Read this article to learn about the scope and importance of public finance in developing countries…
Scope of Public Finance
From the point of view of the study area, public finance can be divided into five parts:-
1. Public Revenue:
In this scope, there are various things are studied about the relative importance of various sources of public income, principles, and their consumption, production, distribution, and savings.
2. Public Expenditure:
Under this part of the revenue, we study that on which items it is necessary to do expense. According to which principles, and what impact do these expenses have on the national economy and what is related to it.
3. Public Debt:
What are the principles on which the state takes credit for some of the principles and for which work is done in the revenues?
4. Economic Stabilization:
Under this part of the revenue, we study the experiments of fiscal policy to bring economic stability in the country.
5. Financial Administration:
Under this, three main things are studied:
(ii) Publish it to the public’s information,
(iii) Auditing articles, etc.
Conclusion: For the convenience of the study, only the above five departments of revenue have been given which are related to each other. The society can achieve maximum welfare only with the mutual harmony of these five organisms.
Importance of Public Finance
At the present time, the following points of importance of public finance have been described:-
(i) Economic Importance.
(ii) Political Importance.
(iii) Social Importance.
1. Economic Importance:
(i) Growth in productive actions:
With the help of revenue actions or powers, the government helps to organize the railway, power, roads, financial institutions, and other productive activities in the country for the attempt to increase the product by motivating the masses towards productive actions.
The government can also encourage production by giving financial assistance or tax relief.
(ii) Protection of infant industries:
The government can restrict the production of those items to large industries with the purpose of providing protection to their infant industries. In this way, foreign competition can also be avoided by providing protection.
(iii) Importance in the mobilization of resources for economic development:
In semi-developed counties, there is a lack of capital formation and resources. Therefore, the purpose of revenue actions in semi-developed countries is to transfer capital and other means of savings and investment to the consumption and other non-development activities.
(iv) Importance in the distribution of income and property:
It is officially accepted today that fiscal policies can play an important role in reducing the inequality of the distribution of money.
By the public expenditure where the level of life of the poor can be raised and the inequalities of distribution can be reduced and at the same time, this objective can be achieved even by lowering the level of income of rich people by taxation.
(v) The establishment of new industries:
Every country’s government establishes industries as per the requirement of the country by its financial policy and attempts to reach the level of full employment.
(vi) Increasing of use of money and credit:
At present, there has been an increase in the use of money and credit in every area of life, which has also increased the work of the state and it has become necessary to use money and credit.
Increasingly, the state’s financial activities have increased due to which the work of the state can be extended for a longer period.
2. Political Importance:
Revenue is also an important contributor to the political sector. The government can implement its political policies properly if they have adequate financial resources and they have a fair revenue policy to utilize those resources.
Apart from this, there is a need for adequate financial resources in order to maintain internal peace in the country and to protect against foreign invasions and to reinvent our foreign and international institutions.
3. Social Importance:
In the field of social finance, there is a role of revenue policy in governing social welfare programs, promoting backward classes, ethnic groups, controlling the consumption of harmful items and reducing social inequalities.
So, these are the points of the explanation of the scope and importance of public finance…