To understand the meaning of public finance, it is pre-requisite to have some knowledge of the words ‘public’ and ‘finance’. The word ‘public’ is a collective term which stands for the collection of individuals, In a wider sense, it refers to all the members of a community . Thus, Public Finance in this manner can be said to be the science of the income and expenditure. “Decoding Public Spending and Revenue” sheds light on the essential mechanisms behind public expenditure and revenue generation. From understanding the allocation of taxpayer dollars to examining the sources of government income, this guide provides a comprehensive look at how fiscal decisions impact economies and societies.
Table of Contents
In the words of Adam Smith, “Public finance is an investigation into the nature principles of the state revenue and expenditure.” Truly, Adam Smith used the d ‘State’ and Dalton on the other hand, used the phrase ‘public authorities’. Yet, Dre is no difference between state and public authorities. Read More https://en.wikipedia.org/wiki/Public_finance
The economists like Prof. Dalton defines Public finances as the subject which is concerned with the income and expenditure of public authorities and with the mutual adjustment.
Thus it seems that there is no substantial difference in the various definitions, since all of them shows that public finance is the subject which studies the income and expenditure of the government-central, provincial or local. Every government has to perform manifold functions for the welfare of the community which the in- dividual cannot or does not perform properly. In short, raising of funds for the necessary expenditure constitutes the subject of public finance
It is obvious that such an understanding of the scope of public finance narrows down the field of study. But since there is a difference between the ‘public economics’ and ‘public finance’. These two terms are generally confused by the reader. The distinction between both terms should be made clear. Public economics is the exact counterpart of the private economics with not only studies the public Finance but also the other activities of public welfare performed by the state. We here study how the various resources of income are mobilized and how these resources are spent on the consumption, production, exchange and distribution activities of the state. Therefore, whole of public economic studies the desirability of the poor relief measures, provident fund schemes etc., while the public finance is concerned with the methods of raising and allocating the funds between these activities. In- short, public finance is the science which deals with the financial operations – in- come, expenditure and debt of the state
Key Factors for Decoding Public Revenue and Expenditure
Public Revenue-
Public Expenditure
Public Debt
Financial Administration
Economic Stabilization
Decoding Public Revenue and Expenditure
public revenue, the principles of taxation and its problems. In other words, all kinds of income from taxes and receipts from public deposit are included in public revenue It also includes the methods of raising funds. It further studies the classification of various resources of public revenue into taxes, fees and assessment etc. Then, we study the principles which should govern the public revenue and various methods of raising it. Briefly, it deals with the canon of taxation. Taxation is the main item of public finance.
In this part of public finance we study the principles and problems relating to the expenditure of public funds. This part studies the fundamental principles that govern the flow of Government funds into various streams. Then comes the study of method of actual expenditure of government funds on different items. We also study the classification of public expenditure on different bases. We also study theoretical set up of different criteria and the latest trends which have emerged in the public expenditure and try to find out the factors which were responsible for the latest trends. At last, we take the normative side of the problem and critically evaluate the policies adopted by the government on public expenditure and suggest various measures for improvement.
Public Debt
Public authority or any Government can raise income through loans to meet the short-fall in its traditional income. The loan raised by the government in a par- ticular year is the part of receipts of the public authority. But now the question is as to why these loans should not be included in public revenue. It is because the revenue raised by the public authorities are not to be paid back but the loans raised by the government within and without the country are always subject to repayment This part of public finance also studies the reasons for which the loan is raised, the source of the loan, the method in which raised, the interest and the method of repayment. Thus, it examines the problem related to raising and repayment of loans. At last, as in every other branch of our study, we critically examine the borrowing policy of the state and suggest measure for further improvement
Financial Administration
Now comes the problem of organization and ad- ministration of the financial mechanism of the Government. In other words, under financial or fiscal administration, we are concerned with the Government machinery which is responsible for performing various functions of the state: The budget is the master financial plan of every government. In the budget, anticipated revenue and expenditure are estimated i.e. the schedule of activities to be under- taken and the ways of financing these activities. The important matter related with the financial administration is the execution of the budget. Various estimates and data are to be collected and prepared. The whole procedure of preparation of the budget, presentation and passing of the budget, execution of the budget and evaluation of the budget, all these aspects fall in the subject-matter of financial administration.
Economic Stabilization
- Now-a-days economic stabilization and growth are the two aspects of the Government economic policy which got a significant place in the discussion on public finance theory. This part describes the various economic policies and other measures of the government to bring about economic stability, in the country. From the above discussion, we can say that the subject-matter of public finance is not static, but dynamic which is continuously widening with the change in the concept of state and functions of the state, As the economic and social responsibilities of the state are increasing day by day, the methods and techniques of raising public income, public expenditure and public borrowings are also changing
READ MORE ARTICLES https://cashflowz.in/why-insurance-is-important/
