Public finance deals with the resource allocation according to the budget limits of a public sector enterprise, normally a government enterprise. Public sector enterprises borrow funds, invest money, and issue bonds and debentures similar to any corporate entity.
Public finance is a form of finance which is involved in the recognition and appraisal of the methods and results of the government policies.Public sector finance examines the results of the various forms of taxation and expenses which are imposed on different legal entities, for example financial institutions, individuals, and corporate organizations because these results do have a significant impact on the society and on the whole economy of a country.
In addition, public finance performs a thorough analysis of the potential strengths of different government policies which have been implemented to achieve specific goals and how to improve the efficiency of those policies.
Public finance plays a pivotal role in budgeting of income and expenditure of a public sector organization because without appropriate budgeting, the operations of that particular organization cannot be continued swiftly.
The bonds issued by public enterprises include revenue bonds or tax increment bonds. They provide a lot of tax benefits to the bondholders.Public finance works as a tool to measure the efficiency of government and it guides the government in order to optimize its expenditures and reduce wastage.
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Last Updated on : 1st August 2013