What is Public Finance ?
According to Dalton, ‘Public finance is concerned with the income and expenditure of public authorities and with the adjustment of one to the other.’
According to Prof. Otto Eckstein, ‘Public finance is the study of the effects of budgets on the economy, particularly the effect on the achievement of the major economic objects – growth, stability, equity and efficiency.’
In simple words, public finance deals with the financing of the government which includes taxation, government expenditure, public borrowing and debt financing, it also deals with fiscal policies adopted by the government to achieve the objectives of price stability, economic growth, equal distribution of income etc. It explains how the government raises its resources and uses them to meet its expenditure and to achieve its objectives.
Importance of Public Finance –
Public finance plays an important role in economic development of the economy.
In the developed industrialised countries, public finance helps in solving the basic problem of ensuring stability at full employment level in the short run and ensuring steady rate of economic growth (growth without fluctuations) in the long run.
While in the developing countries, public finance helps in solving the problem of how to generate and sustain a higher rate of economic growth to tackle the problem of poverty and unemployment. Public finance plays a crucial role in promoting economic growth and maintaining price stability in the developing countries. It also helps in promoting fair distribution of income and expansion in employment opportunities.