also. Some are the points on the Importance of Public Finance in Developing Countries, Public finance has importance for both developing and developed economies. When there is more prosperity in the economy and the people are earning more and more, the government increase the tax rate and during deflation government reduces the tax rate thereby increasing the demand. 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. The government basically allocates an efficient amount from the fund raised through different sources for the infrastructural development in rural areas and provides direct benefits to the rural areas. I will provide accurate knowledge about economics. I make this blog for providing knowledge of economics theories and economics concept which i am reading in my degree. The importance of public finance can be justified on the following grounds- (1) Protection to Infant Industries. In order to control inflation, the government increases the tax rate and capital expenditure. But public is collected name for individual within an administrative territory and finance. Public finance is required for the development of the state. It has a very important role in achieving objectives like full employment and price stability. However in the modern day context, public finance has a wider scope – it studies the impact of government policies on the economy. Public finance is of great importance for both developing and developed economies. Some of the importance of public finance are as follows-Helps in Removing Inequalities in Terms of Wealth and Income It helps the government in proper allocation and utilization of man-made and natural resources. Some of the importance of public finance are as follows-, In underdeveloped economies, there is a very serious problem regarding inequalities in the distribution of income and wealth. Public Finance Meaning,Nature and Scope Meaning The word public refers to general people and the word finance means resources. The importance of money is too much not only for individual but for state (Govt.) Public finance is the study of finance related to government entities. The state has to perform number of functions for which money (funds) is required. Thus Public Finance studies the income and expenditure of Central, state and local governments for the collective satisfaction of wants and the principles which govern income and expenditure.Here we discuss nature, meaning and scope of public finance. Public finance is the study of the role of the government in the economy. It is simply concerned with and deals with the revenue and expenses of the government.eval(ez_write_tag([[300,250],'commercemates_com-medrectangle-4','ezslot_5',121,'0','0'])); It shows how the government manages its incomes and expenditures for the attainment of its objectives that is the overall development of the community. 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”… Public finance helps the government in raising efficient funds for promoting the various infrastructural facilities in the economy like road, railways, medical and educational facilities, etc. The rich are getting more and more while the poor are not getting enough and are thereby becoming poorer and poorer. Home » Financial System » Importance of Public Finance. is performing many important functions like education, industrial […] The purview of public finance is considered to be threefold, consisting of governmental effects on: The efficient … The government finance is important for proper utilization of natural, man made and human resources. It revolves around the role of government income and expenditure in the economy. But public is collected name for individual within an administrative territory and finance. The government can use its finance to promote saving and investment habits in people by reducing the tax rate and providing some relief on product and services prices. Importance of Public Finance in Developing Countries, Helps in Removing Inequalities in Terms of Wealth and Income, Helps in Controlling Inflation & Deflation, Helps in Developing Well Structure & Infrastructure, Helps in Encouraging Savings & Investment, Helps in Allocating Resources Properly & Efficiently, Helps in Bringing Balanced Development in the Economy, Long-term and Short-term sources of Finance, 7 Importance of Public Relations in Marketing, 5 Importance of Public Relations in an Organisation, Advantages & Disadvantages of Public Private Partnership. COVID-19 is also known... Meaning,scope and importance of Public Finance, Hello , I am a student of BA (Hons.) A large category of the population invests their incomes on consumption due to which saving proportionate is very low leading to very low or nil investment. Meaning: In public finance we study the finances of the Government. The Government of an underdeveloped country protects its infant Industries against foreign competition through various public finance activities like imposition of heavy tariff duties on imports, putting restrictions on imports, giving subsidies to keep the cost low etc. Please do not enter any spam link in the comment box. coins. Socially equitable distributions of income, reduction of inequalities in income are some important functions of public finance operations. The importance of public finance can be clarified from the following functions. eval(ez_write_tag([[300,250],'commercemates_com-large-mobile-banner-1','ezslot_6',172,'0','0'])); Government generates its incomes through the collection of taxes from the general public using various public amenities and government uses these funds in the development and betterment of these public amenities.