Sunday, June 24, 2018

Public Finance | Meaning & Definition Of PF

Meaning of Public Finance

Public finance is related with income and expenditure of the government. Public finance deals with income and expenditure of public authorities of the state and their mutual relation as also with financial administration and control. In the narrow sense, public finance deals with any public expenditure and public revenue but inboard sense, public finance also includes, besides public revenue and public expenditure, public debt, financial administration and fiscal policy. In present days the scope of public finance has been widened which includes public income, expenditure and allied activated.

Public Finance

Nature of public finance

Public finance is art as well as science. Public finance is a science shows the map for the construction of house out of the bricks and public finance as an artist gives it a practical shape. For example, when the principles of revenue expenditure are studied it is a scientific study, and when these policies are used by the government in solving the financial problems, it becomes an art.

Public finance is an art-

Public finance has been mentioned as arts also. The systematical and practical shape of any science is known as arts. The knowledge about anything is science but when it is implemented in practice it is called arts. Public finance is an art when the government gets the revenue from various sources and spends it to get maximum social welfare.

Public finance is a science because the branch of knowledge in which gets systematic knowledge of facts is termed as science. Prof. Plehan has considered public finance as a science.

“Science measures the perfect knowledge about a substance obtained with the assistance of careful experiment, honest observation, and accurate reasoning”

Public finance is a science because it contains all the characteristics of science and arts. Public finance is a science and it has supported by the following reasons;

  • It does not study the whole human knowledge, but it is limited to the special study of human knowledge.
  • Scientific methods are used in the study of public finance.
  • It clearly discussed and forecast for the specific goods.
  • It collects facts systematically and frames principles of any study subject.
  • Thus, it is said that public finance is a science for closely related to economics and political science.

The scope of public finance

The subject matter of public finance can be divided into following branches:
Public revenue- in this branch of the public finance various scope of public revenue, tax structure and tax system etc. are studied. It is public revenue through which the government performs its various activities.

Public expenditure

The government has to incur various types of expenditure in the present welfare of society. Various principles of public expenditure, its effect on ethe conomy, various policies including budget etc. are studied in this branch of public finance. Public expenditure obtains that very similar place in public finance which consumption has in economics.

Public debts- in present days, the government is performing various welfare oriented development policies and as a result, public expenditure exceeds public revenue in most of some cases. Under these circumstances, the government secures public debts- both internal as well as external. Debt policies, their methods of obtaining, their effects, the way of redemption etc. are studied in this branch of public finance.

Financial administration- the management of all financial activities is studied in this branch of public finance. Budget making, publication, auditing, etc. are also included in financial administration.

Economic stabilization

The various policies related to economic stability is studied in this branch of public finance. Various fiscal and tariff policies are included under this section. With this section of public finance, government regulates and controls complete economic system. This branch of public finance helps in obtaining the objective of maximum social advantage.

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