Kerala State Syllabus 10th Standard Social Science Notes Chapter 5 Public Expenditure and Public Revenue
The Government undertakes many economic activities for the survival and progress of the nation. These include production, distribution and exchange. The Government undertakes these economic activities for the welfare of the people. The governmental expenditure increases while undertaking welfare activities for the people, developmental activities and security activities. So the governments will have to find income for these. The expenditure of the government is known as public expenditure and the income of the government is known as public revenue. This chapter deals with the various expenditures of the government and Public Expenditure : The expenditure of the government is known as public expenditure. Public expenditure is divided into Developmental Expenditure and Non-Developmental Expenditure.
→ Public Expenditure : The expenditure of the government is known as public expenditure.
→ Public expenditure is divided into Developmental Expenditure and Non-Developmental Expenditure.
→ Developmental Expenditure : The expenditure incurred by the government for developmental activities like constructing roads, harbours and setting up educational institutions.
→ Non Developmental Expenditure : The expenditure incurred by the government for war, to pay interest and pension.
→ Public Revenue: The income of the government’ is known as public revenue.
→ Public revenue is classified into tax revenue and non tax revenue.
→ Tax Revenue : The income from all sources of taxes constitute tax revenue.
→ Non Tax Revenue : The income from fees, grants, profit, etc. constitutes non- tax revenue.
→ Tax : Tax is a compusolry payment to the government made by the public for meeting expenditure towards welfare activities, developmental activities, etc.
→ Tax payer : The person who pays the tax.
→ Taxes are of two types : Direct tax and Indirect tax.
→ Direct Tax: The tax which is paid by the person on whom it is imposed.
→ Indirect Tax: The tax which is imposed on one person and the tax burden is shifted to another person. Goods and Services tax are important indirect taxes in India.
→ Important direct taxes are personal income tax and corporate tax.
→ Personal Income Tax : Tax imposed on the income of the individuals when income is beyond a limit prescribed by law.
→ Corporate Tax: Tax imposed on the net income or profit of a company.
→ Goods and Services Tax : Tax imposed by central and state governments by merging different indirect taxes. Taxes are levied at different stages starting from production to final consumption of goods and services.
→ Surcharge: Additional tax imposed on tax.
→ Cess: Additional tax imposed by the government for certain special purpose.
→ Fees : Reward collected for the government’s services.
→ Fines and penalties: Punishments for violating the laws.
→ Grants : Financial aid by one government to another.
→ Interest : Reward for loans given by government.
→ Profit: Income received from the enterprises operated by government.
→ Public Debt: The loans taken by the government.
→ Internal Debt : Loans availed by the government from individuals and institutions within the country.
→ External Debt: Loans avai led by the government from foreign governments and international institutions.
→ Public Finance : The branch of economics that relates to public revenue, public expenditure and public debt.
→ Budget: The financial statement showing the expected income and expenditure of the government during a financial year.
→ Fiscal Policy : Government’s policy regarding public revenue, public expenditure and public debt.