COMPARIOSN BETWEEN PUBLIC FINANCE AND PRIVATE FINANCE

•COMPARISON OF PUBLIC FINANCE AND PRIVATE FINANCE

•    PUBLIC FINANCE

•    DR SHASHI AGGARWAL

•    MEANING OF PUBLIC FINANCE

1.       PUBLIC IS COLLECTIVE TERM WHICH STANDS FOR COLLECTION OF INDIVIDUALS

2.       WIDER SENSE REFERS TO ALL THE MEMBERS OF THE COMMUNITY

3.       ORDINARY MEANING OF FINANCE IS MONETARY RESOURCES

4.       IN PUBLIC FINANCE PUBLIC IS USED IN NARROW SENSE AND FINANCE IN WIDER SENSE

•    SCIENCE OF PUBLIC FINANCE STUDIES AND ANALYSIS THE EFFECTS OF GOVERNMENT BUDGETARY PRACTISES OF TAXING AND SPENDING :

1.       ALLOCATION OF SCARCE PRODUCTIVE RESOURCES

2.       DISTRIBUTION OF INCOME AND WEALTH

3.       ECONOMIC STABILITY AND FULL EMPLOYMENT

•    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

•    PUBLIC AUTHORITIES REFERS TO DIFFERENT LAYERS OF GOVT OPERATING WITH IN A COUNTRY.

•    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.

•    BUCHNAN” PUBLIC FINANCE STUDIES THE ECONOMIC ACTIVITIES OF GOVT AS A UNIT

•    PRIVATE FINANCE

•    PRIVATE FINANCE WE MEANS THE STUDY OF THE INCOME,DEBT AND EXPENDITURE OF AN INDIVIDUAL OR A PRIVATE COMPANY AND BUSINESS VENTURE

•    PUBLIC FINANCE DEALS WITH INCOME, EXPENDITURE AND BORROWING OF THE GOVERNMENT.

•    SIMILAR TIES

1.       SAME OBJECTIVE: SAME OBJECTIVE THAT IS SATISFACTION OF HUMAN WANTS. PRIVATE FINANCE IS CONCERNED WITH PERSONAL WANTS WHILE PUBLIC FINANCE IS CONCERNED WITH SATISFACTION OF SOCIAL OR COLLECTIVE WANTS.

2.       BOTH CONCEPTS ARE BASED ON RATIONALITY

3.       BOTH HAVE TO REPAY THEIR LOANS

4.       BOTH HAVE LIMITED RESOURCES : FACE THE PROBLEM OF ADJUSTMENT OF INCOME AND EXPENDITURE

5.       EFFICIENT MANAGEMENT : BOTH REQUIRE EFFICIENT MANAGEMENT

•    DISSIMILARITIES

•    ADJUSTMENT OF INCOME AND EXPENDITURE

•    PUBLIC AUTHORITIES ADJUST THEIR INCOME TO THE EXPENDITURE

•    AN INDIVIDUAL ATTEMPT TO ADJUST HIS EXPENDITURE TO HIS INCOME

•    DIFFERENT MOTIVES OF EXPENDITURE

•    INDIVIDUAL THING OF EARNING PROFITS

•    BUT THE MODERN GOVERNMENT EXIST FOR THE WELFARE OF THE COMMUNITY

•    NATURE OF RESOURCES :

•    RESOURCES AT THE INDIVIDUALS ARE VERY LIMITED

•    BUT THOSE OF THE PUBLIC AUTHORITY ARE ENORMOUS

•    PRINCIPLE OF EQUI MARGINAL UTILITY

•    FOR AN INDIVIDUAL IT IS EASY TO PLAN THE EXPENDITURE ON THE BASIS OF LAW OF EQUIMARGINAL UTILITY. DIFFICULT FOR GOVERNMENT

•    COMPULSORY CHARACTER

•    BUT THE PUBLIC AUTHORITIES CAN NOT AVOID OR POSTPONE CERTAIN EXPENDITURE,LIKE THE EXPENDITURE ON DEFENCE IS COMPULSORY, BUT IN CASE OF INDIVIDUAL EASY TO POSTPONE

•    COERCIVE AUTHORITY :

•    PRIVATE INDIVIDUALS CAN NEVER USE FORCE TO GET THEIR REVENUE BUT PUBLIC AUTHORITY CAN REA LISE THEIR REVENUE BY USING MONEY COERCIVE METHOD

•    BUDGETING DIFFERENCE :-

•    INDIVIDUAL BUSINESS HOUSE BELIEVES IN SURPLUS BUDGET

•    GOVERNMENT FIND IT USEFUL TO HAVE DEFICIT BUDGET

•    SECRECY AND AUDIT

•    PRIVATE BUSINESS CAN MAINTAIN SECRECY BUT GOVERNMENT CAN NOT