Publicfinance 190121055136 PDF
Publicfinance 190121055136 PDF
Publicfinance 190121055136 PDF
Nithin Kumar
Department of Economics
University Evening College
Mangalore
INTRODUCTION
• The government of every country has to perform
certain special functions which can be classified
under two heads
1. Obligatory Functions
2. Optional Functions
2.Precedence of Income
3.Scarcity of resources
4.Borrowings
2. Precedence of Income
4. Borrowings
Both the public and private finance always face the same problem,
i.e., the problem of adjustment of income and expenditure.
Dissimilarities/Differences Between Private
Finance and Public Finance
1. Determination of Expenditure 8. Secrecy of the budget
7. Coercive Method
1. Determination of Expenditure
It can borrow large amounts not only from its citizens but also
from the foreigners
Continued…
3. Right to print the currency
The government can print notes which are legal tender within the
country
The private individual arranges his Expenditure in accordance with the law of Equi-
Marginal Utility
A Private Individual distributes his income between consumption and savings in such
a manner as to equalize their marginal utility
A Private individual tries, as far as possible, to apply the law of Equi – Marginal
Utility to his Expenditure
The government does not give as much importance this law as a private individual
does
Modern governments sometimes incur certain types of expenditure from which they
do not derive any advantage
They do incur this type of expenditure to satisfy certain sections of the community
Continued…
5. Nature of Budget
13.Effect on Economy
1. Public Revenue
2.Public Expenditure
3.Public Debt
4.Financial Administration
5.Economic Stabilization
PUBLIC REVENUE
• The income of the government through all sources
is known as public revenue
Public Revenue
Narrow sense
Wider sense
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PUBLIC REVENUE
• Narrow sense - it • Wider sense – it
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SOURCES OF PUBLIC REVENUE
• The sources by which a government earns its
income are classified into two categories.
a. Tax Revenue
b. Non Tax revenue
Administrative Revenue
Commercial Revenue
Other revenues
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• Tax revenue is the income that is gained by governments through
taxation.
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• Direct Taxes: A tax is said to be direct, if the tax
payer bears the burden of the tax. He cannot shift
the burden to any other person. Example – Income
tax, wealth tax and gift tax.
the economy.
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ADMINISTRATIVE REVENUES
• Fees
• Special Assessments
• Forfeitures
• Escheats
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ADMINISTRATIVE REVENUE
• Fees
47
Continued…
• Escheats
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COMMERCIAL REVENUE
• Public authorities own and manage commercial and
industrial enterprises
2. Government properties
3. Public borrowings
5. Recovery of loans
6. Miscellaneous Sources
GIFTS, GRANTS & DONATIONS
Government earns income in the form of gifts,
grants and donations offered to it by the citizens,
institutions and foreign governments and
international institutions for different purposes
A. Revenue Expenditure
B. Capital Expenditure
REVENUE EXPENDITURE
2. Defence expenditure
4. Miscellaneous expenditure
CIVIL EXPENDITURE
• Civil expenditure refers to the expenditure of the
government pertaining to the maintenance of justice, law
and order.
i. Developmental Expenditure
1. Economic Services
b. Defence expenditures
c. General services
d. Subsidies
g. Police expenditure
6. To Counteract inflation