what is public finance essay

what is public finance essay

Importance of Public Finance in the Economy

1. Introduction to Public Finance

Public finance is used for various activities. The main uses of common money are as follows: Expenditure is carried out by the government using income, capital, and cash profit. The government is involved in road maintenance, canal services, electricity, education, health, and other areas. In addition to these, the government is involved in employment-related work. It protects the interests of the producing class through taxes. The government’s expenditure trend is increasing, which is leading to an increase in income from the underground economy for the government itself. Other than common expenditure criteria, there is service maintenance, public utility management, and enforcement of governmental services. Additionally, the government is expanding service fees. The recovery of service fees is also being extended. Weak income is causing price distortions in providing services. In addition to increasing income, the government has made the sale of government property easier. Furthermore, the government has established lifetime accounts and independent fund foundations to provide reports.

When the government uses common money, the money takes on the nature of public finance. The resources of public finance can be classified into money that is used, which is called earnings or income. It is also referred to as revenue. The resources of public finance also include money that is lost. When public finance is used for the present and the use of money is set aside, it is referred to as present public finance. When public finance is used for the future, the money is called future public finance. Essentially, money is used by the public sector.

2. Role of Public Finance in Economic Development

Public finance has different functions and they are concerned with the manner in which the government finances its expenditure. According to Dalton, modern economic civilization may be invoked to two distinctive forms of the conversations control of finance the one the growth of taxation, the other by the methods used finance State borrowing. Among the different functions of public finance public expenditure is considered the most important. This is because, to maintain law and order, provide certain economic goods public health services, public education, public transportation and public utility services roads, canals and harbors, government must incur expenses. Thus the prime task of finance is to ensure that public services are maintained at a necessary and desirable level. The reason is simply because the role which government plays in the economic life of the nation today has become so great that public finance has come to occupy a place of great importance in the fiscal system of states. Public finance is an offshoot of political science. The increasing role played by the government in present day economic life highlights the significance of the study of public finance.

Public finance is that branch of general economics which deals with the financial activities of the government. It has a bearing on the kind of financial policy a government pursues and also on the means it adopts to realize the desired ends. Public finance is not only concerned with increasing the revenue of the state and reducing the expenditure of the state but also with the way in which the question of raising revenue and cutting down expenditure is interrelated. Public finance deals with the question how does the government get its revenue to finance public expenditure? The decisions revolving around these questions are termed as the function of public finance.

3. Key Components of Public Finance

The importance of public finance in the economy also involves the study of administration and development. Thus, public income involves the collection of different types of income involved in the administration of public and local bodies. Government finance management is mainly concerned with the collection and expenditure of the funds. This is where the role of government officials in financing is significant, as they must come up with the ideas of establishing public funds, making a list of capital expenditures, and hiring staff of concern as a gold-paying fund. A good finance officer should have knowledge of private and public finance as this helps to obtain all the benefits of the establishment of a fully centralized economy. He should have the necessary qualities to his candidates, enabling them to obtain services at the lowest possible cost.

Public finance is a discipline that is related to the study of income and wages of a nation or state that is in turn related to the well-being or improvement of a society. It also deals with the revenue and expenditure of the country or state government in acquiring essential commodities. It can be segregated into two: government finance and private finance. Government finance is involved with the addition of public money through revenue tax and expenditure involving public expenditure. Public income involves the collection of income from different sources, including revenue tax, public enterprises, and public debt. In turn, public expenditure is the sum of money spent on various public projects like national defense, social welfare, and public works. This is where an understanding of the entire functioning of public finance is essential.

4. Challenges and Solutions in Public Finance

A conclusion is only as general as the analysis that creates it. With an element of caution, all of the discussion here would benefit from more detail and more careful analysis. It is necessary to go beyond the simplistic combination of means and ends that are standard in these reports. It is important to ensure that these discussions, after the proper authoritative analysis, are both heeded and acted upon. All these strategies are important because the persistent capital budget shortfalls in infrastructure and the energy sector remain obstacles to all of these developments and proposed questions.

The most important policy areas for addressing these recommended changes to make the most effective public investments for the poverty reduction strategy are stronger rules on project readiness at the time of appraisal, complementary project design, supportive governance arrangements, and systematic performance evaluation. Additionally, there should be a larger use of SME contractors and consultants, and establishing an effective procurement chain. There is an association between increased compliance with these recommendations, improved project performance, and reductions in poverty rates.

There can be several challenges and solutions in the public finance of Bangladesh. Successfully addressing these challenges can support most of the goals in the Bangladesh development perspective plan. A high-level summary of the challenges that need to be addressed includes the development of the bond market, the cost-efficient public sector, the strengthening of the capacity of NBR, DA system reform, improvement in LGNN, and a more effective social protection program.

5. Conclusion: The Need for Effective Public Finance Management

It is considered that public funding is critically important for economic development because it provides finance for the essential projects such as infrastructure development, human capital growth, and environmental management. Raw material processing is also important in providing these projects. These improvements can improve productivity and increase long-term economic development. Public support systems also create effective social systems. Domestic investment will increase and people will eventually reach wealth. Public funds are therefore required to maintain the investment and savings needed to sustain the economy. The General Services Board (GSB) in a report said that writing documents for government provision of goods and services will help to maintain the pattern of actions in the country, develop the country’s social and social characteristics, meet the needs and desires, and achieve the peaceful, social, and satisfactory lives of the people. Peace is based on a fair and moderate pattern of public examination and control of both society and the entire organization.

Most governments now deploy public funds in a variety of tools to meet the growing needs of their citizens. Beyond this, there is an important role of sound public resources and their management that will completely help to discipline the issue of corruption for the delivery of services as well. Public funds in the form of cash, grants, and donations are maintained about the collection and control of public services such as sewage, the regulation of activities, and the keeping of the economy or other welfare. This cost is difficult to bear. Private enterprise has failed without government intervention. Modern government makes little effort without a large amount of financial resources being provided by the public. As a result, the economy, public finance, and activities are almost interconnected. Therefore, it appears that sustainable economic development is directly related to public fund management. The success of the economy depends to a large extent on effective public expenditure and sound tax policy. Therefore, there are some reasons why the economy and the people should be involved in the public project framework.