Causes for the Increase in Government Expenditure: The modem state is a welfare state. In a welfare state, the government has to perform several functions viz Social, economic and political. These activities are the cause for increasing public expenditure.

(I) Population Growth: 

1. During the past 67 years of planning, the population of India has increased from 36.1 crore in 1951, to 121 crore in 2011.

2. The growth in population requires massive investment in health and education, law and order, etc. 

3. Young population requires increasing expenditure on education & youth services, whereas the aging population requires transfer payments like old age pension, social security & health facilities.

(II) Defence Expenditure:

1. There has been enormous increase in defence expenditure in India during planning period. 

2. The defence expenditure has been increasing tremendously due to modernisation of defence equipment. 

3. The defence expenditure of the government was ? 10,874 crores in 1990-91 which increased significantly to ? 2,95,511 crores in 2018-19.

(III) Government Subsidies: 

1. The Government of India has been providing subsidies on a number of items such as food, fertilizers, interest on priority sector lending, exports, education, etc.

2. Because of the massive amounts of subsidies, the public expenditure has increased manifold.

(IV) Debt Servicing: The government has been borrowing heavily both from the internal and external sources, As a result, the government has to make huge amounts of repayment towards debt servicing.

(V) Development Projects: 

1. The government has been undertaking various development projects such as irrigation, iron and steel, heavy machinery, power, telecommunications, etc.

2. The development projects involve huge investment.

(VI) Urbanisation: 

1. There has been an increase in urbanization. 

2. In 1950 – 51 about 17% of the population was urban based. 

3. Now the urban population has increased to about 43%. 

4. There are more than 54 cities above one million population.

5. The increase in urbanization requires heavy expenditure on law and order, education and civic amenities.

(VII) Industrialisation: 

1. Setting up of basic and heavy industries involves a huge capital and long gestation period. 

2. It is the government which starts such industries in a planned economy. 

3. The under developed countries need a strong of infrastructure like transport, communication, power, fuel, etc.

(VIII) Increase in grants in aid to state and union territories:

There has been tremendous increase in grant-in-aid to state and union territories to meet natural disasters.