One of the following is NOT a reason for increase in public expenditure

Analyze the question: We need the option that is NOT a reason for an increase in public expenditure (government spending).

Concept: Public expenditure is money the government spends. It rises because of things like:

• Rising population and demand for social services (schools, hospitals, roads)
• Defence and internal security needs
• Higher wages and salaries for public servants (recurrent expenditure)
• Growing public debt and the cost of servicing it (debt servicing is a burden that pushes spending up)

Check each option:

• A. Decrease arising from public debt and its servicing. This is oddly worded ("decrease"). In reality, public debt servicing increases expenditure. A "decrease" would not cause spending to rise, so this option is faulty as a reason. That makes it a possible candidate.
• B. Increase in capital expenditure to provide social services. This is a valid reason spending rises.
• C. Increased financial commitment for defence and security. This is a valid reason.
• D. Increase in recurrent expenditure on wages and salaries. This is a valid reason.
• E. Returns on viable public corporations. This is revenue (income) to the government, not expenditure. It does not cause spending to increase. Returns from public corporations are a source of government income.

Deciding between A and E: Option A is poorly worded, probably a typo for "increase", and is clearly about debt servicing, which is an expenditure item. Option E is conceptually not expenditure at all: it is revenue.

Answer: E

Tip: In "NOT a reason" questions on public finance, sort each option into spending (wages, defence, social services, debt servicing) versus income (taxes, royalties, returns from public corporations). The one in the wrong category is your answer.