QUESTION DISCUSS THE NATURE AND SCOPE OF PUBLIC FINANCE
u PUBLIC FINANCE
u
MEANING
u
PUBLIC FINANCE IS THAT BRANCH OF ECONOMICS
WHICH IS CONCERNED WITH THE STUDY OF REVENUE AND EXPENDITURE OF THE PUBLIC
AUTHORITIES. IT STUDY HOW THE PUBLIC AUTHORITY RAISE REVENUE AND INCURS
EXPENDITURE SO THAT SOCIETY MAY GET MAXIMUM SOCIAL BENEFIT
u
PUBLIC AUTHORITIES REFERS TO DIFFERENT LAYERS
OF GOVT OPERATING WITH IN A COUNTRY.
u
PUBLIC MEANS A GROUP OF PEOPLE REPRESENTED BY
GOVT AND FINANCE MEANS FINANCIAL RESOURCES OR INCOME OR EXPENDITURE OF THE
GOVERNMENT OF A COUNTRY.PUBLIC FINANCE IS RELATED TO FISC. FISC MEANS GOVT
TREASURY.
u
BUCHNAN” PUBLIC FINANCE STUDIES THE ECONOMIC ACTIVITES
OF GOVT AS A UNIT
u
NATURE OF PUBLIC
FINANCE
u WHETHER IT IS SCIENCE OR ART OR BOTH
u PUBLIC FINANCE IS A SCIENCE:- SCIENCE IS THE SYSTEMATIC STUDY OF ANY
SUBJECT WHICH STUDIES CAUSAL RELATIONSHIP BETWEEN FACTS.PUBLIC FINANCE IS A
SYSTEMATIC STUDY OF ANY SUBJECT WHICH STUDIES CAUSAL RELATIONSHIP BETWEEN
FACTS. THE ARGUMENTS :-
I.
DEFINITE AND LIMITED FIELD OF HUMAN KNOWLEDGE
II.
SYSTEMATIC STUDY OF FACTS
III.
SCIENTIFIC METHODS ARE USED TO STUDY PUBLIC
FINANCE
IV.
PRINCIPLES OF PUBLIC FINANCE ARE EMPIRICAL
u
NATURE OF PUBLIC FINANCE
u
PUBLIC FINANCE IS AN ART: ART IS THE
APPLICATION OF KNOWLEDGE FOR ACHIEVING OBJECTIVES. FISCAL POLICY WHICH IS AN
IMP INSTRUMENT TO OF PUBLIC FINANCE
MAKES USE OF THE KNOWLEDGE OF GOVT’S REVENUE AND EXPENDITURE TO ACHIEVE THE
OBJECTIVES OF FULL EMPLOYMENT,ECONOMIC EQUALITY,ECONOMIC DEVELOPMENT AND PRICE
STABILITY
u
SCOPE OF PUBLIC FINANCE
u
THEORY OF PUBLIC REVENUE:
I.
PRINCIPLES OF TAXATION
II.
METHODS OF RAISING REVENUES
III.
CLASSIFICATION OF REVENUE
IV.
DEFICIT FINANCING
ALSO KNOWN AS DISTRIBUTION BRANCH
u
THEORY OF PUBLIC EXPENDITURE:-ALLOCATING BRANCH
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THEORY OF PUBLIC DEBT:
I.
SOURCES OF DEBT
II.
IMPACT OF BURDEN OF DEBT
III.
METHOD OF INTEREST PAYMENT
IV.
REDEMPTION OF DEBTS
u
FINANCIAL ADMINISTRATION:- PROBLEMS OF DRAFTING
THE BUDGET,ITS ACCEPTANCE AND APPLICATION
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STABILITY AND GROWTH:-
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FEDERAL FINANCE
•
ALLOCATION BRANCH
•
DISTRIBUTION BRANCH
• STABILIZATION BRANCH
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PUBLIC FINANCE AND PRIVATE FINANCE
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SIMILARITY:-
- BALANCE BETWEEN INCOME AND EXPENDITURE
- MAXIMUM SATISFACTION
- IMPACT OF ECONOMIC CHANGE
- CAPACITY TO BORROW
- POSSIBILITY OF MIS USE
- DIFFERENCE
- PUBLIC
FINANCE
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CAN COMPEL PEOPLE TO PAY TAXES
u
ESTIMATE OF EXPENDITURE THEN ESTIMATE INCOME
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RELATIVE MORE ELASTIC
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MAXIMUM SOCIAL BENEFIT
u PUBLICIZES EXTENSIVELY
u
DEFICIT FINANCING
u
BUDGET
u
NO
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PVT FINANCE
a.
NO SUCH
RIGHT TO COMPEL ANY ONE
b.
BUT HERE INCOME IS ESTIMATED FIRST
c.
LESS ELASTIC
d.
MAXIMUM SATISFACTION TO HIM
e.
SECRECY
f.
NA
g.
SHORT BUDGET
h.
BANKRUPT: CAN BE DECLARED BANKRUPT IF LIABILITIES EXCEED ASSETS
u
PRINCIPLE OF PUBLIC FINANCE
u GAIN MAXIMUM SOCIAL ADVANTAGE. DR. DALTON HAS
GIVEN THE DOCTRINE OF MAXIMUM SOCIAL ADVANTAGES. IT IS BASED ON ASSUMPTIONS:-
•
TAXES ARE THE MAJOR SOURCES OF GOVT REVENUE
•
THE LAW OF
DIMINISHING MARGINAL SOCIAL ADVANTAGES APPLIES TO THE PUBLIC EXPENDITURE
EXPLANATION :-THE GOVT SHOULD STRIKE A BALANCE
BETWEEN THE PUBLIC REVENUE AND PUBLIC EXPENDITURE IN SUCH A WAY THAT COULD
YIELD A MAXIMUM SATISFACTION
u
u
IMPORTANCE OF PUBLIC FINANCE
a.
INCREASE IN THE ACTIVITIES OF THE GOVT
b.
INCREASE IN THE EFFECT ON ECONOMIC LIFE
c.
TO ACHIEVE ADJUSTMENT IN ALLOCATION OF
RESOURCES
d.
TO ACHIEVE ADJUSTMENT IN THE DISTRIBUTION OF
INCOME AND WEALTH
e.
TO ACHIEVE ECONOMIC STABILITY
f.
TO ACCELERATE THE RATE OF ECONOMIC GROWTH
u
MEASUREMENT OF
SOCIAL WELFARE
a.
INCREASE IN
PRODUCTION
b.
EQUITABLE
DISTRIBUTION OF WEALTH
c.
LIMITATION
•
DIFFICULT TO MEASURE SOCIAL BENEFIT
a.
FUTURE ADVANTAGE
b.
DIFFICULT TO
MEASURE THE BURDEN OF TAXATION
c.
NOT APPLICABLE TO
PUBLIC DEBT
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