Principles of public expenditure | canon of public expenditure

Public expenditure principles are also called canons of public expenditure. They are guidelines which public authorities should follow while spending government money.

1) principle of maximum social advantage:-

The objective behind this principle is that public expenditure must promote social welfare and money should be spent for general cause. It should bring elimination of inequality, increased in production and public expenditure should not be spent for benefit of particular group of society but it should promote welfare for all.

2) canon of economy:-

The government should minimise waste of public money i.e public money should not be misused and wasted. They should not pay more where less can do . The money should bring maximum benefit.

3) canon of sanction :- 

It states that public money/expenditure should be used with proper authority . Public expenditure should not be incurred without proper authority . Also,the money must be spent for purpose for which it was sanctioned which ensures waste avoided ,whether expenditure has fulfilled objective and there is proper control and supervision over public expenditure

4) canon of surplus :-

It is an outdated canon. It states that public authorities should raise adequate revenue to meet expenditure and leave some surplus. there should be no deficit in budget 

5) canon of elasticity :-

Structure of public expenditure should be flexible so that needed change can be effected easily . In today's expenditure it is easier to increase government expenditure but difficult to lower it

6) canon of productivity :-

Public expenditure should be capable of raising productive capacity of country. It should improve business organization and increase level of employment.

7) canon of equitable distribution :-

It meant that government expenditure should be allocated to different heads which prevents inequality in distribution

8) canon of co-ordination :-

Co-ordination is needed to prevent and avoid duplication of expenditure as in federal state lower level government too spend large sum of money along with central government.