Dissecting Public Expenditure : Part – I

Article Type

Article

Description

Several commentators have argued that the problem of fiscal deficit in Pakistan lies in its profligate public expenditure and unless this expenditure is drastically reduced a healthy fiscal balance is difficult to achieve.

This article based on research and computations, making adjustments for overlaps and avoiding double counting, analyses the most recent data on consolidated public expenditure of the federal and the provincial governments to shed some light on this issue.

Before delving into this analysis, the objectives of public expenditure should be spelt out. The purpose of public spending in any country is to allocate resources efficiently for investment and growth, improve distribution of income and stabilise the economy. These goals are achieved through direct provision of public goods and services, income transfers and social protection and selective interventions when the economy is on an unstable trajectory. Low-income countries have to strike a balance between public consumption and public investment as the latter complements and draws in private investment. For innovation economy, the state has to invest in R&D, technology transfer, assimilation and application and build skills and capabilities of its labour force.

Publication Source

The News

Publication Date

1-14-2022

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