Q85
Indian EconomyPublic Finance, Budget & Taxation
Which of the following is not regarded as public expenditure in India?
- a.Subsidy given to local city bus service
- b.Defense expenditure
- c.Interest payment on national debt
- d.Investment spending by public companies
Answer: (D) Investment spending by public companies
Public expenditure is spending by the government itself (Centre, States and local bodies) out of its budget. A subsidy to a city bus service, defence spending and interest on the national debt are all budgetary outlays. Investment by public sector companies out of their own internal resources and market borrowings is the spending of commercial enterprises and is not counted in the government's budget, so it is the odd one out. Useful theory: Wagner's law states that public expenditure grows as an economy develops, and Peacock and Wiseman put forward the "displacement effect".