This work is primarily deals with the comparative analysis of public expenditure of Punjab between 1971 and 1991 on revenue account and capital account. The main objective of the study is to analyze the nature and structure of the public expenditure of the state, as state was passing through its difficult time of terrorism. After the detailed study of comparative public expenditure of Punjab between 1971-81 and 1981-91 on general, social and economic services on revenue account and capital account along with per capita expenditure and growth rate, it was found that the analysis does not prove the contention that the finance of Punjab Government is being squandered away by the expenditure on law and order. There is definitely on increase in this expenditure but it is being met through the internal reallocation of amounts from different heads of expenditure.