Hello Okoth Douglas here, reporting from Machakos Town

Public finance is related to the financing of the state activities and a narrow definition of the public finance would try to say that public finance is a subject which discusses the financial operation of the fiscal or of the public treasury.

Reasons for ballooning of the public expenditure

• Wagner’s law which states that as long as the government continues to exist there will be extension of the functions of the state which lead to an increase in public expenditure on administration, state enterprises and regulations of the economy.

• Population effect. A high population calls for more goods and services equally the government has to spend more to try meet the high demand for goods and services are available. The government also has to spend more to deal with problems such as unemployment, health sector shortages, sanitation and environmental degradation.

• An increase in national income of a country will bring about a growth in public expenditure, more revenue will be collected and the government is going to increase its expenditure on programmed for example health, education and welfare among others.

• Abandonment of laissez-faire doctrine. During the great depression of 1929, over 20% of the population of the United Kingdom was unemployed. the theory of government non-intervention would no longer hold. There was pressure from the public for government to provide relief for the unemployed and create jobs and hence in so doing public expenditure was increased.

• An increase in the range of economic activities by the state for example an increase in parastatals or establishment of new government institutions thus leading to growth in public expenditure.

• The advancement of Keynesian economics which advocated for government intervention in the economy through increase in government expenditure when the economy is in recession.

• Nationalism: Taking over private enterprises by states leads to more government expenditure due increase in cost in operating the newly nationalized companies.

• War and social crisis lead to increase in public expenditure since a country will be spending more on arms and ammunitions equally during post war reconstruction government spend more in order to rebuild the country.

• Socialism leads to increase government spending since the government will be trying to improve the welfare of everyone such a providing subsidies, better education and health care

• Inflation is defined as the general rise in price level. During inflation the government has to spend more so as to provide for goods and services. equally the government has to pay more for salaries and services hence leading to increase in public expenditure

Thanks for reading this article. Have a fruitful day wont you!!!