Subject Matter of Public Finance
To understand the concept of public finance, its importance, limitations, doctrine, etc., we first need to study the subject matter of public finance. There are various components studied under public finance, including Public Revenues and Expenditures, Public Debts, Financial Administration, and Fiscal Policy.
1. Public Revenues: Public revenues study the concept of income of the government which the government uses to fund its operations. The main source of income for the government is through tax. Public finance undertakes the study of the incidence of tax.
2. Public Expenditures: The government needs to provide certain facilities to the public for their well-being and to make society better as a whole. Public finance studies the expenditure of government towards different functions, along with the ways and methods by which the government can reduce its expenditure.
3. Public Debts: Sometimes, the government needs to borrow funds from the public to cover its deficit. Thus, public finance also studies the concept of borrowings from the public; namely, public debts and how the government manages the public debts. For example, the Indian government has borrowed from the people to implement the Five Year Plan.
4. Financial Administration: Under financial administration, the study of various important subjects, like financial management by the government, the preparation of the budget, its final acceptance by the legislature, etc., is conducted.
5. Fiscal Policy: Fiscal policies deal with the effects of the financial operations of the government on various aspects of the functioning of the national economy, such as prices, employment, consumption, production, distribution of wealth, etc.