Public Finance
Hidayatullah National Law University · LL.B. Semester 4 · LLB-C-406
Unit I — PUBLIC FINANCE-INTRODUCTION
This module explains why and how governments intervene in the economy to address market failures and enhance social welfare, focusing on the meaning and the scope of public finance and the Theory of Maximum Social Advantage. · Meaning and scope of Public Finance · Market failures: Imperfect Competition, Asymmetric Information, externalities and public goods · Government intervention: Role of Government in correcting market failure and providing welfare. · Theory of Maximum Social Advantage
Unit II — PUBLIC REVENUE- TYPES AND REFORMS
The module explains how governments raise money through tax and non-tax revenue, outlines key taxation concepts. · Sources of Public Revenue: Tax and Non- tax revenue · Concepts Related to Taxation: Cannons of Taxation, Incidence of Taxation, Features of a good taxation system, Progressive taxation system in India · Tax Revenue of the Union, States and local bodies · Non-tax Revenue of the Union, States and local bodies · Issue of Tax Evasion in India and reforms in Indian Taxation System
Unit III — PUBLIC DEBT
The module explains how the government raises money through various types and sources of public debt, outlines the principles and the burden of public debt and debt redemption strategies to ensure sustainable public finances. Constitutional Governance II · Public debt: Types, Sources and instruments of government borrowings in India · Principles and the Burden of Public debt · Effects of Public debt · Principles of debt management and Strategies of debt redemption
Unit IV — PUBLIC EXPENDITURE
This module explains the principles, types, and growth of public expenditure, examines theories explaining why government spending and analyzes the impact of public expenditure on production, income distribution, and economic growth in India. · Cannons and classification of public expenditure · Theories of Public Expenditure: Wagner’s law of increasing state activities & Wiseman-Peacock hypothesis · Structure and Growth of Public expenditure in India · Effects of Public Expenditure on Production, Distribution and Economic growth
Unit V — BUDGETARY PROCESS AND FISCAL POLICY
The module explains the types and structure of public budgets, Process of preparation of a Budget, including revenue and capital accounts, and highlights major budgetary and the FRBM Act for fiscal discipline, along with analysis of central and state government budgets. · Types of Public Budget; Structure of Public Budget · Economic and functional classification of government budget and rationale behind the classification. · Concepts of different Budgetary Deficits · Process of preparation of a Budget in India & Revenue and Capital account in Indian Budget · Budgetary Reforms: Expenditure reforms, Tax reforms, FRBM Act 2013 · Analysis of Central and State government budget
Unit VI — FISCAL FEDERALISM IN INDIA
The module outlines how financial powers and responsibilities are divided between the Centre and States under the Constitution (via the Seventh Schedule and Articles like 270, 275 and 280), summarises the 15th Finance Commission’s recommendations on tax devolution and grants to States and local bodies, and highlights fiscal decentralisation under the 73rd and 74th Amendments to empower local governments. · Fiscal federalism and constitutional provision in India · Centre-State Financial Relations: Division of powers and division of resources under the Constitution of India · The 15th Finance Commission: Findings and recommendations of latest Finance Commission of India · Fiscal Decentralization in India in context of 73rd &74th Constitutional Amendments