vishal mandaviya (PM002213)

CEPT University |
ASSIGNMENT: 1
Evolution of discipline of public finance and urban public finance and describing
scope of the discipline, its functions, subject matters.


ASSIGNMENT: 1
Evolution of discipline of public finance and urban public finance and describing scope of
the discipline, its functions, subject matters.

Evolution of discipline of public finance and urban public finance in
India:
Local self-government institutions in India have a long history; the first municipal
corporation1 was formed in Madras in 1687. The overall framework of local self-
governments or urban local bodies (ULBs) that is, the framework within which the
panchayats (an institution of self-government constituted under article 242B for the rural
areas) and municipalities in India function and carry out their activities has always been
diverse and complex, shaped by years of deliberations on state-local distribution of
functional assignments, tax bases, criteria for revenue sharing and grants-in-aid, and
responsibilities for service delivery systems.
Indian cities, towns, and villages have grown at highly variable rates over the decades
some having experienced a growth rate of more than 9 percent annually and others
registering annual growth of less than 1 percent. During the census decade of 198191, 856
settlements acquired urban status for the first time; however, 93 settlements lost their
urban status. Urban settlements in India also have a complex system of civic status.2
Thus, it is common for urban settlements to have the status of corporation, municipality,
Nagar panchayat, town committee, and so on. A likely implication of this feature is that
the functions and consequently the financial requirements may differ between a local
body with the civic status of a Nagar panchayat, and another, which may be a town
committee, a municipality, or a corporation.
NDIA has grappled with its public finances for long enough. When presenting its first
budget after independence in 1947, the finance minister of the day insisted that the
country was not living beyond its means. Yet every budget since has failed to produce a
surplus. India borrows more heavily than typical big emerging economies and faces more
periodic crises. Palaniappan Chidambaram is the latest to try to tame the fiscal beast. He
became finance minister, for the third time, last July. On February 28th he will present his
budget, possibly the last one before the ruling Congress Party goes to the polls, which
must take place by mid-2014. (echonomist)
SCOPE OF PUBLIC FINANCE
In order to discuss the scope of public finance we present a definition which would be
helpful to determine the reality of this subject as a science. According to Prof. Taylor,
"Public Finance deals with govt. Finance and govt. finance is concerned with raising govt.
revenue and making expenditures. In this way, public finance is concerned with govt.
Treasury. If we consider it a science, then it is a fiscal science. The names of the policies of
this science are fiscal policies and the names of issues of this science are known as fiscal
issues. All this means that public finance is concerned with the finance of state. The
scope of public finance is extended to the followings:
(1). Govt. Expenditure,
(2) Govt. Revenue,
(3).Public Debt, and
(4).Financial Management.
1. PUBLIC REVENUES:
Every govt. has to make a lot of expenditures. For this purpose it has to raise revenues.
The major share of Public revenues is obtained through taxes. Again, govt. Also raises
revenue through non-revenue sources like fees and penalties. Thus in the science of
Public finance we study different types of taxes. The principles of taxation, the burden of
taxes, and the system of taxes.

2. PUBLIC EXPENDITURES:
The revenue which a govt. Raises have to be spent on different items. Thus in public
finance we study the principles of making govt. Expenditures. Moreover, it is seen what
the major items of govt. Expenditures are. Again, whether the expenditures are diverted
to productive fields or non-productive fields. What will be the effects of Public
expenditures on the level of income distribution and level of output?
3. PUBLIC DEBT:
So often the govt. Revenue are far less than govt. Expenditures. The govt. have to make
the traditional as well as the welfare type expenditures. In such circumstances, the govt.
Expenditures exceed govt. Revenues. There for, to meet the situation, govts. depend upon
public debt. Thus in public finance we study following regarding public debt. What type
of public debt are available to the govts; what will be the rate of interest against such
loans; what type of bonds the govt. have to issue; How the govts. Will repay the debt;
whether the govts. Will get loans directly from the public or indirectly; which sources of
public borrowing, i.e., central bank or commercial banks will be more economical;
whether the amounts raised through public debt will be spent on productive fields or
non-productive fields.
4. FINANCIAL ADMINISTRATION:
Public finance does not mean raising of public revenues, making of govt. Expenditures
and issuing of bonds to have public debt. Rather, we study all that mechanism which
helps in performing all these activities. It means that in public finance we study financial
management. It means that we study how govts. Prepare budgets which are the biggest
financial documents consisting of budget estimates, revised estimates and actual
estimates of govt. revenues and govt. Expenditures. (Finance)


FUNCTIONS OF PUBLIC FINANCE
Distribution function appears as part of the distribution, meaning the intercession of
the public finances of processes of redistribution of resources between individuals and
legal entities, involving public authorities. This function is manifested by taking the
public funds of parts of the income or assets of various individuals or legal forms of taxes,
fees, etc. And then distribution of public expenditure forms made according to criteria of
equity and social justice. By default, its performance is reflected in the redistribution of a
portion of GDP between members of society.
Stabilization function expressed by the intercession of public finances stabilizing
influences on character development and social and economic life, these having the
capacity to contribute to ensuring price stability, a high labor employment, maintaining
balance in relationships external, thus contributing to maintaining an acceptable rate of
economic growth balanced synthesis, taking into account the different approaches and
the main situations where there is, it can be assumed that public funds meet the
following functions:
Distribution function (allocation-distribution)
Control function (stabilization) of the economy.
Public finance control function of economic
and social activities
Public finances are manifested as mediator of exercising control through money on
various aspects of economic and social life. Their ability to mediate monetary and
financial inspection of the course and results of various economic activities and social
control defines what their function is.




SUBJECT MATTER OF PUBLIC FINANCE
The economics of public finance is fundamentally concerned with the process of raising
and dispersion of funds for the functioning of the government. Thus, the study of public
revenue and public expenditure constitutes the main division in the study of public
finance.
But with these two symmetrical branches of public finance, the problem of organization
of raising and disbursing of resources also arises. It has also to solve the question of what
is to be done in case public expenditure exceeds the revenues of the state. In solving the
first problem, financial administration comes into the picture. In the latter problem,
obviously, the process of public borrowings or the mechanism of public debt is to be
studied.
Since both public debt as well as financial administration gives rise to a number of special
problems, these are conventionally treated as a separate branch of the subject.


Bibliography
echonomist. http://www.economist.com/news/asia/21572224-government-borrowing-generates-
inflation-widens-external-deficit-and-crowds-out-much-needed. n.d.
Finance, Public. http://business.blurtit.com/1790449/explain-the-scope-of-public-finance. n.d.