Committed expenditure
Topic: Government Budget, Fiscal Policy and FRBM · NCERT: Class 12, Ch 5 "Government Budget and the Economy"
Meaning
Committed expenditure is spending that the government has already promised and cannot easily cut. It covers interest payments, defence, salaries and pensions. It matters because it leaves little room in the budget. When money is short, the government ends up cutting productive items like capital spending or welfare instead.
Example
Interest payments are the single largest item of revenue expenditure. In 2023-24 they were 3.6% of GDP. That same year, defence took 1.0% of GDP on the revenue side. National security leaves little scope for big cuts to it.
Don't confuse with
- Charged expenditure: a legal category. It is spending "charged" on the Consolidated Fund of India, which Parliament may discuss but does not vote on (for example, the President's emoluments and debt charges). Committed expenditure is an economic idea. It is about how hard the spending is to cut, not about how Parliament approves it.
Related concepts
- Revenue expenditure
- Capital expenditure
- Plan and non-plan expenditure
- Interest payments
- Effective capital expenditure
- Social sector expenditure
- Welfare expenditure
- Wagner's law
- Peacock-Wiseman hypothesis