Introduction Of Public Finance | Meaning and Scope of Public finance| Public and Private Finance |

simple layman terms, public finance is the study of finance related to government entities. It revolves around the role of government income and expenditure in the economy.
Prof. Dalton in his book Principles of Public Finance states that “Public Finance is concerned with income and expenditure of public authorities and with the adjustment of one to the other”
By this definition, we can understand that public finance deals with income and expenditure of government entity at any level be it central, state or local. However in the modern day context, public finance has a wider scope - it studies the impact of government policies on the economy.
Let’s understand the scope of public finance to understand how public finance impacts the economy.
THE SCOPE OF PUBLIC FINANCE
Prof. Dalton classifies the scope of public finance into four areas as follows -
PUBLIC INCOME
As the name suggests, public income refers to the income of the government. The government earns income in two ways - tax income and non-tax income. Tax income is easy to recognize, it’s the tax paid by people of the country in the form of income tax, sales tax, duties, etc. On the other hand non-tax income includes interest income from lending money to other countries, rent & income from government properties, donations from world organizations, etc.
This area studies methods of taxation, revenue classification, methods of increasing government revenue and its impact on the economy as a whole, etc.
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PUBLIC EXPENDITURE
Public expenditure is the money spent by government entities. Logically, the government is going to spend money on infrastructure, defense, education, healthcare, etc. for the growth and welfare of the country.