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Developmental and Non-Developmental Expenditure

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The term expenditure describes a payment made in cash or on credit to buy or obtain goods or services. Liabilities incurred in the exchange of commodities or services are referred to as expenditures.

Difference between Developmental Expenditure and Non-Developmental Expenditure

 

What is Developmental Expenditure?

The expenditure which is related directly to the economic and social development of the country is known as Developmental Expenditure. These expenditures are also known as productive expenditures since they contribute to economic growth by boosting the nation’s production and the real economy. For example, Expenditure on health, social welfare, industrial development, agricultural development, etc. Expenditure on these kinds of services is not a part of the government’s main functioning. Besides, developmental expenditures add to the flow of goods and services in the economy.

What is Non-Developmental Expenditure?

The expenditure incurred on the important general services of the government is known as Non-Developmental Expenditure. It means that these expenditures do not immediately advance the economic and social development of the nation. For example, Expenditure on police, justice, defense, etc. Besides, these expenditures are important from the administrative point of view.

Classification of an expenditure as Developmental and Non-Developmental Expenditure

If an expenditure directly adds to the flow of goods and services of an economy, then it is said to be developmental expenditure.

If an expenditure indirectly contributes to the flow of goods and services of an economy, then it is said to be non-developmental expenditure.

Difference between Developmental Expenditure and Non-Developmental Expenditure

Basis

Developmental Expenditure

Non-Developmental Expenditure

Meaning

The expenditure which is related directly to the economic and social development of the country. The expenditure incurred on the important general services of the government.

Impact on Development of Economy

These expenditures have a direct impact on the development of the country’s economy. These expenditures have an indirect impact on the development of the country’s economy.

Objectives

In the case of developmental expenditure, definite objectives are set which can be achieved in a fixed duration of time. In the case of non-developmental expenditures, it is impossible to set objectives and achieve them in a fixed duration of time.

Share of Expenditure

The share of these expenditures is gradually increasing in the economy. The share of these expenditures is gradually decreasing in the economy.

Nature

Developmental Expenditure is productive in nature as it adds to the flow of goods and services. Non-Developmental Expenditure is not concerned with the working class’s productivity.

Example

It includes all the social, community, economic and developmental assistance to the state. It includes pensions, cost of tax collection, defense expenditure, etc.

FAQs on Developmental and Non-Developmental Expenditures

Question 1: What are liabilities?

Answer:

Liabilities refer to the sum of money that is owed or borrowed from someone else and it can be repaid in a specific period through money, goods, or services.

Question 2: What do you understand by expenditures?

Answer:

The term “expenditure” describes a payment made in cash or on credit to buy or obtain goods or services. Liabilities incurred in the exchange of commodities or services are referred to as expenditures.

Question 3: Write an example of developmental and non-developmental expenditure.

Answer:

  1. Examples of developmental expenditures- are expenditures that are held in the agriculture sector, health sector, and education sector.
  2. Examples of non-developmental expenditures- are expenditures that are held in defence, cost of tax collection, and administration.

Question 4: Which is more beneficial for the government in developmental and non-developmental expenditures?

Answer:

Both are beneficial for the government but there is just one difference between developmental and non-developmental expenditure that is developmental expenditure gives direct benefit and non-developmental gives indirectly.


Last Updated : 14 Jan, 2024
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