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Public Finance Money That Government Spend On People


Public finance is the people’s money which is in the hands of the government and its expenditure.

The government collects money from the public through different methods like taxes, duties, imposts, etc.

The government collects its revenue in different ways but it returns back to the Public by providing various facilities such as roads, colleges, hospitals, and factories.

We get a gas cylinder at a very low cost because the state provides a subsidy on it. Many times the government takes a loan from World Bank for development.

You have observed that many times the state announced a big package for some natural calamity and for a martyr to support financially, to clarify it is basically the public revenue.

What Is Here For You 

  1. Component Of Public Finance
  2. Importance Of Public Finance 
  3. Types Of Public Finance 
  4. Objective Of Public Finance 
  5. Where To Study Public Finance 
  6. How Public Finance Affects The Economy 
  7. Conclusion 
  8. Frequently Asked Question 

Component Of Public Finance

  • Tax collection
  • National debt
  • Deficit/surplus
  • National budget
  • Expenditure

Tax collections

Generally, the main source of revenue of the government is taxes. in addition, State collect includes sales tax, Income tax, Property tax, Estate tax, etc.There are two types of tax :

Direct tax

Indirect Tax

Direct taxIndirect tax  
It impose direct on the income of people.It is relie on goods and services.
The government finds it difficult to  Collect.It is easy to collect
Ex.Income tax, wealth taxEx.Service Tax,VAT,LBT

National Debt

If we divide the national debt with a population of India then every person has a debt of almost 52k.

The child who has not taken birth they would have preinstalled debt.

Every citizen has a debt and it’s increasing With an interest rate.

Let’s understand it with an example suppose in a year government has a budget of 10k and its expenditure is 12k then it has a deficit of 2k to balance the deficit government take loans from The World Bank, International Monetary Fund, Bank Of England.

In addition ,State also issues BONDS.

Reforms To Prevent National Debt

  • Industrial Policy Reforms
  • Promoting Foreign Investment
  • Trade Policy Reform
  • Monetary and Financial Sector Reform
  • Reform In Capital Market

Deficit /Surplus

The surplus is the condition when the revenue of the government is higher than its expenditure therefore at this condition government is in the state of profit. The government also give concession in Corporate Tax so that people prefer first for businesses.

As far as deficit is concern here expenditure is more than the tax collection.

National Budjet

The national budget is the statement of revenue and expenditure of the government in a financial year. In addition, The budget was first to come in a role by the ROBERT WALPOLE.

There are various types of national budget

  • Union budget
  • State budget
  • Plan budget
  • Performance budget
  • Supplementary budget
  • Zero-based budget.

 On the basis of revenue and expenditure budget is devided into three category:

Balanced Budget: is in which expenditure is equal to collected  revenue

Surplus Budget:It is budget in which expenditure is less than tax collected

Deficit Budget:the budget in which expenditure is more than revenue collected. .

The main element of government budget is revenue and the expenditure.


The government makes a proper budget to provide services to their citizen. So that government saves and finds better Investing Options In India and indirectly helps the country to grow.

Common people can not afford the goods and services of the private department so it the duty of the State to provide all of them.

Getting basic facilities are the right of every citizen. A  government is said to be good if it is providing and fulfilling the need for common people who can not collect it. The government spends in the various department for example

Agriculture And Farmer Welfare Department Of Atomic  Energy

Department Of Agriculture Research and Education

Department Of Chemicals And Petrochemicals

Civil Aviation

Coal Department

Yoga ,Ayurveda


Importance Of Public Finance

Serve The Economic Policy

When the government starts to build any kind of Economy policies then firstly it sees its revenue, according to the collection different policies are built secondly the part of the investment is divided according to the necessity.

The thing that is more important for the country that gets more percent of the budget

But it is the irony of our country that here the education budget is less than the budget of defense however education is the building block of any Country.

 Different operations are created by the government by seeing the resources that are allocated. It is the government who manage all the system.

 Taxation And Expenditure Can Be Decided

The state has data of revenue cool in the form of direct and indirect tax. After analyzing both the scenario compensation

And expansion is done in the tax policy.

But it is seen that most of the time-poor people are punished in the form of tax .

Many times corporate taxes are deducted. In 2020 tax 1Lakh crore corporate tax has been reduced.

Bring Stability

A country is suffer or stable it is decided by the financial condition of                  

Stability can be maintained by providing enough opportunity for young people. The state provides a proper infrastructure for growth and development. A country many times help the private firm to adopt new technology with the help of grants, cheap loans, tax relief.

Types Of Public Finance

It is divided into four category

1:Public  Revenue

2:Public  Debt

3:Public  Expenditure

4:Financial  Administration

Objective And Function Of Public Finance

Price Stabilization

It plays a key factor in the stability of the economy. Keeping the price of goods and services balance is a challenge for the government. Inflation is in control by the national finance.

Equitable Distribution Of Wealth

First of all, we will understand that what is meant by the propensity of consuming:

It shows the data on how you consume we can understand by an example if a person earns 100 rupees then how he spends his money is called propensity of consuming.

It is seen that poorer have a higher propensity to consume.

If wealth could not distribute in a proper way than the majority of the population could not get right opportunity to grow

One of the measures that can take is to provide subsidy, unemployment benefits and benefits on the basis of disability.

State also provides the infrastructure to the common people in a low amount so that everyone can access it.

Satisfaction of Needs

A country has lots of diversity. A society is classified into a group to meet the need of the country is the responsibility of the country.

Allocation of Resources

By the help of government hepl both the sector public as well as private

Provision Of Full Employment

It is the goal of national finance to provide the opportunity for employment.

The government make different policies and infrastructure to generate employment in the country.

The country makes an amendment to motivate FDI(Foreign Direct Investment) so that more countries come in our country to set up companies and factories so that more and more people get a job and opportunity to grow.

Foreign companies went abroad if they find it profitable. Our country has improved a lot in ease of doing business.

Where To Study Public Finance

There is a bachelor’s degree available from where you can learn public finance and acquire a skill that has a value in the market. It is generally three to four years. Most of the student has a question what is taught in the public, basically, here you are taught how to handle the big budget.

You also got an opportunity  become chief Financial Officer in a office.

You can also done online course in it .


How Public Finance Affects the economy

The government provides an opportunity to get employment. It makes many policies to help the public in the form of subsidy and packages. When people have money they spend the money to buy the commodity, then the economy expands when people don’t have money. Many companies do their hare Public in Share Market

Then they save it do not spend it and economy start shrinking .

You Can Also Read

Personal Finance

12 Investing Options In India

Corporate Tax


Public finance is the people’s money which is in the hands of the government and its expenditure. The government collects money from the public through different methods like taxes, duties, imposts, etc. There are many saving schemes through which people manage finance. Public Finance can be understood by, We get a gas cylinder at a very low cost because the state provides subsidy on it.

FAQ (Frequently Asked Question)

1:Is Public Finance Accounting

It is not only the accounting but it also includes law accounting and public finance management

2:Public Finance for UPSC

It is the part of syllabus in the upsc exam.

3:Public Finance  For UGC NET

Different topics of public finance in UGC net is given below
1:Types of goods:
Public goods
Private goods
Merit goods
2:Principle of Public Finance
3:Public Budget
Consolidated Fund
Contingency Fund
Supplementary Fund
4: Technique Of Budgeting
Performance budgeting
Program budgeting
Zero base budgeting
5:Concept of Deficit
6:Theory of Public Finance
7:Canons Of Expenditure
8:Canons of taxation
9:Theories of Distribution of Tax Burden
10:Sacrifies Principles

Public Finance Vs Private Finance

Government takes a loan to serve the nation, this loan is big in number.
In public finance deficit budget is good because it is in the welfare of the public but against the country because the country lends loans from the other source.



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