Skip to content
Related Articles
Open in App
Not now

Related Articles

Explain the Developmental and Non-Developmental Expenditure of Government

Improve Article
Save Article
  • Last Updated : 02 Nov, 2022
Improve Article
Save Article

The term “expenditure” describes a payment made in cash or on credit to buy or obtain goods or services. Liabilities incurred in the exchange of commodities or services are referred to as expenditures.

What is Developmental Expenditure?

These expenses are made on the things that directly advance the economic and social progress of the nation. Developmental expenditures are also known as productive expenditures since they contribute to economic growth by boosting the nation’s production and the real economy. Examples include costs associated with the agriculture, health, and education sectors.

Expenditure comprises:

  1. Spending on government departments’ businesses, such as the railways, post office, and telegraph, should be planned.
  2. Spending on non-departmental government contractors like Air India and Indian Airlines
  3. Loans from the government are given to non-departmental firms for development.

What is Non-Developmental Expenditure?

These expenses are made on things that don’t immediately advance the economic and social development of the nation. This focuses on tasks associated with fundamental services in general. Examples include costs associated with defense, tax collecting, and administration.

Non-development expenditures include those on the military, interest payments by the government, tax collection expenses, loans for non-development uses, and subsidies for food and coarse clothing for the benefit of the less fortunate segments of society.

Difference between Developmental and Non-Developmental Expenditures

 

Developmental Expenditures

Non-Developmental Expenditures

1.  These expenditures help directly in the development of the country’s economy. These expenditures help indirectly in the development of the country’s economy.
2.  In the case of developmental expenditure, they set definite objectives and can achieve them in a fixed duration of time. In the case of non-developmental expenditures, it is impossible to set objectives and achieve them in a fixed duration of time.
3.  The share of these expenditures is gradually increasing. The share of these expenditures is gradually decreasing.
4.  It includes all the social, community, economic and developmental assistance to the state. It includes pensions, cost of tax collection, defense expenditure, etc.

FAQs on Developmental and Non-Developmental Expenditures

Question 1: What are liabilities?

Answer:

Liabilities refer to the sum of money that is owed or borrowed from someone else and it can be repaid in a specific period through money, goods, or services.

Question 2: What do you understand by expenditures?

Answer:

The term “expenditure” describes a payment made in cash or on credit to buy or obtain goods or services. Liabilities incurred in the exchange of commodities or services are referred to as expenditures.

Question 3: Write an example of developmental and non-developmental expenditure.

Answer:

  1. Examples of developmental expenditures- are expenditures that are held in the agriculture sector, health sector, and education sector.
  2. Examples of non-developmental expenditures- are expenditures that are held in defence, cost of tax collection, and administration.

Question 4: Which is more beneficial for the government in developmental and non-developmental expenditures?

Answer:

Both are beneficial for the government but there is just one difference between developmental and non-developmental expenditure that is developmental expenditure gives direct benefit and non-developmental gives indirectly.

My Personal Notes arrow_drop_up
Related Articles

Start Your Coding Journey Now!