - Increase in population

- Social welfare activities

10. What is budget? Mention different types of budget?

Budget is the financial statement showing the expected income and expenditure of the government during a financial year. It is from April 1 to March 31 in India.

When income and expenditure are equal, it is called a *balanced budget*.

 When income is more than expenditure, it is called *surplus budget*. 

When expenditure is more than income, it is called *deficit budget*.

11. What is fiscal policy? What are the goals of the fiscal policy?

Government's policy regarding public revenue, public expenditure and public debt is called fiscal policy. 

➡️ Attain economic stability,

➡️  create employment opportunities,

➡️  control unnecessary expenditure are the goals of fiscal policy.

*Inflation* - Tax rate ⬆️ consumption ⬇️

*Deflation* - Tax rate ⬇️ Consumption ⬆️