Hi friends, in today’s article we are going to know about the scope of public finance and also know the public finance Meaning. So let’s discuss in details.
What is Public Finance?
The term ‘Public Finance’ is related to the Italian word ‘Fise’, which means government treasury. Thus, public finance is a fiscal science, Which studies the operations of the govt treasury. Again the term public finance consist of two words, public + finance.
The word ‘public’ means authorities, i.e., all types of governmental bodies central, state & local. The word ‘Finance’ means the financial or monetary resources.
Thus public finance deals with the financial operation (finance) of the public authorities (public). In the traditional sense, public finance deals with the income and expenditure of public authorities.
In other words, public finance is a science which studies systematically & scientifically, the income and expenditure of the govt, their control and administration. It is a branch of knowledge which deals with –
- How and through what different sources the govt get its income.
- How it spends for the fulfillment of its requirements and for public welfare, and
- How it controls and administrates the income and expenditure.
Public finance has been defined by differently by different economist. According to Bastable, ‘public finance’ deals with expenditure and income of public authorities and their mutual relation as also with financial administration and controls.
Scope of Public Finance
Public finance is the science which deals with financial operations-income, expenditure and debt of the state, thus the scope of public finance may be summarised as follows or scope of public finance includes –
(i) Public Revenue.
(ii) Public Expenditure,
(iii) Public debt.
(iv) Financial administration.
(v) Economic stabilization & Fiscal Policy
• Public Revenue – Public revenue concentrates on the method of raising public revenue, principles of taxation and other related problems. All kinds of income from taxes and receipts of public deposits are include in public revenue.
If also includes the method of raising funds. Therefore, under public finance. We study the principles which should govern the public revenue and various methods of raising it.
• Public Expenditure – Public expenditure deals with the principles classification and effects of public expenditure which includes-
(a) The principles governing the flow of public funds into different channels
(b) The classification and justification of public expenditure,
(c) Effects of public expenditure on macro variables, such as employment, aggregate income, aggregate output, price level etc.,
(d) Expenditure policy of the govt; etc.
• Public Debt – The study of public debt includes-
(a)Method and objectives of public borrowing
(b) Management of public debt
(c) Burden of public debt, internal & external.
• Financial Administration and Control – Financial administration and control concentrates the methods of administration control and problem relating to the preparation of budget are studied and analysed in this branch of public finance.
• Economic Stability and Growth – Now a days economic stabilization and growth are two aspects of government economic policy which got a significant place in the discussion on public finance theory.
The port describes the various economic policies and other measures of the govt to bring about economic stability in the country.
From the above discussion we come to conclude that the subject matter of the public finance is not static but dynamic in the sense that it is continuously widening with the change in the concept of state and functions of state and the changing problem of economics with increasing social and economic responsibility of the state, the scope of public finance in India is also widening.
So friends, this was the concept of public finance and the scope of public finance. Hope you get the full details about it and hope you like this article.
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