Since The Theoretical Aspects Of Public Finance And Their Application To The Indian Fiscal System Feed Upon Each Other, The Book Is Divided Into Two Parts: The First Covers The Theory Of Public Finance And The Second Covers The Indian Public Finance.The Edition In Hand Thoroughly Tracks The Contents And Related Issues Of A Rapid And All-Engulfing Transformation Of The Indian Fiscal System. Download Public Finance Book By H L Bhatia Free free. 9/21/2016 1 Comment Public finance book by h l bhatia free download PDF public box peugeot PDF law public intellectuals PDF public health leadership PDF public affairs handbook PDF introduction to public health ppt PDF introduction to public. CI Day Public Finance HL Bhatia Modern.
Before we begin with the public finance, we would like to point out the major functions of a modern government: (a) Improving economic efficiency (b) Making the distribution of income less unequal (c) Stabilising the economy through macro-economic policies (d) Representing the country internationally It is duty of the government to bring economic and social justice in the country. And this can only be done by properly utilising the funds raised through taxes and other sources of public finance. Has revolutionised and changed the meaning of public finance. According to Keynes, public finance should be used as an instrument for achievement of certain economic and social objectives. Before Keynes, the concept of public finance was to raise sufficient revenues for meeting public expenditure.
In other words, before Keynes, public finance was concerned w ith the raising of financial resources for the State. But Keynes made a fundamental change in the nature and scope of public finance. Keynes and his followers emphasised that public finance is to help in the achievement of certain social and economic objectives and finance some essential economic activities. Keynes underlines the fact that the taxation and public expenditure policy of the State vitally affects the level of income and employment in the country.
Keynes showed that during depression, how a government could reduce the depression from the economy by increasing its public expenditure and raise the level of employment. When the government increases its investment expenditure on public works, then the level of income and employment in the country increases more than the ratio of increase in initial investment. This is Keynes' Income Multiplier. Generally, the level of full employment in the economy is impossible. This is so because whenever there is lack of effective demand, the production remains unsold which ultimately leads the entrepreneur to loss.
Thus investor will reduce the level of investment resulting more unemployment and a situation of depression in the economy. In depression, the purpose of budgetary policy is to provide investment opportunities and increase employment level in the economy. The government should increase public expenditure during depression more than the public revenue. The deficit can be covered by deficit financing, i.e., by creating money.
The result of deficit financing is that the purchasing power with the people increases and aggregate demand for goods. And services increases. Owing to increase in aggregate demand and the operation of multiplier, the depression will tend to disappear and the economy will move towards full employment. On the contrary, whenever, there is a higher effective demand and when the money supply is increased, there will be a generation of inflation in the economy.
In such a situation, the purpose of fiscal policy to reduce money supply in the economy so as to reduce the inflationary pressure and so people can save more and consume less. When there is inflation in the economy and the prices are soaring higher and higher, the government should levy heavy taxes and in this way withdraw purchasing power from the people and should also reduce its own expenditure. The demand having been reduced in this way, prices w ould tend to come down.
It is clear that to fight inflation, the government should frame a 'surplus budget'. A surplus budget means that the government should collect more money from the public by imposing more taxes but keep its expenditure less than the revenue raised. The result will be that less purchasing power will be left with the people and the aggregate demand for goods will be reduced. Consequently, the prices will have a tendency to fall. The above situation is mostly existed in economically advanced and rich countries.
The less developed countries, like Pakistan, Bangladesh, India, China, Myanmar, etc. Are caught up in the vicious circle of poverty and their main problem is to break this circle and move towards economic development so that poverty is removed and the living standard of the people is raised.
The objectives of public finance in less developed countries are to give a fill up to capital formation, encourage industrialisation, encourage productive investment, and foster economic growth. Thus the objectives of public finance in less developed countries are different from those in the developed countries. Whereas in developed countries, the function of public finance is to accelerate economic growth so that the widespread unemployment and poverty prevailing in the country are removed. It is the duty of the government to ensure that the country is in a right direction of economic development.
Government must ensure controlled inflation, greater employment opportunities, rapid technological advancement, adequate capital formation, and higher economic growth rate. Intervention of government in the economy takes a number of forms. The government may undertake the conduct of production, or may influence private economic activity by subsidies or taxes, or they may exercise direct control over behaviour on the private sector. Finally, governments may transfer purchasing power from some persons to others. The government activities can be broadly classified into four groups.