PUBLIC EXPENDITURE IN UTTARAKHAND

In recent times globally the issue of Public Expenditure efficiency has drawn the attention of both policymakers and researchers. The Economists considered Public Expenditure as an indicator that shows the course of economic development as well as the administrative skill of the government in a country or a governing body. Even in India the assessment of Public Expenditure efficiency becomes much more crucial with the increased demands for Outcome-based Budgeting. For the first time it was Keynes who popularized the necessity of government’s expenditure as a means of achieving economic development as well as an effective tool to combat the ill effects of depression in advanced European countries.

Public Expenditure is efficient when the government, using its given resources in such a way, produces the maximum possible benefits for the country’s population. Ceteris paribus, Governments that produce more outputs with less spending on inputs can be viewed as more efficient than governments that produce fewer outputs while using more inputs. The spending activities of the appropriate governments should generate the maximum potential benefits for the population to prevent the use of resources inefficiently. The main objective of any public policy of any appropriate government is to provide a host of public goods and services such as health, education, public infrastructure, and public safety and so on to their populations. However, macroeconomic constraints in the economy do limit governments’ scope for increasing their public expenditure.

In view of the fact that most of the expenditures are made through Budgets, how well these resources are used becomes more relevant. One of the prominent changes which have taken place during the second half of the twentieth century was that most developing countries of the world have been inspired by the idea of a Welfare State and are willing for economic growth for the welfare of their people. In result of this the egalitarian objective is explicitly emphasised in the development programmes of developing countries with the objective for equalisation of opportunities to all because all being equal in this respect. In developing countries as a result Public expenditures are assigned the role of not only accelerating the growth of the economy through appropriate resource allocation but also ensuring better distribution of income. Expenditures on health and education have a direct impact on welfare and growth of the economy.

ROLE OF PUBLIC EXPENDITURE

Public Expenditure is one of the most effective measures whereby different economic and social objectives of the country are sought to be realised and Public Expenditure has a multiplicity of aspects. The Public Expenditure aspect mainly consists of the acceleration of the rate of economic growth, equitable distribution of income, improving the living standards, stabilisation of economic activities, balanced regional economic development in addition to the orthodox classical objectives of defence, maintenance of law and order and the like. Public Expenditure on economic and social overheads helps in raising the aggregate output on agriculture and allied activities, electricity, irrigation, industry & mines, roads & bridges, education, medical and public health assists the productive process in the economy. Expenditure made on Defence, Police, Justice and Jails ensures relatively peaceful living of the citizens of the nation and helps them to carry on their productive avocations undisturbed in addition to the protection of territory against foreign aggression. Similarly, a heavy dose of investment during a period of depression and curtailment of expenditure during a period of boom helps in maintaining economic stability in the economy.

Public Spending tries to bring regional balance in the economy as well. In every State, there are some underdeveloped regions where government spending can be effective in bringing prosperity to such depressed areas through the allocation of a greater proportion of Public Expenditure on different Socio-Economic upliftment programmes and in that way it may ensure balanced regional development.

In Democracy, Public Expenditure is an expression of people’s wills which is managed through political parties and institutions. Public Expenditure is financed through taxes, public debt, money emission, international aid or government borrowing.

The four main roles which Public Expenditure plays are as:

It contributes to current effective demand;
It expresses a coordinated impulse on the economy which can be used for stabilization, business cycle inversion, and growth purposes;
It increases the public endowment of goods for everybody;
It gives rise to positive externalities to the economy and the society more through its capital component.

1.2 EFFECTS OF PUBLIC EXPENDITURE

Public Expenditure has large effects on the distribution of income as it redistributes income both vertically and horizontally. Government expenditure on the transfer payments i.e. expenditure incur on various Social Security Schemes (such as Old age pensions, Veterans benefits, Sickness and invalidity benefits, Unemployment compensation/relief, Family allowances, Scholarships, Subsidies on food and housing etc.) redistributes income vertically and all these expenditures add to the income of the recipients directly. Government expenditure on infrastructure, drinking water supply, and other social and economic services affect the income distribution horizontally and provide benefits to the Society at large. In particular, expenditure made on education and health services improves the educational and health standards of the people and makes them more active agents of production. Overall Public Expenditure can thus be used for augmenting production, reducing income inequalities, improving living standards, ensuring balanced regional economic development, maintaining law and order and for stabilisation purposes.

1.3 CLASSIFICATION OF PUBLIC EXPENDITURE

Following are the categories of public expenditure.

Development and Non-Development Expenditure

Development expenditure consists of all the productive expenditure by the government that can further lead to social welfare and accelerate economic growth and development. These expenditures are like a productive investment and used in the production of capital goods and services which provide instant benefits as well as it has some future prospective benefits. These expenditures include spending on various economic services and social services.

Non-Development expenditures are like consumption expenditure and provide instant benefit and expand the well-being of the society, but it doesn’t lead to further economic growth or development. These expenditures include expenditure on subsidies, defence expenditure, salaries, pensions etc.

Plan and Non-Plan Expenditure

The Plan expenditure consists of all the expenditures that are part of central planning. Plan expenditure includes all products and assets creating expenditure.

Non-Plan expenditure consists of all the expenditures that are incurred on completed or previous schemes interest payment on borrowings. It often includes non-asset building and consumption expenditure.

In September 2011, a panel headed by Dr C Rangarajan suggested redefining the plan and non-plan expenditure as capital and revenue expenditure.

Capital and Revenue Expenditure

Capital expenditures are expenditure on building fixed assets and are non-recurring in nature. This expenditure focuses on improving economic and social activities and productivity of the economy. These expenditures include loans to state and foreign governments and public enterprises to finance the project and capital defence expenditure. The Capital Expenditure is financed out of the capital receipts such as market loans, borrowing by government from Reserve Bank of India and other parties, loan received from Foreign Governments and International Financial Institutions and recoveries of loans granted by Central Government to State Governments and other parties. Capital Expenditure consists of Expenditure used for the acquisition of assets like land, buildings, machinery equipment as investment in shares etc. and loans & advances granted by the Central Government to State Governments, Government Companies’ Corporations and other parties for development purposes.

The important heads of Capital Expenditure are shown in the budget of government of India are as follows:-

General Services
Defence Services
Social and Community Services
Economic Services
Loans and Advances to the States and Union Territories Government

Revenue expenditures are recurring kind of expenditure incurred year by year on current consumption. The Expenditure on Revenue Account is financed out of the receipts of taxes and other revenue such as the contribution of railways, post and telegraphs and civil works, and so on. Revenue Expenditure is incurred for the normal running of government departments and various services and interest charges on the debt incurred by government etc. Expenditure which does not result in the creation of assets is treated as revenue. All grants given to State Governments and other parties are also treated as the revenue expenditure. Revenue Expenditure is met out of the revenue receipts of a government that is tax revenue and other revenues.

The important heads of revenue expenditure which are shown in the Budget of Government of India are as follows:-

General Services
Defence Services
Social and Community Services
Economic Services
Grants-in-aid to States.

1.4 TREND OF PUBLIC EXPENDITURE IN INDIA

TABLE: 1.1 Total Expenditure of Government of India (Rs. in Crore)
Year	Revenue Expenditure	Capital Expenditure	Total Expenditure
2011-12	1145956	141042	1286998
2012-13	1237754	155822	1393576
2013-14	1366171	175295	1541466
2014-15	1457882	187460	1645342
2015-16	1537761	253022	1790783
2016-17	1690584	284610	1975194
2017-18	1878833	263140	2141973
2018-19	2007399	307714	2315113
2019-20	2447780	338569	2786349

Source: CAG Report of India.

In Table & figure 1.1, the Total Expenditure of India is increasing from 2011 to 2020 to 2.16 times which was Rs. 12,86,998 Cr. in 2011 and Rs.

27,86,349 Cr. in 2020. The Capital Expenditure of India is increasing from

2011 to 2020 to 2.40 times which was Rs. 1, 41,092 Cr. in 2011 and Rs.

3,38,569 Cr. in 2020. The Revenue Expenditure of India is increasing from

2011 to 2020 to 2.14 times which was Rs. 11,45,956 Cr. in 2011 and Rs.

24,47,780 Cr. in 2020.

CAUSES OF GROWTH OF PUBLIC EXPENDITURE IN INDIA

The increasing trends in public expenditure in India are due to various factors. Followings are some important reasons that resulted in increase in public expenditure in India.

Population

The increase in population is one of the major causes of the growth of public expenditure in India. Increasing population requires more and more social sectors expenditure, public goods and strong law and order. The population of India was 692 million in 1981-82 which increased to 1,040 million in 2001-02 and further it increased and reached to 1332 million in 2018-19.

Increase in per-capita income

According to Musgrave increase in per-capita income leads to an increase in demand for public goods. Thus, it leads to an increase in public expenditure. The per-capita income in India was 2,115 rupees per annum which increased to 1,41,265 rupees per annum.

Defence Expenditure

Defence expenditure in India has increased significantly. It possesses a major portion in both revenue and capital expenditure. Although, its share in revenue expenditure has decreased over time its share in capital expenditure gas increased very rapidly. It possesses almost one-third of total capital expenditure. According to the union budget document, 12 per cent of total public expenditure in India goes to defence expenditure in 2018-19.

Subsidy

The subsidy is necessary to support essential economic activities like agriculture. The share of subsidies in total expenditure has increased over time by showing the decreasing sign. It was 8.90 per cent of total public expenditure in 1981-82 which increased to 18.22 per cent in 2012-13 and in 2018-19 it was 12.22 per cent of total public expenditure in India.

Interest payments

Interest payments have been increased over time contributes significantly to raising public expenditure in India. In 1981-82, the share of interest payments in total expenditure was 11.44 per cent which increased very rapidly during the 1990s and 2000s and reached to 23.70 per cent in 2018-19 after some upward and downward fluctuations.

Administrative services Expenditure

Administrative services are necessary to maintain peace, law and order. The administrative expenditure has also increased very rapidly. In 1981-82 the administrative expenditures were 1,825 Cr. which increased to 2,07,538 Cr. in the year 2018-19.

Social services Expenditure

The social services expenditure also has increased over time in India. The government provides various types of social services to support developmental activities. With an increase in developmental works and population the social services expenditure has increase overtime.

Urbanization and Infrastructure Development

India is still too urbanized so a major portion of expenditure goes to urbanization and development of basic infrastructure facilities. Government undertakes the development and construction of various social overheads to support economic activities.

Inflation

This is also one of the reasons that increased public expenditure. Inflation is a rise in the general price level in the country. Inflation increases the cost of both new and existing projects.

Indian Economic and Political System

The Indian economy is a mixed economy where there is the participation of both the public and private sectors. It increases the responsibility of the government. India is also a democratic country where social welfare is promoted. Therefore, it increases the expenditure by the government.

1.5 RATIONAL OF THE STUDY

Uttarakhand is a new state, so public expenditure is necessary to gear up the development process in a new state. But the increasing budgetary deficits are causing a fiscal imbalance. This increasing budgetary deficit dents the development work. It also causes inflation, resulting in a decline in the purchasing power of the people, hence a slowing down of growth.

As we know, the impact of government spending on economic growth not only depends on the quantity of public expenditure but also on how the government spends money. So the focus of this study is to firstly analyse the trend of public expenditure by studying time series data of public expenditure and, secondly, to examine the quality of public expenditure.

1.6 OBJECTIVES OF THE STUDY

1.To analyse the trend of Public Expenditure in Uttarakhand.

2.To analyse the trend of committed Expenditure in Uttarakhand.

3.To examine the quality of Public expenditure in Uttarakhand.

This chapter provides a broad perspective of the public expenditure of the Uttarakhand Government, keeping in view the overall Trends of Public Expenditure from 2005-06 to 2019-20.

The chapter presents the analysis of the findings and results in accordance with the research design and methodology that has been described in the previous chapter.

The analysis of the trend of the public expenditure of Uttarakhand will be done under the following headings:

4.1. TREND OF PUBLIC EXPENDITURE IN UTTARAKHAND

Expenditure is the spending of money on something, or an amount of the money, time, or effort that is spent on something (Goods & Services). Total Expenditure is an economic term used to describe the Total amount of money that is spent on a public in a given time period by a government. Expenditure Budget shows the revenue and capital disbursements of various ministries/departments and presents the estimates in respect of each under ‘Plan’ and ‘Non-Plan’. Expenditure Budget provides complete information about the total expenditure of an Appropriate Government in a financial year. This exhaustive information is classified into two broad categories – Capital Expenditure and Revenue Expenditure. While the former results in the creation of a physical assets or investment, the latter comprises mainly operational expenses such as payment of wages, pensions, subsidies, and interest.

(A) TOTAL EXPENDITURE OF UTTARAKHAND GOVERNMENT

Table: 4.1 presents the Total Expenditure of Uttarakhand from 2005-06 to 2019-20 (15 Years). The Growth Rates of Total Expenditure of Uttarakhand Government depicted through figure: 4.1 whereas the Total Expenditure of Uttarakhand Government as Percentage of GSDP (Constant Price) during 2011-12 to 2019-20 depicted through figure: 4.3

TABLE: 4.1 TOTAL EXPENDITURE OF UTTARAKHAND GOVERNMENT (Rs. In Cr.)

Year	Total Expenditure
2005-06	7451
2006-07	8278
2007-08	9703
2008-09	10532
2009-10	12334
2010-11	13536
2011-12	15539
2012-13	17775
2013-14	20206
2013-14	20206
2014-15	26254
2015-16	27386
2016-17	30391
2017-18	35074
2018-19	38563
2019-20	38399

Source: CAG Report of Uttarakhand

Table: 4.1, shows that Total Expenditure of Uttarakhand from 2005-06 to 2019-20 was increasing but year 2019-20 as compared to year 2018-19 has slightly declined to Rs. 164 Cr. from Rs. 38,399 Cr. to Rs. 38,563 Cr. respectively. Total Expenditure was Rs. 7,451 Cr. in year 2005-06 and Rs. 38,399 Cr. in year 2019-20 which shows that Total Expenditure has increased by 5.15 times.

(B) ANNUAL GROWTH RATE OF TOTAL EXPENDITURE OF UTTARAKHAND GOVERNMENT

Growth rates are used to express the annual change in a variable as a percentage. Here annual Growth Rate of Total Expenditure calculated.

Annual Growth Rate of Total Expenditure of Uttarakhand Government is analysed . It shows 2014-15 has the highest Annual Growth Rate i.e. 29.93 percent and year 2015-16 has the lowest Annual Growth Rate i.e. 4.31 percent and in year 2019-20 Annual Growth Rate was at negative i.e. -0.43 percent. There is a fluctuation in the annual growth rate of Total Expenditure and with fluctuation it has declined to 9.95 percent from 2005 to 2020. In year 2019-20 because of pandemic it become negative (-0.43).

(C) TOTAL EXPENDITURE OF UTTARAKHAND GOVERNMENT AS PERCENTAGE OF GSDP

GSDP (Gross State Domestic Product) is the sum total of value added by different economic sectors (Agriculture, Industry and Services) produced within the boundaries of the State calculated without the duplication during a year. It is one of the majors of economic growth for a State’s economy. The compilation of GSDP is similar to that of compiling GDP of the entire economy i.e. measuring the volume in monetary terms, the total value of goods and services produced within the geographical boundaries of the State.

Total Expenditure of Uttarakhand Government as percentage of GSDP (constant price) is analysed where year 2018-19 has the highest Total Expenditure as percentage of GSDP i.e. 20.14.and year 2011-12 has the lowest Total Expenditure as percentage of GSDP i.e. 13.47 percentage. From 2011-12 to 2019-20 the Total Expenditure is increasing with fluctuation. In 2019-20 Total Expenditure as percentage of GSDP has decreased to 0.91 percentage.

4.1 (D) TRENDS OF TOTAL EXPENDITURE OF UTTARAKHAND GOVERNMENT BY ACTIVITIES

Government Activities means the provision of all government services and the conduct of all activities provided in connection or otherwise associated with any government authority. The trends of Activities here refer to the General Services, Social Services, Economic Services, Grants and Loans & Advances.

The Trends of Total Expenditure of Uttarakhand Government by Activities, Table: 4.2 present the trends of activities from 2005-06 to 2019-20 (15 Years). Where figure: 4.3 depict Trend of General Services of Uttarakhand Government as percentage of Annual Growth Rate, figure: 4.4 Social Services, figure: 4.5 Economic Services, figure: 4.6 Grants and figure: 4.7 Loans & Advances.

TABLE: 4.2 TOTAL EXPENDITURE BY ACTIVITIES (Rs. In Cr.)

Year	General Services	Social Services	Economic Services	Grants	Loans & Advances
2005-06	2214	2464	2522	116	135
2006-07	2551	2827	2527	271	102
2007-8	2856	3247	3077	310	213
2008-09	3278	3673	3184	275	122
2009-10	3803	5089	3087	325	30
2010-11	4285	5405	3379	408	60
2011-12	4552	6388	3973	379	247
2012-13	5501	6811	4693	497	273
2013-14	6320	8139	4801	668	278
2014-15	7616	10455	7351	681	151
2015-16	8521	10791	7225	766	83
2016-17	10005	11479	8002	741	165
2017-18	13212	12016	8376	1393	77
2018-19	13979	13308	9818	1275	183
2019-20	14208	14204	8271	1590	126

Source: CAG Report of Uttarakhand

Table: 4.2, shows that Trends of Total Expenditure of Uttarakhand from 2005-06 to 2019-20 was continuously increasing but Loan & Advances was fluctuating and has decreased to Rs. 126 Cr. in 2019-20 from Rs. 135 Cr. In 2005-06. From 2005-6 to 2019-20 General Services has increased 6.42 times, Social Services has increased 5.76 times, Economic Services 3.28 times, Grants has increased 13.71 times and Loan & Advances has decreased 0.93 times.

TRENDS OF REVENUE EXPENDITURE IN UTTARAKHAND

Revenue Expenditure pertains to expenditure that does not result in the creation of any asset for the government and does not result in the reduction of any liability

(A) REVENUE EXPENDITURE

Table: 4.3 presents the Revenue Expenditure of Uttarakhand from 2005-06 to 2019-20 (15 Years). The Revenue Expenditure of Uttarakhand Government as Percentage of Total Expenditure depicted through figure: 4.8, Annual Growth Rate of Revenue Expenditure of Uttarakhand Government depicted through figure: 4.9 where as the Revenue Expenditure of Uttarakhand Government as Percentage of GSDP (Constant Price) during 2011-12 to 2019-20 depicted through figure: 4.10.

TABLE: 4.3 REVENUE EXPENDITURE OF UTTARAKHAND GOVERNMENT (Rs. In Cr.)

Year	Revenue Expenditure
2005-06	5611
2006-07	6477
2007-08	7255
2008-09	8394
2009-10	10657
2010-11	11621
2011-12	12975
2012-13	13960
2013-14	16216
2014-15	21164
2015-16	23086
2016-17	25272
2017-18	29083
2018-19	32196
2019-20	32859

Source: CAG Report of Uttarakhand

Table: 4.3, shows that Revenue Expenditure of Uttarakhand from 2005-06 to 2019-20 was increasing. Revenue Expenditure was Rs. 5611 Cr. in year 2005-06 and Rs. 32859 Cr. in year 2019-20 which shows that Revenue Expenditure has increased by 5.86 times.

(b) ANNUAL GROWTH RATE OF REVENUE EXPENDITURE OF UTTARAKHAND GOVERNMENT

Growth rates are used to express the annual change in a variable as a percentage. Here Total Expenditure as percentage of Growth Rate is calculated as current year subtracting the base year by dividing it by the base year and multiplying it by the percentage i.e. 100.

4.2(c) REVENUE EXPENDITURE OF UTTARAKHAND GOVERNMENT AS PERCENTAGE OF GSDP

TRENDS OF CAPITAL EXPENDITURE IN UTTARAKHAND

Capital Expenditure includes expenditure on the acquisition of land, building, machinery, equipment, investment in shares, and loans and advances by the government to Public Sector Undertakings (PSUs) and other parties. The Capital expenditure of the government either results in the creation of some assets (i.e. a school or college building) or results in some kind of investment that will yield profit or dividend in the future.

4.3 (A) TRENDS OF CAPITAL EXPENDITURE IN UTTARAKHAND

Table: 4.4 presents the Capital Expenditure of Uttarakhand from 2005-06 to 2019-20 (15 Years). The Capital Expenditure of Uttarakhand Government as Percentage of Total Expenditure depicted through figure: 4.11, the Capital Expenditure of Uttarakhand Government as Percentage of Annual Growth Rate depicted through figure: 4.12 where as the Capital Expenditure of Uttarakhand Government as Percentage of GSDP (Constant Price) during 2011-12 to 2019-20 depicted through figure: 4.13.

TABLE: 4.4 CAPITAL EXPENDITURE OF UTTARAKHAND GOVERNMENT (Rs. In Cr.)

YEAR	CAPITAL EXPENDITURE
2005-06	1705
2006-07	1699
2007-08	2235
2008-09	2016
2009-10	1647
2010-11	1855
2011-12	2317
2012-13	3542
2013-14	3712
2014-15	4939
2015-16	4217
2016-17	4954
2017-18	5914
2018-19	6184
2019-20	5414

Source: CAG Report of Uttarakhand

Table: 4.4, shows that Capital Expenditure of Uttarakhand from 2005-06 to 2019-20 was fluctuating. Capital Expenditure was Rs. 1705 Cr. in year 2005-06 and Rs. 5414 Cr. in year 2019-20 which shows that Total Expenditure has increased by 3.18 times, year 2019-20 as compared to year 2018-19 has declined to Rs. 770 Cr. from Rs. 5414 Cr. to Rs. 6184 Cr. respectively.

TRENDS OF COMMITTED EXPENDITURE IN UTTARAKHAND

The committed expenditure of the Government on revenue account is a Revenue Expenditure where a large proportion of it goes into committed items like salaries and wages, interest payments and pensions The Upward trend in Committed Expenditure leaves the Government with lesser flexibility for overall development of various sectors.

4.4 (A) TRENDS OF COMMITTED EXPENDITURE

Table: 4.5 presents the Committed Expenditure of Uttarakhand from 2005-06 to 2019-20 (15 Years). The Committed Expenditure of Uttarakhand Government as Percentage of Total Expenditure depicted through figure: 4.14, Annual Growth Rate of Committed Expenditure of the Uttarakhand Government depicted through figure: 4.15 where as the Committed Expenditure of Uttarakhand Government as Percentage of GSDP (Constant Price) during 2011-12 to 2019-20 depicted through figure: 4.16.

TABLE: 4.5 COMMITTED EXPENDITURE OF UTTARAKHAND GOVERNMENT (Rs. In Cr.)

YEAR	Committed Expenditure
2005-06	4191
2006-07	4900
2007-08	3951
2008-09	5103
2009-10	6815
2010-11	7387
2011-12	9368
2012-13	9342
2013-14	10642
2014-15	12376
2015-16	13658
2016-17	15711
2017-18	19702
2018-19	21570
2019-20	21760

Source: CAG Report of Uttarakhand

Table: 4.5, shows that Committed Expenditure of Uttarakhand from 2005-06 to 2019-20 was increasing. Committed Expenditure was Rs. 4,191 Cr. in year 2005-06 and Rs. 21,760 Cr. in year 2019-20 which shows that Total Expenditure has increased by 5.19 times.

4.4 (B) COMMITTED EXPENDITURE OF UTTARAKHAND GOVERNMENT AS PERCENTAGE OF TOTAL EXPENDITURE

The committed expenditure of the State Government on revenue account mainly consists of interest payments, expenditure on salaries and wages, interest payments, pensions and subsidies.

4.5. QUALITY OF PUBLIC EXPENDITURE IN UTTARAKHAND

The availability of better social and physical infrastructure in the State generally reflects the quality of its expenditure. The improvement in the quality of expenditure basically involves, adequacy of the expenditure (i.e. adequate provisions for providing public services), efficiency of expenditure use.

In this section we will analyse the quality of public expenditure under following two headings:

4.5 (A) ADEQUACY OF PUBLIC EXPENDITURE

The expenditure responsibilities relating to social sector and economic infrastructure are largely assigned to the State Governments. Enhancing human development levels requires the States to step up their expenditure on key social services like, education, health etc. The low level of spending on any sector by a particular State may be either due to low fiscal priority attached by the State Government or on account of the low fiscal capacity of the State Government or due to both working together. The low fiscal priority (ratio of expenditure category to aggregate expenditure) is attached

to a particular sector if it is below the respective national Average while the low fiscal capacity would be reflected if the State’s per capita expenditure is below the respective national Average even after having a fiscal priority that is more than or equal to the national Average.

TABLE: 4.6 ADEQUACY OF PUBLIC EXPENDITURE OF UTTARAKHAND GOVERNMENT

Year		2011-12	2012-13	2013-14	2014-15	2015-16	2016-17	2017-18	2018-19	2019-20
SCS	AE/GSDP	26.39	24.8	23.5	26	24.58	27.4	25.86	26.73	23.02
UK	AE/GSDP	15.88	13.51	13.55	16.26	15.46	15.54	15.74	15.68	15.14
SCS	DE / AE	61.26	61.1	64	66.76	66.34	61.4	64.17	64.82	64.2
UK	DE / AE	68.25	66.24	65.41	68.39	66.08	64.09	58.14	59.97	58.53
SCS	SSE/ AE	37.02	34.3	37.6	36.27	36.25	34.2	34.99	35.75	35.42
UK	SSE/ AE	41.11	38.32	40.28	39.82	39.4	37.76	34.26	34.49	36.99
SCS	ESE/ AE	28.37	30.7	29.3	30.49	30.1	30	29.18	29.08	28.77
UK	ESE/ AE	27.14	26.4	23.76	28.57	26.68	25.79	23.88	25.47	21.54
SCS	CE/ AE	14.02	15.1	13.8	14.46	13.96	13.6	15.73	15.69	14.08
UK	CE/ AE	14.91	19.93	18.37	18.81	15.4	16.3	16.86	16.04	14.1
SCS	Education/ AE	18.86	18.1	18.3	18.52	18.32	16.6	18.04	18.21	17.42
UK	Education/ AE	23.41	22.15	21.35	19.6	18.01	18.91	19.01	19.29	19.76
SCS	Health/ AE	5.4	5.3	5.4	5.6	5.95	5.4	6.22	6.48	6.19
UK	Health/ AE	4.55	4.83	3.68	5.73	4.83	4.6	4.62	5.44	5.22
AE: Aggregate Expenditure, DE: Development Expenditure, SSE: Social Sector Expenditure, ESE: Economic Sector Expenditure, CE: Capital Expenditure

Source: CAG Report of Uttarakhand

Table: 4.6, Aggregate Expenditure (AE) as a proportion of GSDP in the State remained lower than the SCS’s average during all the nine years. Development Expenditure as a proportion of Aggregate Expenditure in the State was higher than that of the SCS’s average during 2011-12 to 2014-. However, it was declining after 2014-15 but it was slightly higher during 2016-17. Social Sector Expenditure as a proportion of Aggregate Expenditure in the State was higher during 2011-12 and 2018-19 as compared to SCS’s average. However, it was lower during 2017-18 and 2018-19 The Economic Sector Expenditure as a proportion of Aggregate Expenditure in the State was lower than that of SCS’s during all the nine years. Priority has been given by the State Government to Capital Expenditure so .in the state During all nine years the ratio of Capital Expenditure to Aggregate Expenditure has been higher than that of the SCS’s average. In Education Sector, expenditure as a proportion of Aggregate Expenditure in the State was higher than the SCS’s average during all the nine years. However, it was lower during 2015-16. Expenditure under Health Sector was below the average of SCS’s during all the nine years. However, it was higher during 2014-15.So it is clear that in Uttarakhand, Development Public expenditure is not adequate similarly for economic services and Health sector also the trend is declining.

4.5 (B) EFFICIENCY OF PUBLIC EXPENDITURE

Development Expenditure refers to the expenditure of the government which helps in economic development by increasing production and real income of the country. Developmental Expenditure is divided into Development Expenditure on Revenue Account and Developmental Expenditure on Capital Account.

In view of the importance of public expenditure on development heads from the point of view of social and economic development, it is important for the State Governments to take appropriate expenditure rationalization measures and lay emphasis on provision of core public and merit goods.

In this section we are measuring efficiency of public expenditure by analysing the share of development expenditure in total expenditure. Higher the allocation towards development expenditure, the better would be the quality of expenditure.

TABLE: 4.7 TRENDS OF DEVELOPMENT EXPENDITURE OF UTTARAKHAND

Year	Components of Development Expenditure (in Crore)
Year	Development Expenditure	Development Revenue Expenditure	Development Capital Expenditure	Development Loans & Advances
2011-12	10607	8121	2240	246
2012-13	11776	8091	3413	272
2013-14	13216	9366	3574	276
2014-15	17955	13081	4725	149
2015-16	18098	13910	4106	82
2016-17	19477	14431	4882	164
2017-18	20391	15205	5110	252
2018-19	23125	17212	5730	183

Source: CAG Report of Uttarakhand

Table: 4.7, shows the Trend of Development Expenditure which is continuously increasing from 2011 to 2019 and it has increased to 2.18 times, Development Revenue Expenditure and Development Capital Expenditure is also increasing from 2011 to 2019 and have increased to 2.12 times and 2.56 times respectively whereas Development Loan & Advances has decreased from 2011 which was Rs. 246 Cr. to 2019 which was Rs. 183 Cr.

CONCLUSION AND SUGGESTIONS

The chapter presents the conclusion & suggestions to the topic ‘An Analysis of Trends of Public Expenditure of an Appropriate Government: A Study in Uttarakhand’.

Public Expenditure plays a vital role in shaping the economic destinies of the people of the modern states. Public Expenditure refers to the effect of Government Revenues and Expenditure on allocation, distribution and the stability of the economy. Modern India, where we, the people aspire to live their life with access to modern amenities with using standard facilities and opportunities for daily livelihood which is been fulfilled by the Public Expenditure which is referred as the expenses of the Public authorities such as Central, State and Local Governments either in protecting the citizens or in promoting their economic and Social Welfare.

Trends in Public Expenditure refers to Government expenditure that is Government spending. It is incurred by Central, State and Local governments of a country to satisfy the collective social wants of the people known as public expenditure.

It was realized that Public Expenditure can be used to revive economy. As Uttarakhand is a Special Category State that is heavily dependent on the Centre for financial resources for accelerating economic development.

5.1 CONCLUSION

This Research is an attempt to bring about an economic analysis in the Trends of the Public Expenditure of the Government of Uttarakhand from 2005-06 to 2019-20 (15 years). The research is been done on the Total Expenditure, Revenue Expenditure, Capital Expenditure, Committed Expenditure and Quality of Expenditure, the data is been analysed through Average, Growth Rate Percentage, Expenditure as percent of GSDP.

The results of the study from 2005 to 2020 of the trends of Public Expenditure of Uttarakhand State reveals that the Total Expenditure has been increasing annually but annual growth rate is fluctuating. Whereas the Total Expenditure as percent change of the GSDP is increasing.
Revenue Expenditure is been increasing annually but the annual growth rate was fluctuating. Whereas Revenue Expenditure as percent change of GSDP was in a increasing slightly annually. Revenue Expenditure as percent change of Total Expenditure was increasing with slightly fluctuating annually.
Capital Expenditure is been increasing annually but the annual growth rate was fluctuating annually where it was sometime going to negative figures. Capital Expenditure as percent change of GSDP was at slightly increasing but as percent change of Total Expenditure it was in a Decreasing with fluctuations.
The Trends of Activities of Uttarakhand Government shows that General Services, Social Services, Economic Services and Grants were increasing but the Loans & Advances were in decreasing manner.
Committed Expenditure was increasing annually but the growth rate was in fluctuating manner. Committed Expenditure as percent change of GSDP was in a fluctuating manner. Committed Expenditure as percent change of Total Expenditure was in a slightly increasing manner.
Quality of Expenditure of Uttarakhand shows that Adequacy of Public Expenditure as Uttarakhand as a Special Category State has a decreasing Development Expenditure, , Economic Sector Expenditure, Capital Expenditure & Education Expenditure. Whereas the Social Sector Expenditure and Health Expenditure was in increasing manner.
Quality of Expenditure of Uttarakhand shows that Efficiency of Public Expenditure to Development Expenditure and Efficiency of Expenditure in Social and Economic Services have been decreasing with fluctuation.

5.2 SUGGESTIONS

The study suggests that focus on good governance could yield better outcomes from Public Spending. It means public spending becomes more effective in increasing development outcomes with the presence of good governance.
Governments should reduce their spending in unproductive sectors such as advertising governments functioning in TVs, Newspaper and so on.
The State Government may increase its capital expenditure, particularly in social and economic sectors since it adds to the asset base which in turn would contribute to economic growth.
The State Government may ensure reasonable return on capital invested in profit making State PSUs in view of the substantial high cost of borrowings made by it.
The State may ensure time-bound completion of the incomplete projects and ensure that there are no further cost overruns.
The State may increase allocation of resources on Health sector so as to bring it at par with SCS average.
The State Government may ensure the recoveries of Guarantee Commission fees and deposit it in the Guarantee Redemption Fund.
The State Government may consider resorting to need-based borrowings only and utilising the existing cash balances to the extent feasible before resorting to fresh borrowings.

There is a suggestion to convert the Sir George Everest House to a museum and to develop it into a camping site. The plan is to develop the area to make provisions for trekking, nature walks, rock climbing, hang gliding, bird watching, watching wild life, horse riding, paragliding and other outdoor activities.
Downsizing of the government by eliminating unproductive staff, improving efficiency in government, transfer of non-essential functions to the private sector and tenure-based government jobs.
Removing inefficient subsidies and diverting funds to enable areas such as infrastructure and education.
Improving tax collection and compliance.
Uttarakhand has the potential to develop as a major industrial state of the country due to its proximity to Delhi, the national capital, high literacy rate, concentration of high quality educational institutions, presence of a large number of national institutions and widely spread informal sector
States can now attract private capital in such sectors as power, irrigation, ports, roads and all areas of manufacturing and it is their ability to attract private capital, which now determines a state’s growth performance. Development spending now needs to be narrowly focussed on the states’ areas of comparative advantage, where it complements rather than substitutes for the private sector.
Tourist Attractions in Uttarakhand, Pilgrimage has traditionally been a major segment of tourism in Uttarakhand. However, Uttarakhand also has enormous resources for cultural, adventure, wildlife, nature, health and leisure tourism and a wide variety of entertainment and sporting activities, which attract the modern tourist.
Promoting Investments The PPP model of infrastructure development is motivated by three distinct factors: (1) public resources are limited, (2) state of the art technologies are needed to build better road more quickly, and (3) private sector is equipped with better and efficient management techniques as compared to public sector. Capital intensity of infrastructure projects, long gestation periods, requirement of huge working capital requirement and uncertainty on returns are the major issues associated with investment decisions in infrastructure. Therefore, multilateral financing, consortium with government guarantees and tax incentives etc., are the ways followed for this purpose. Addressing the abovesaid three areas of concern are the objectives of infrastructure reforms introduced in other states. Uttarakhand has to seriously pursue sector specific reforms judging their appropriateness from the experiences of the states that have followed them earlier.
rejuvenation/upgrading of schemes are necessary because the government attempts to make expenditure as effective as possible in the short term (more water supply for less money) without regard for the long-term capital costs this engenders.
Single Water Resource Ministry There are six departments in Uttarakhand at present, dealing with water resources but working under different administrative controls in the government. Due to this reason the water resource planning for different purposes falls mostly into the abyss of dispute causing bottle-neck in the pace of development. To establish synchronisation, all the water resource agencies viz., Irrigation Department, Minor Irrigation Department, Watershed Management Directorate, Jal Vidyut Nigam, Peyjal Nigam and Uttarakhand Jal Sansthan should be brought under single administrative umbrella of a Water Resource Ministry.
both development and health expenditures are significant in reducing poverty. Education expenditure helps reduce poverty
Public expenditure is the most powerful instrument at hands of governments to achieve their objectives of economic development and social welfare.
Education and health should be priorities.
Infrastructure should be more inclusive.
Strengthening the institutions and governance is necessary to improve the quality of spending and its efficiency.
governments should reduce their spending in unproductive sectors such as defence, and curtail excessive subsidies in fertilizer, irrigation, power, and pesticides.
all regions should increase spending in agriculture, particularly on production-enhancing investments such as agricultural R&D.
The composition of public spending should change towards goods and services that build capacity and create strong externalities, together with robust medium-term fiscal consolidation. Such a change would improve fiscal and monetary coordination, since it would reduce the volatility of aggregate supply.
Good governance could yield better outcomes from public spending. the spending activities of the government should generate the maximum potential benefits for the population to prevent the use of resources inefficiently.
the social sector expenditure especially education and health sectors are a vital source of human capital formation, which enhances economic growth. 2 Therefore, the efficient allocation of resources in such growth-promoting expenditures such as education, health, and social sector seems utmost importance.
STEPPING UP AGRICULTURE: Agriculture being the backbone of the State‟s economy on which the sustenance of million depend, the problems concerning this vital sector needs urgent intervention. Our farmers need agriculture related information along with financial incentives. The irony is that in spite of possessing vast natural and human resource, the poor farmers are unable to exploit the advantages of the market due to the lack of infrastructure to produce and transport from the farm to the market.
URAL DEVELOPMENT: Development of rural areas is a must for the overall development of the State.
States should increase their share of capital expenditure for long-term development purposes.