Principles
of Public Finance:
Public finance, according to the traditional definition of the subject, is
that branch of Economics which deals with, the income and expenditure of a
government. In the words of Adam Smith:
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Public finance is different from private finance.
Findlay Shiraz in his
famous book 'Principles of Public Finance' has listed the following points of
difference between government finance and private finance.
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The classical economists did not attach much importance to
public expenditure. They advocated the policy of laissez-faire.
They held the view that government expenditure were apt to be
wasteful. They firmly believed that if money was left in the
private hands, it could bring better returns.
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The government expenditure should be incurred in such a way that
it should give benefit to the community as a whole. The aim of
the public expenditure is the provision of maximum social
advantage.
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Public expenditure exercises a far-reaching influence upon the
national economy of a country. Its economic effects can be
viewed from two points:
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The role of the state in economic affairs is a complex and controversial
topic. The political thinkers are divided about the extent and mode of state
interference in economic activity.
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The activities undertaken by the modern state are complex and
varied. This is due to the fact that there is a strong demand by
the people for active state intervention in the social and
economic affairs of the country.
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