Explain the principles of public expenditure.

Question

Ghissu Editorial · Accepted Answer

The principles of public expenditure, maximum social benefit, economy, sanction, balanced budget and elasticity, guide governments to spend for the widest welfare without waste or fiscal stress. In Andhra Pradesh, a CFMS audit found ₹968 crore in excess payments, and capital spending was only 3.45% of total expenditure in 2022-23.

**Introduction**

Public expenditure shapes economic growth and social welfare, especially in ==Andhra Pradesh⟦2⟧⟦1⟧==, where post-bifurcation challenges demand efficient resource use. Principles guide governments to maximize social benefits while maintaining fiscal discipline.

**Institutional Foundations**

1. **Maximum Social Benefits and Economy**: Public spending⟦3⟧ must prioritize welfare projects like ==Polavaram irrigation== and avoid waste, as the ==Andhra Pradesh CFMS audit found ₹968 crore excess payments==.  
2. **Sanction and Balanced Budget**: Prior authorization prevents misuse, critical given welfare fund diversions; ==Andhra Pradesh’s revenue deficit rose sharply in 2022-23==, highlighting fiscal stress.

**Challenges and Outcomes**

1. **Elasticity and Avoidance of Unhealthy Effects**: Expenditure must adapt to needs, e.g., infrastructure in ==Visakhapatnam port-led corridors==, while avoiding subsidy dependency seen in welfare fund declines.  
2. **Efficiency and Accountability**: Audits reveal administrative overspending and pending welfare claims, undermining economy and social goals.  
3. **Developmental vs Revenue Expenditure**: Capital outlay was only 3.45% in 2022-23, limiting asset creation and growth.

**Ensuring Impact and Way Forward**

1. **Social Overheads and Regional Growth**: Spending on schools, hospitals, and backward regions like Rayalaseema is vital post-bifurcation.  
2. **Agriculture, Industry, and Fiscal Sustainability**: Support irrigation and industrial parks; manage debt to meet the 3.8%⟦4⟧ GSDP deficit target in 2026-27.  
3. **Strengthen Controls and Targeting**: Implement stricter budget sanctions and use data analytics to reduce leakages in welfare schemes⟦5⟧, learning from the ==CFMS audit==.  
4. **Prioritize Capital Expenditure**: Increase capital outlay to foster sustainable economic development.

**Conclusion**

Robust adherence to public expenditure principles with enhanced accountability and targeted investments is crucial for ==Andhra Pradesh==’s inclusive growth and fiscal stability.

Explain the principles of public expenditure.

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