General Introduction

1.1. Meaning of public finance

• Public finance is a compounded term of the words ‘public’ and ‘finance’. In order to understand the meaning and contents of public finance, one should be aware of the connotations of the words ’public’ and ‘finance’. The word ‘public’ stands for a collection or conglomeration of individuals, i.e., people taken as a whole. The people constituting a public body should have something in common; they should posses some common characteristics; and have common interest uniting them for some purpose for a definite period of time. Thus, the members constituting the public should form a people. The word also implies belonging to the people.

• Finance refers to money matters (revenue, expenditure, debt, receipt, payment, etc) and their management.

• What is public finance? Public finance is also called government finance, public economics, public sector economics or fiscal operations of the treasury. According to Groves H., “Public finance may be defined as the study of the state/government/public authorities. These public authorities differ widely among themselves with regard to the magnitude of the areas and population which they govern, the range of functions they exercise, the methods of obtaining their income, the objects of their expenditure, and their financial relations with other public authorities, superior or subordinate to them.

• According to Bastable, “Public finance deals with expenditure and income of public authorities of the states and their mutual relation and also with the financial administration and control.