Subject Matter / Scope of Public Finance
In Modern times, the subject ‘Public Finance’ includes five major sub-divisions, viz., Public Revenue, Public Expenditure, Public Debt, Financial Administration and Fiscal Policy.
Public revenue deals with the methods of raising public revenue such as tax and non-tax, the principles of taxation, rates of taxation, impact, incidence and shifting of taxes and their effects.
This part studies the fundamental principles that govern the Government expenditure, effects of public expenditure and control of public expenditure.
Public debt deals with the methods of raising loans from internal and external sources.The burden, effects and redemption of public debt fall under this head.
This part deals with the study of the different aspects of public budget. The budget is the Annual master financial plan of the Government. The various objectives and steps in preparing a public budget, passing or sanctioning, allocation evaluation and auditing fall within financial administration.
Taxes, subsidies, public debt and public expenditure are the instruments of fiscal policy.
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