Public Private Finance

Private finance and public finance are known as the two branches of finance. Private finance could be further divided into persona finance, which basically deals with optimizing the finance in an individual like family, consumer, personal saving etc, subjected to any constraint in the budget. For example, a consumer will be able to finance his or her purchase of any car and this can be done by taking any loan from a bank or even financial institution. In short, a personal finance is nothing but financial planning by individual. It involves utilization of the monetary resource by families and individual by budgeting, spending as well as saving after taking into all the possible events of the future as well as any risk associated to it. Personal finance normally includes insurance policies, consumer loans, savings account, and stock market investment, managing taxes, retirement plans and credit cards.

The second category under private finance is the business finance, this helps in optimizing the goals such as sales, profit etc. of any business organization or a corporation by estimating any future asset requirements as well allocating the funds according to availability for the same.

Public finance on the other hand is a type of finance that normally just hovers around the allocation of the resources subjected to only the budget constraint of public entities or government. It is the branch of economics that helps in identifying as well as appraising the effects and means of any policy of the government. Public finance normally only examines the consequences and the effects of different type of expenditures and taxes on the agents such as institutions, organizations and invidious of a society and then on the economy entirely. It also helps in analyzing the effectiveness of the policy that are aimed at a particular objective and then help in the development of such techniques and procedures in order to increase the effectiveness of a policy.

Following are a few branches under public finance

1) Public revenue: this includes the revenue that the government as earned in terms of taxes such as income tax, import duty, sales tax etc as well as other non-tax resources like fees, fines etc.

2) Public expenditure: this deals with different types of expenditures for government requirement in order to function properly.

3) Public debt: when the expenditure of the government exceeds the revenue, in order to function properly the government then borrows from public by giving rise to the public debt such as - Redemption of debt, impact of dept on policy matters and total amount of the public debt.