..Causes/Factors of Growth of Public Expenditure..

Causes/Factors of Growth of Public Expenditure:

Public expenditure has now-a-day enormously increased due to the intensive and extensive expansion of state activities. The main factors/causes which have contributed to the increase in the government expenditures are as under:
(i) Increase in Defense Expenditure: Practically every country of the world now is spending large quantity of money on preparing for a war or for itsprevention. The countries are feverishly engaged in producing costlywar material. The air to air missiles, the jet aero planes, hydrogen bombs, tanks, submarines, F-16, etc., cost hugeamounts of money to the exchequer. We conclude, therefore, that the main factor which has contributed to the enormous increase in the public expenditure is the ever increasing armament race which is going on in almost every country of the world.
(ii) Expansion of Government Functions: Increase in public expenditure is also due to the keen interest which governments are taking for the welfare of their citizens. Every government is spending large sums of money on construction of roads, hydro-electric projects, buildings, hospital, canals and other public worksprogrammes. It is also spending huge amounts of money for providing education, housing facilities, public parks, libraries, museums, medical aid, etc. etc.
(iii) Backward Area and Increase in Population: Another reason for the growth of public expenditure is that the modern governments with the limited resources at their disposal havebrought under control the neglected parts of their territories. The governments are spending vast sums of money for raising the standard of living of the people hitherto, living in the underdeveloped areas. The increase in expenditure is also due to the fact the population is increasing at a fast speed. The welfare states of today, therefore, have to meet the needs of people living in their countries. The increase in public expenditure is, therefore, inevitable.
(iv) Higher Price Level: Public expenditure has increased because of the higher price level in almost every country of the world. The government has now to spend increased amounts of money on the purchase of commodities and services. The public' expenditure is, therefore, bound to go up.
(v) Increase in Public Revenue: The most important factor which has contributed to the expansion of public expenditure is the increase in public revenue. Since the Industrial Revolution, there has been continuously taking place an increaseduse of heavy plants and complex machinery. The per capita income of the people has gone up. As the taxable capacity of the people has increased, so the revenue of every state has also increased. With the rise in public revenue, the government expenditure is surely to go up.
(vi) Duplication of Expenses: Some increase in public expenditure is also due to the fact that government is sometimes wasteful and extravagant inits expenditure. Duplication of government expenditure is not uncommon to any one of us.
(vii) Accelerating Economic Growth: The government of every country is doing its utmost for accelerating the economic growth in order to raise the standard of living of the people. This has also led to the expansion of state expenditure.

..FINANCIAL INCLUSION..

Financial inclusion
Financial inclusion or inclusive financing is the delivery of financial services at affordable costs to sectionsof disadvantaged and low income segments of society. Unrestrained access to public goods and services is the sinequa non of an open and efficient society. It is argued that as banking services are in the nature of public good, it is essential that availabilityof banking and payment services to the entire population without discrimination is the prime objective of public policy. Theterm "financial inclusion" has gained importance since the early 2000s, and is a result of findings about financial exclusion and its direct correlation to poverty. Financial inclusion is now a common objective for many central banks among the developing nations.
The Reserve Bank of India hasset up a commission (Khan Commission) in 2004 to look into financial inclusion and the recommendations of the commission were incorporated into the mid-term review of the policy (2005–06). In the report RBI exhorted the bankswith a view of achieving greater financial inclusion to make available a basic"no-frills" banking account. InIndia, Financial Inclusion first featured in 2005, when it was introduced, that, too, from a pilot project in UT of Pondicherry, by K C Chakraborthy, the chairman of Indian Bank. Mangalam Village became the first village in India where all households were provided banking facilities. In addition to this KYC (Know your Customer) norms were relaxed for people intending to open accounts with annual deposits of less than Rs. 50,000. General Credit Cards (GCC) were issued to the poor and the disadvantaged with a view to help them access easy credit. In January 2006, the Reserve Bank permitted commercial banks to make use of the services of non-governmental organizations (NGOs/SHGs), micro-finance institutions and other civil society organizations as intermediaries for providing financial and banking services.

These intermediaries could be used as business facilitators (BF) orbusiness correspondents (BC) by commercial banks. The bank asked the commercial banks in different regions to start a 100% financial inclusion campaign on a pilot basis. As a result of the campaign states or U.T.s like Pondicherry , Himachal Pradesh and Kerala have announced 100% financial inclusion in all their districts. Reserve Bank of India’s visionfor 2020 is to open nearly 600million new customers' accounts and service them through a variety of channels by leveraging on IT. However, illiteracy and the low income savings and lack of bank branches in rural areas continue to be a road block to financial inclusion in many states. Apart from this there are certain in Current model which is followed. There is inadequate legal and financial structure. India, being a mostly agrarian economy, hardly has schemeswhich lend for agriculture. Along with microfinance we need to focus on

..Inclusive growth..

Inclusive growth as the literal meaning of the two words refers to both the pace and the pattern of the economic growth. The literature on the subject draws fine distinction between direct income redistribution or shared growth and inclusive growth. The inclusive growth approach takes a longer term perspective as the focus is on productive employment rather than on direct income redistribution, as a means of increasing incomes for excluded groups. Inclusive growth is, therefore, supposed to be inherently sustainable as distinct from income distribution schemes which canin the short run reduce the disparities, between the poorest and the rest, which may have arisen on account of policies intended to jumpstart growth. While income distribution schemes can allow people, to benefit from economic growth in the short run, inclusive growth allows people to “contribute to and benefit from economic growth”.
The ‘inclusive growth’ as a strategy of economic development received attention owing to a rising concern that the benefits of economic growth have not been equitably shared. Growth is inclusive when it creates economic opportunities along with ensuring equal access to them. Apart from addressing the issue of inequality, the inclusive growth may also make the poverty reduction efforts more effective by explicitly creating productive economic opportunities for the poor and vulnerable sections ofthe society. The inclusive growth by encompassing the hitherto excluded population can bring in several other benefits as well to the economy. The concept “Inclusion” should be seen as a process of including the excluded as agents whose participation is essential in the very design of the development process, and not simply as welfare targets of development programmes (Planning Commission, 2007).

Economics and climate change

Economics and climate change
What role should economists then play in the fight against climate change? As with all other economic problems, economists have formed and advocated normative economicpolicies to mitigate the effects of climate change, which have generated great debate. It is important to understand these debates and decide on the most effective measures. In future, economic analysis should hopefully yield new estimates of mitigation benefits and improve our understanding of costs in the presence of various market distortions. It should also create better tools for making policy choices under uncertain conditions, and alternate mechanisms for good environmental policy. A better and more comprehensive understanding of the economics of climate change would greatly enhance the formulation and implementation of a range of innovative climate change policies at domestic and international levels.
Conclusion The effects of climate change will have far reaching impacts on our lives, and there is no doubt that it is an uphill task to resolve this global issue. While the debate over the economics of climate change remains heated and there are no clear answers as to the best means of mitigating the effects of climate change, it is nevertheless a positive sign that citizens and countries around the world recognise theseverity of the problem of climate change. Indeed, many countries have pledged to join the fight against global warming by reducing their greenhouse emissions and adopting environmentally friendly policies, including China, one of the world’s largest emitters of greenhouse gases.
On a micro level, firms and consumers have also rallied toward recognised the importance of building a sustainable environment for our future. Firms have adopted cleaner technology while consumers have displayed greater environmental awareness and activism, such as by switching to more fuel efficient cars. Governments have also recognised the importance of building a sustainable blueprint for the future. International agreements such as the Kyoto Protocol also show the urgent need for global cooperation. It is hoped that the United Nations Climate Change conference in Copenhagen this December would lead to a newinternational agreement on climate change, as the Kyoto Protocol expires in 2012. Will our actions today translate intoa cleaner and greener future? Perhaps only posterity can tell. Nevertheless, it is crucial to take action now to create a better environment for ourselves and future generations.