Disadvantages of High Public Expenditure

Disadvantages of High Public Expenditure

The Govt use public expenditure as to achieve the economic objectives.

1.Unwanted Expenditure:- Sometime to achieve the economic objective the Govt may undertake those projects which are not basically required for the country. For example construction of dam if there in no immediate requirement of energy in the country.

2. No Immediate Response :- The high public expenditure need some time , the announcement of new project ideally takes many years therefore the economic objective will take time to get the results.

3. Interest Burden increases :- The public expenditure even there is no funds are available , therefore, the Govt has to take borrow from the bank and this will increase the interest payment expenditure. so it is a wise option to increase the deficit.


4. Rate of Inflation Rises :- The high public expenditure will raise the inflation in the economy. The reason for such increase is due high demand of good in the economy which will create Gap between supply and demand which would ultimately result in increase in inflation rat