INTRODUCTION‌

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ublic finance is a much wider title which includes all those matters which are connected with public money, i.e., the money a government gets, spends, borrows, lends, raises or prints. Public finance, i.e., finances of the

government, now named as public economics, does not only discuss the issue that how much of the country’s resources the government should acquire for its own use but also discusses the ‘efficiency’ with which the money should be used. Public finance gets reference in the ancient treatise Arthashastra1 of Kautilya which covers ‘treasury, sources of revenue, accounts and audit’ in a very detailed way. However, the subject has gathered much significance in the post Second World War period once the governments’ role in the economy started expanding2 due to various reasons namely, the rise of public sector, the delivery of public goods, law and order, defence, etc. By the Second World War, the importance of the government’s role in the economy was urgently felt and it was believed that all needs of the people cannot be met if the economy is left to the market (i.e., the private sector) in its entirety. For example, national defence, law enforcement and other major areas which must be cared for by the national government besides the supplies of affordable or free healthcare, education, social security measures, etc., could only be taken care of by the governments (as they are not profit driven). This is why there was an agreement among the experts and the policymakers to expand the government’s role in the economy. This led to the ultimate rise of the public sector around the world.3 Here we will be looking into the major concepts related to the area of public finance with special reference to India.‌‌