Address: Near Jivan Jyoti Hospital, Tinsukia College Road; Contact Person: Naveen Mahato, 8876720920

Thursday, October 29, 2015

Dibrugarh University (3rd Semester) - Advanced Financial Accounting Selected Questions for Nov' 2017 Exam

Selected questions for November’ 2017 exam
Unit – 1: Accounts of Banking Companies
Q. List out the form of business in which Banking Company may engage as detailed in Section 6 of the Banking Regulations Act. Or Mention the features of a banking company.
Q. Explain the following in relation to the Banking Company:
a)      Slip system of posting
b)      Rebate on Bills Discounted and its treatment
c)       NPA
d)      Non-banking Assets
e)      Form B of the Banking Company
f)       Books maintained by banking companies
g)      Money at call and short notice (Schedule 7)
Q. Write a brief note on various types of advances provided by bank. (Cash Credit, Overdraft, Loan, Discounting)
Q. Write a brief note on various classes of advances (Standard assets, sub-standard assets, doubtful assets, loss assets. Also mention % of provision required in these classes.
Q. Give in brief the various provisions of the Banking Regulation Act, 1949 relating to the annual accounts of the banking company.
Q. Practical Problems: (Illustration and Previous exams question papers)

Monday, October 26, 2015

Dibrugarh University Questions Paper: Advanced Financial Accounting Nov' 2013

2013 (November)
COMMERCE (Speciality)
(Advanced Financial Accounting)
Course: 203
Full Marks: 80
Pass Marks: 32
Time: 3 hours

The figures in the margin indicate full marks for the questions.
1. (a) Choose the correct answer:                             1X3=3
a)      Preferential creditors are shown under List A/ List B/ List E.
b)      Revenue account of life insurance Act, A-RA/ A-PL / A-BS.
c)       A term loan is treated as non performing asset (NPA), if interest n it remains unpaid for a period exceeding 90 days/ 100 days / 120 days

(b) Fill the blanks:                            1X3=3
a)      The IRDA was set up in the year ______.
b)      During the period of inflation, profits are _____.

Sunday, October 25, 2015

Dibrugarh University Question Paper: Alternative English Nov' 2014

2014 (November)
Alternative English
Course: 302
Full Marks: 80
Pass Marks: 32
Time: 3 Hours
The Figures in the margin indicate full marks for the questions
1. (a) A week ago you bought a washing machine from M/s D.D Traders, Silpukhuri, Guwahati. The machine is not working properly. Write a letter of complaint asking for a replacement.                                   8
(b) Reader’s Digest India Ltd., Mumbai has bought out a book called How to write Speaker Better. As the marketing manager of the company, write a letter to a potential customer offering the book at a special price of Rs 250 against the print price of Rs 500.
2. Write an assay on any one of the topics given below:                                 10
(a) Advertisements and consumers

Dibrugarh Univeristy Question Paper: Business Laws and BRFW Nov' 2014

Commerce (General/Speciality)
Course: 102
Time: 3 Hours
New course (Business Laws)
Full Marks: 80
Pass Marks: 24
The figures in the margin indicate full marks for the questions
1. Write True or False:                                    1x8=8
a)      Offer may be implied.
b)      Acceptance may be conditional.
c)       Agreement with a minor is void.
d)      Consideration from stranger to contract is valid.
e)      Money cannot be a subject matter of sale under the Sale of Goods Act 1930.
f)       Breach of warrantees by one party entitles the other party to repudiate the contract.
g)      Share warrants are Negotiable Instruments.
h)      A government hospital is considered as an industry under the Industrial Disputes Act, 1947

Sunday, October 18, 2015

Dibrugarh University Question Paper: Advance Financial Accounting Nov' 2012

2012 (November)
Commerce (Speciality)
Course: 301
(Advance Financial Accounting)
Full Marks: 80
Pass Marks: 32
The figures in the margin indicate full marks for the questions.
1. (a) Choose the correct answer:                                             1x3=3
(i) Banking Companies are governed by the Banking Regulations Act, 1947/1948/1949.
(ii) The valuation balance sheet is prepared by the general insurance companies/the life insurance companies/ both general and life insurance companies.
(iii) Accounting for price level changes is popularly known as Inflation Accounting/Deflation Accounting.

(b) Fill in the blanks:                                        1x3=3
(i) In case of cum-interest, interest is _________ in the quoted price.
(ii) The Provincial Insolvency Act was enacted in the year ________________.
(iii) In case of Banking Companies Accounts, Contingent liabilities are shown under schedule __________.

Dibrugarh University Question Paper: Entrepreneurship Development Nov' 2014

2014 (November)
Course: 502
(Entrepreneurship Development)
Full Marks: 80
Pass Marks: 32
1. (a) Write True or False:                                             1x4=4
(i)         There is no difference between a manager and an entrepreneur.
(ii)       Entrepreneurs are born, not made.
(iii)      The word “Entrepreneur” has been derived from the French word ‘entreprendre’.
(iv)     Innovation theory of entrepreneur was advocated by J.A. Schumpeter.
(b) Write the full form of:                                             1x4=4
(i)         SHG
(ii)       SISI
(iii)      KVIB
(iv)     SIDBI

2. Write short notes on the following:                                    4x4=16

Collection Letters and It's Nature

Collection Letters and It’s Nature
Credit is the soul of business, but the business can be kept working only by recovering the payment after selling the goods on credit. Otherwise, it is liable to perish. Collection letters are written to customers who have purchased on credit and not paid their bill on the due date. The purpose of collection letters twofold: one to get money back and other to retain customer’s goodwill.
Sometimes one single collection letter makes the debtor to pay the debt but sometime the lender has to persuade the debtor to make payment by writing a series of collection letters.

In the opinion of Kitty O. Locker, “Collection letters ask customers to pay for the goods and services they have already received.”
Quibble and others defined, “Collection letters are used by an organization to entice its charge customers to pay an outstanding charge-account balance.”

Features (Nature) of collection Letter: Collection or dunning letters possess some distinct features that differentiate them from other business letters. Some of the features of collection letter are as follows:
1.       Parties involved: Buyer who buys on credit and seller are involved in collection letter. Seller writes this letter to the buyer for payment of dues.
2.       Series of letter: Collection letters are written in a series. The series includes remainder letter, inquiry letter, appeal and urgency letter and warning letter.
3.       Objective: The prime objective of writing collection letter is to realize the dues from the customers.

Meaning of Office Memorandum and Its advantages and disadvantages

Office Memorandum or Memo or Memorandum
Memorandum is popularly known as memo. The literal meaning of the word memorandum is a note to assist the memory. Memos are the written internal communication means for exchanging information relating to day-to-day functions within the organizations.
According to Lesikar and pettit, “Memorandum is a form of letters written inside the business”.
According to Stewart and Clark, “Memos are used to communicate with other employees, regardless of where the employees may be located in the same organization.”
According to S. Taylor, “Memo is a written communication form one person to another (or a group of people) within the same organization.”
So, memorandum or memos are an internal short note or letter in which information exchanged among superiors and subordinates or same potion of employees in the organizational structure.
Advantages of office memo
We know memorandum serves various purposes. It is a common means of writer, communication within the organization. The main advantages of memos are discussed below:
1.       Time saving: We can see that may organizations use printed memo. As it is usually printed, it takes less time to draft it.
2.       Less formality: No formality is necessary in drafting a memo, usually inside address, salutation and complimentary closing is omitted in it.

Saturday, October 17, 2015

Business Letter: Meaning, Purpose, Stages and Essentials

Business Letter - Meaning
A letter is price of conversation by post. It is the most important means of written communication. Every organization has to maintain contacts with its customers, suppliers, Government Department and so on. The organization has also to exchange information with various parties. Placing orders, soliciting enquires, executing orders etc. require communication. For such type of communication the media used by the organization is a letter. This letter is known as business letter.
In the words of H. A. Murphy and others, “The medium used most often for written messages to persons outside your organization is the business letter.”
W. J. Weston said, “Business letter is the process of accomplishing business transaction in written form.”

The functions or purposes of a business letter
Business people have to communicate with the suppliers, debtors, creditors, customers and with other concerned parties to exchange information. Business letters are basically used to communicate with the above parties.
According to Ricks and Gow, “The primary purposes of business letters are to inform, instruct, request, inquire, remit, order, advice, correct and to question.”
Purpose of Business Letter
1. Convey information: The basic purpose of any business letter is to convey information regarding business activities. Information can be transmitted through business letter to customers, suppliers, debtors, government authorities, financial institutions, bank and insurance companies and to any other parties related with the business.

Individual and Group Presentation

Individual and Group presentation
In business communication, the word presentation means a “prepared speech on a given topic that is made to a small audience”. A presentation can be classified into two categories: Individual Presentation and Group Presentation.

In Individual type of presentation, there is only one speaker who expresses his views on a given topic to an audience. Individual presentations allow a person to completely control the thoughts, ideas and methods of presenting without outside influence if they choose. An individual presentation is based solely on one person's thoughts, time, and effort.

A group presentation is supposed to be a subject matter with content that is agreed upon by all of the members present. A group presentation needs to incorporate the thoughts and opinions of the people in that group. This allows for more viewpoints and can lead to an overall improved and effective presentation. While individual presentations allow someone to work at their own leisure and pace, group projects require a sacrifice of time and increased effort to meet outside of class and possibly at crazy times. Group projects usually offer less flexibility and can be much harder to accomplish things if too many people are running in too many different directions.

Seminar in Business Communication - Comprehensive Note

A seminar may be defined as “a discussion in a small group in which the result of research or advance study is presented through oral or written reports.” Seminar is simply group communication in which open person makes a presentation or speech on a topic by highlighting it contents in the light of present and pressing problems. This presentation or speech is followed by questions and expect comments from the audience. Thus seminar is mixture of speech and group discussion. During seminar one person acts as chairman of the session and conducts the seminar by introducing the topic and the speaker. At the end of the session, he asks the audience to raise questions and ensures that the discussion follows in the light of the theme.

Significance of seminar
Seminar helps bring expert in a particular subject together to present their experiences and vies. There is a meaningful discussion on the papers, presented, their summaries and recommendations, if any, of these papers are published in the form of a report for wider circulation.
A seminar is an effective method of oral communication. Thus, one important aspect of a seminar is thorough and indepth knowledge of the subject and proper delivery. This involves careful articulation, stress on important words and effective modulation of the voice.

How to Make Seminar Effective
The effectiveness of seminar depends upon how different parties and persons play their role in effective way. These parties and persons include organizations, speakers, chairperson and audience.

Mock Interview in Business Communication - Comprehensive Note

Mock Interview
A Mock Interview is a practice interview designed to simulate a real job interview as closely as possible.  Mock interviews are one of the best ways to improve interview skills and prepare for an interview.  The practice gained in a mock interview is invaluable. Mock interviews can be completed in person, by phone or by video conference.  All three methods work well.  The key to success in a mock interview is recreating the interview experience as much as possible.

Purposes/Objectives of mock interview
a)      Practicing for actual interview.
b)      Describes the manner of actual interview.
c)       Develops the strategy of interview.
d)      Minimize worry and anxiety prior to actual interview.
e)      Aims at making firms impression effective.
f)       Practicing communicating of one’s skill clearly.

Importance/Significance of Mock Interview
Mock interviews enable candidates to have a fair idea about the sort of things they are going to experience at actual interviews, and prepare them how accurately they can deal with it. Generally these interviews are organized by career services where a career coach trains the students and recent alumni for the new opportunities they can explore by being perfect at the actual interview sessions. But, accuracy does not come automatically. It needs a thorough practice and guidance from an expert trainer. Mock interviews do just the exact thing with the candidates to bring them to perfection and boost their confidence.

Group Discussion in Business Communication - Comprehensive Note

Group Discussion
Group Discussion is an important tool in the selection process. It is mostly used for selecting candidates for management posts. Here, the candidates are divided into small groups. Each group contains six to eight candidates. Each group is given a topic for discussion. They are also given a time limit for discussing this topic. The topic may be a general or current topic. For e.g. "Leaders are born, not made". Each participant has to give his or her views about this topic. The selectors observe the full discussion. After the time limit is over, the best candidate from the group is selected. The same process is followed for other groups.
Group discussion is mostly unstructured. That is, every single step is not planned in advance. Each candidate is not given a time limit for speaking. Similarly, the order of speaking, that is, who will speak first and who will speak last is not fixed in advance. The candidates have to decide how to conduct the group discussion. The selectors see how the group takes shape, and who contributes most to it. They also judge the knowledge of each candidate, time management, leadership quality, behaviour, etc.
Purposes/Objectives of group discussion:
Group discussion actually detail the area of approach to a problem or topic. A fruitful group discussion should include the following objectives:
1. Suggestions: Advice and ideas, together with suggestions, they form the core heart of a group discussion. It is through these tools that a meaningful and practically implementable solution can be reached. Intermingling of these suggestions give rise to a new ones, creating a space for best possible output.

Difference between Hearing and Listening

Hearing Vs Listening

It is a physical ability and not a conscious act.
It is a skill and is a conscious act (Psychological)
Everyone hears unless there is a physical disability
Not everyone listens.
Perceiving sound by the ear
Making an effort to hear and it involves reception, analysis, interpretation and response
It is an Involuntary act.
It is Voluntary act.
In case of hearing, We hear sound and noise but do not understand much
In case of listening, we understand what is being said or heard
Does not need focus.
Needs focus and care.
Hearing uses only one of the five senses which is hearing.
Listening uses hearing, seeing and sometimes the sense of touch too.
It is Passive in nature.
It is Active in nature.

Effective Listening: Meaning, Importance, Types, Process and Principles of Effective listening

Effective Listening:
Listening is an essential part of spoken communication. Speaking and listening go together and oral communication can not be effective without proper listening. Poor listening defeats the very purpose of spoken words. Listening is a deliberate effort and is much more than hearing. It requires getting the full meaning of what is being said.
Listening effectively takes skill, self-motivation, and practice. Effective listening means concentrating on what the speaker says rather than on how it is said. Lack of attention and respectful listening can be costly - leading to mistakes, poor service, misaligned goals, wasted time and lack of teamwork.
Reasons for Effective Listening
Listening is an important aspect of business communication. It stands third after writing and speaking. A business communicator has to listen to various customer, employees, officer, suppliers, financiers etc. Obviously, it is an unavoidable task for a business person. This important reason as to why a business communicator should known about listening is enumerated as under.
(1) To gain new information and ideas.
(2) To question and test evidence and assumptions.
(3) To be inspired and motivated.
(4) To improve overall communication.
The explanation of these points is as under:

Various forms of Formal and Informal Communication

Channel of communication/Communication Networks
A channel means a path or a way. Thus a channel of communication is the path or way through which information is transmitted throughout the organization. It is the route through which the message flows from the sender to the receiver.  Human beings in an organization are inter-related to each other. They are related both formally as well as informally. These relationships are maintained by means of communication. Therefore there exists in an organization two channels of communication: -
1. Formal channel of communication
2. Informal channel of communication

Various forms of Formal channel of communication
Formal Channel of Communication are classified into following forms:
1. Downward communication: Communication that flows from the top level of the organization to the bottom level along with the scalar chain is known as downward communication. Example for such type of communication are orders, instructions, rules, policies, programs and directives etc. it specifies the extent of the subordinates authority and their responsibility.
2. Upward Communication: Upward communication is just the opposite of downward communication. In this communication system, the message is transmitted from the bottom of the organization upward to the top of the organization through the middle managers along with the line. Usually this includes workers grievances, suggestions and reactions. This communication system was not appreciated by the superiors. But it has assured importance in modern times and is considered to be a main source of motivating employees.

Corporate Communication: Meaning, Types with Characteristics, advantages and disadvantages

Meaning of Corporate Communication
Corporate communication is broadly defined as a corporation's attempt to inform the public, including all its consumers, private investors and the media. Corporate communication represents the very voice with which corporate institutions interact with the outside world and is inclusive of communications regarding investor relations, government relations, labor relations and employee development. Corporate communications is the process of facilitating information and knowledge exchanges with internal and key external groups and individuals that have a direct relationship with an enterprise. It is concerned with internal communications management from the standpoint of sharing knowledge and decisions from the enterprise with employees, suppliers, investors and partners.

In the words of William Scott,” Administrative communication is a process which involves the transmission and accurate replication of ideas ensured by feedback for the purpose of eliciting actions which will accomplish organizational goals‖.”

Types of Corporate Communication/Communication Channels/ Communication Networks
It is basically of two types:
1.       Formal Communication
2.       Informal Communication

Meaning of Feedback and Its importance in Business Communication

Meaning of Feedback and Its Importance
The receiver’s response or reaction to the sender’s message is called feedback. Feedback ensures proper and mutual understanding between sender and receiver. Feedback provides primary information about the success of the communication. In other words, feedback is the reaction to the sender message. When receiver answers or responses to the sender’s through a message or information is called feedback. Some definitions of feedback are as follows:

According to Pearson and Nelson, “Feedback is the receiver’s verbal and nonverbal response to the source’s message.”
According to Bovee and others, “Feedback is a response from the receiver that informs the sender how the message is being interpreted and how the communication is being received in general.”
According to Bartol and Martin, “Feedback is the receiver’s basic response to the interpreted message.”
According to S.P. Robbins, “Feedback determines whether or not understanding has been achieved.”
So, feedback is the process of reaction or response of receiver to the sender with regard to the sender’s message.

Importance of Feedback in Communication Process

Forms of Business Communication

Forms of Communication
Communication is the transfer of ideas and information from one person to another person. It is a bridge of meaning among people so that they can share what they fell and know. By using this bridge, a person can safely cross the river of misunderstanding that sometimes separates people. To make successful communication there are different methods/ ways:

(A) On the basis of location of the receiver: Depending on the location of the receiver there are two types of communication:
1. Internal Communication
2. External Communication

1. Internal Communication: Communication among the members of an organization is known as internal communication. That is when executives and employee of an organization communicate each other within the organization then it will be labeled as internal communication.

2. External Communication: When executives and employees of an organization communicates or exchanges information with outsiders of the organization then it is called external communication.

Both internal and external communication can be subdivided into two types:

Growing importance of Communication in the present world

Significance (Need) of Business communication

Communication is the life blood of business. It is an all pervasive function of management. Today the organizational structure is designed on the basis of specialization and division of labour. Large number of people work together who are functionally related to each other. Thus, co ordination is must amongst the workmen. Co-ordination can be achieved only when there is mutual trust and understanding between them. This understanding is created by effective communication. Thus communication is an essential ingredient for effective management. Further the role of communication may be summed up as:-

1.       The objectives, plans and policies of the organization are cleared to the workers through communication.
2.       It provides unity of direction to various activities of the enterprise.
3.       It helps in controlling and coordinating the various activities of the organization.
4.       It helps in motivating the workers of an organization.
5.       It helps the managers to develop their managerial skill.

According to Sir John Harvey-Jones, “Communication is the single most essential skill. Effective   communication is the need of the day.” In recent times communication has become all more essential due to the following reasons:-

Tuesday, October 13, 2015

Principle of Maximum Social Advantages: Meaning, Assumptions and Criticism together with diagram


One of the important principles of public finance is the so – called Principle of Maximum Social Advantage explained by Professor Hugh Dalton. Just like an individual seeks to maximize his satisfaction or welfare by the use of his resources, the state ought to maximize social advantage or benefit from the resources at its command.

The principles of maximum social advantage are applied to determine whether the tax or the expenditure has proved to be of the optimum benefit. Hence, the principle is called the principle of public finance. According to Dalton, “This (Principle) lies at the very root of public finance” He again says “The best system of public finance is that which secures the maximum social advantage from the operations which it conducts.” It may be also called the principle of maximum social benefit. A.C. Pigou has called it the principle of maximum aggregate welfare.

Public expenditure creates utility for those people on whom the amount is spent. When the volume of expenditure is small with a slighter increase in it, the additional utility is very high. As the total public expenditure goes on increasing in course of time, the law of diminishing marginal utility operates. People derive less of satisfaction from additional unit of public expenditure as the government spends more and more. That is, after a stage, every increase in public expenditure creates less and less benefit for the people. Taxation, on the other hand, imposes burden on the people.

Financial Administration in India: Meaning, Principles and Agencies involved in it

Meaning of Financial Administration
In simple words, financial refers to such a system or method by which one can analyse the financial working of the public authority. Thus the focuses on the procedure which ensure the lawful use of public funds. However the concept has been differently defined as under:

Prof .M.S Kenderic, “The financial administration refers to the financial measurement of govt. including the preparation of budget method of administering the various revenue resources the custody of the public fund, procedures in expending money, keeping the financial records and the like. These functions are important to the effective conduct of operation of public finance”

Prof. Dimock, “Financial administration consists of a series of steps whereby funds and made available certain official under procedures which will ensure their lawful and efficient use. The main ingredients are budgeting, accounting, auditing and purchase and supply.”

From these definitions one can easily find four ingredients (Methods/Process) of financial administration:

1)      Budget. The term budget has been derived from the French word “Bougette” which means a leather bag or a wallet. The chancellor of Exchequer in England used to carry his papers in the bag to House of Commons. Prof. Willoughby defined, “Budget-it should be at once a document through which the Chief Executive comes before the fund-raising and fund grading authority and makes full report regarding the manner and which he or his subordination have administered affairs during the last completed year ; in which he or exhibits the present conditions of public treasury and one the basis of such information sets forth his programme of for the year to come and the manner in which the purposes that such work should be financed.” 

Saturday, October 10, 2015

Public Finance and Its Significance in Developing Countries like India

Meaning and Definition of Public Finance
Public finance is a study of income and expenditure or receipt and payment of government. It deals the income raised through revenue and expenditure spend on the activities of the community and the terms ‘finance’ is money resource i.e. coins. But public is collected name for individual within an administrative territory and finance. On the other hand, it refers to income and expenditure. Thus public finance in this manner can be said the science of the income and expenditure of the government.
Different economists have defined public finance differently. Some of the definitions are given below. 
According to prof. Dalton “public finance is one of those subjects that lie on the border lie between economics and politics. It is concerned with income and expenditure of public authorities and with the mutual adjustment of one another. The principal of public finance are the general principles, which may be laid down with regard to these matters.
According to Adam Smith “public finance is an investigation into the nature and principles of the state revenue and expenditure”
To sum up, public finance is the subject, which studies the income and expenditure of the government. In simpler manner, public finance embodies the study of collection of revenue and expenditure in the public interest for the welfare of the country.

Meaning, Nature and Scope of Public Finance

Meaning and Definition of Public Finance
Public finance is a study of income and expenditure or receipt and payment of government. It deals the income raised through revenue and expenditure spend on the activities of the community and the terms ‘finance’ is money resource i.e. coins. But public is collected name for individual within an administrative territory and finance. On the other hand, it refers to income and expenditure. Thus public finance in this manner can be said the science of the income and expenditure of the government.
Different economists have defined public finance differently. Some of the definitions are given below. 
According to prof. Dalton “public finance is one of those subjects that lie on the border lie between economics and politics. It is concerned with income and expenditure of public authorities and with the mutual adjustment of one another. The principal of public finance are the general principles, which may be laid down with regard to these matters.
According to Adam Smith “public finance is an investigation into the nature and principles of the state revenue and expenditure”
To sum up, public finance is the subject, which studies the income and expenditure of the government. In simpler manner, public finance embodies the study of collection of revenue and expenditure in the public interest for the welfare of the country

Friday, October 09, 2015

Public and Private Finance: Similarities and Dissimilarities

Public Finance and Private Finance
Generally, the word ‘finance’ is loosely used for both the public and private finance. By private finance, we mean the study of the income, debt and expenditure of an individual or a private company or business venture. On the other hand public finance deals with income, expenditure and borrowings of the government. There are both similarities and dissimilarities in governmental financial operations as compared to the monetary operations of private businessman. An individual is interested in the utilisation of labour and capital at his disposal to satisfy social wants. In short, both private finance and public finance have almost the same objective of satisfaction of human wants. Again, private finance stresses individual gains whereas public finance attempts at promoting social welfare of the whole community. These two view points are correct to greater extent only because of their similarities as well as dissimilarities between both.

Similarities between Public and Private Finance
1.       Both the State as well as individual aim at the satisfaction of human wants through their financial operations. The individuals spend their income to satisfy their personal wants whereas the state spends for the satisfaction of communal or social wants.

2.       Both the States and Individual at times have to depend on borrowing, when their expenditures are greater than incomes.

3.       Both Public Finance and Private Finance have income and expenditure. The ultimate aim of both is to balance their income and expenditure.

Various Causes for Growth of Public Expenditure

Increase in Public Expenditure
There has been a persistent and continuous increase in public expenditure in counties all over the world. It is due to the continuous expansion in the activities of the state and other public bodies on several fronts. The modern governments not only perform such primary functions as the civil administration as well as defence of the country, but also take considerable interest in promoting economic development of their countries. Today, the state is taking active part in social and economic matters, such as education, public health, removal of poverty and in commercial and industrial development. The public expenditure has increased enormously in recent years mostly due to the development activities of the state. Hence, the increase in public expenditure is fully justified.
One of the most important features of the present century is the phenomenal growth of public expenditure. Some of the important reasons for the growth of public expenditure are the following.
1) Welfare state: Modern states are no more police states. They have to look in to the welfare of the masses for which the state has to perform a number of functions. They have to create and undertake employment opportunities, social security measures and other welfare activities. All these require enormous expenditure.
2) Defence expenditure: Modern warfare is very expensive. Wars and possibilities of wars have forced the nation to be always equipped with arms. This causes great amount of public expenditure.

Effects of Public Expenditure on Production, Economic Development and Planning, Economic Stability and Distribution

Importance of Public Expenditure/ Effects of Public Expenditure
Recently, in almost all countries of the world there has been a phenomenal increase in the magnitude and the variety of governmental activities. The acceptance the principle of welfare state, the necessity of maintaining full employment and economic development etc. the significant role of the government has been increased. All these show the need for an ever increasing public expenditure. The effect of public on various factors are given below:
Effect of Public expenditure on Production
The roles of private and the public sectors are complementary. The public sector provides the infrastructure, transport and communications, power, education and public health programmes. In the absence of goods and services provided by the government sector, private sector can hardly make any meaningful contribution towards production and development: According to Dalton, other things being equal, taxation should not adversely affect production and public expenditure should increase it as much as possible. Public expenditure can affect (i) the ability to work, save and invest, (ii) the desire to work, save and invest, and (iii) allocation of resources as between different uses. Public expenditure can influence these factors either favourably or unfavourably.
The economies of ,developing countries cannot make significant progress unless they concentrate on development of investment goods sector. This may not result in production in the immediate future, as in education and health programmes, infrastructural projects and projects with long gestation periods. This would, however, certainly build up growth potential in the economy, and help take the economy to a self-generating level.