Public Sector Finance

There are different public sectors that seek finance from financial service providers. The financial service providers and the financial companies offer a wide range of alluring finance options.
The major types of finances are mentioned below:
Public Sector Finance: A government level or public level finance is known as public sector finance. Government accumulate revenues through taxes and government budget usually do not balance and as a result, there remains some deficits or excess amount.
Financing in the government or public level is known as public sector finance. Government meets its expenditures mainly through taxes. As there exist certain dissimilarity in income and expenditure in governmental expenses, often government require to borrow for balancing the existing deficits.
Business Finance: It attempts to optimize the desired financial goals related to profits and losses. Future asset requirements and allocation of funds take place in accordance with the availability of the governmental funds.
Personal Finance: Personal finance is basically the optimization of finances in the individual level subject to the budget constraint. Any consumer may finance his purchase of a car by obtaining a loan from financial institutions or banks
Government finance or public finance:
Basically deals with the allocation of different resources according to the budget constraint of a public sector company and government companies.

The objective of the government does not remain profit maximization related, but usually remain welfare centric. It is usually noticed that government expenditure exceeds the revenue.

As a governmental objective, it is not profit maximization but it is welfare. So, it is generally noticed that government expenditure exceeds the revenue. So, a budget deficit is a common issue. This again leads the concerned entity to borrow which in turn lead towards public debt. Public debts are generally marketable securities and these are issued by the government.

Government always attempt to distribute the tax amount among different classes of individuals in accordance to their income levels with the application of differentiated taxes.

Taxes can be categorized into the following few categories:
Direct tax
Indirect tax
Income Tax
Sales Tax
Tax imposed can be segregated in accordance to the percentage of the consumption or income, tax can again be classified into the following sections:Progressive tax: The rate of tax increases with increase in income or consumption
Proportional tax: The rate of remains same with the rate of increase of consumption or income
Regressive tax: The rate of tax decreases with the increase of income or consumption


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Last Updated on : 1st August 2013

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