What Is The Difference Between Public And Private Finance?

15 Answers

Adam Yare Profile
Adam Yare answered
The different here is very easy to understand. Public finance is controlled by the government and used and spent on certain public areas to ensure that everything remains as it should or can either be improve. Private finance is what certain businesses have so they can spend it as they like. They are in control of the money and it cannot be used by the government. The private business can use the funds as they see fit and therefore use it to benefit their company and make them more successful.

The only problems that arise here is that if a business that has private finance runs out of money, they are going to turn to the government for more funds and this is why some people think that all businesses and companies should be controlled by public finance. As you look into the subject further you will see there are many different arguments that people have and many different suggestions as to how the situation can be improved.

As public finance is used to ensure that the money is going to be there and handled correctly for long period of time, many people think that this is the best way for the finance to be handled, however, there are many people who also think that private finance is the best way for certain funds to be handled as the business is going to know exactly where they need to spend the money to benefit them and the public, as opposed to the government only having a slight idea about what needs to be done.

It is up to you which argument you are going to side with and that is why there are many different opinions on the matter, but the main differences are that public finance is spent and controlled by the government, whereas private finance is controlled by the business itself.
d ds Profile
d ds answered
The differences are as follows:


    • In public finance, the government first determines its expenditure and then tries to raise the money for that expenditure. On the other hand in private finance the budget is made based on the current income.

    • Public finance is generally long term, that is it exceeds one year

    • The purpose of public/government financing is the overall benefit of the society trough development by investing in development programs on the other hand the purpose of private finance is to maximize the benefit for the concerned person/persons.

    • Details of public finance are published and are easily available for the public but the private financing details are kept secret.

    • The government has the authority to make laws to make people pay taxes but the private finance does not have this authority.
Haider Imtiaz Profile
Haider Imtiaz answered
What is public finance?
It is a branch of economics which deals with income and expenditure of government of a country. The function of public authorities are simply revenue raising and revenue spending for covering the cost of administration and defense in the days of early economists. But modern states have to perform various functions to promote the welfare of the people. Therefore, the public finance includes the study of financial administration as well as of financial control.
According to Professor Bastable, "public finance is a branch of economics which deals with income and expenditure of public authorities or the state and their mutual relation as also with the financial administration and control."
Public finance is used for the benefit of the people of an economy while the private finance is used for the benefit of an individual or his family. Public finance and the private finance are differentiated as under:
Difference between private and public finance: these are the differences between the private and public finance.
1: Adjustment of income and expenditure: a government first prepares an estimate of expenditure and then means to raise that sum and the individual must adjust his expenditure to his income.
2: Budgeting: the unit for the public budget is one year but an individual needs not balance his budget during a given period.
3: Deficit financing: deficit financing is a peculiar privilege of government but an individual can not do it, unless he is prepared to go behind the bars.
4: Different objectives: an individual tries to maximize his satisfaction or profit from a given amount of resources but the objective of government expenditure is to maximize social benefit.
5: Publicity of finance: budgets are published and the widest publicity is given to them. On the other hand, the secrecy surrounds individual finance.
6: Coercion: a government has to pass a law and compel the citizen to pay a tax while an individual lacks the coercive authority.
Anonymous Profile
Anonymous answered
To my own understanding the different between public and private finance is that both are engage in activities such as buying and selling .and also production,savings,capital equalibrum,transaction.
Private finance cannot raise nonrepayable loan but the goverment can do that,
Anonymous Profile
Anonymous answered
Public finance relates to the economic aspect of government, such as the business of raising and collecting taxes and borrowing money to pay for government operations. The term would normally be understood to cover all levels of government operations, from central government down to local town councils.

Private finance is everything else which relates to private individuals or companies raising, processing and spending money.
Lily James Profile
Lily James answered

Public Finance and Private finance are both concept from economics. Public Finance deals with the payment of collective or governmental activities and the design and administration of these activities.

Public Finance deals with income distribution and social equity. Government policies can help in reallocation of incomes by transfer payment or through tax systems.

On the other hand, Private Finance is a method used by many governments to set up a public and private sector partnership. It involves privatization and deregulation. A number of projects are undertaken all around the world under this initiative. The aim of these projects is to provide infrastructure and also operational services.

Anonymous Profile
Anonymous answered
Public finance is always satisfied man but private finance is only thinking his income which may be wrong or illegal.
Anonymous Profile
Anonymous answered
Public finance is a the collection of tax from the provision of public goods by the government & the use of those tax funds to  toward production of public goods.
Anonymous Profile
Anonymous answered
Public Finance is the subject which is to examine the formation and development of he financial distribution relationship .
Shabir Ahmad Profile
Shabir Ahmad answered

Public finance
studies the income-getting and income-spending activities of the public bodies
or the state. Private finance deals with the way a private person gets and
spends his income. There are certain differences between the principles
underlying public finances and those of private finances. These are explained
below.

1.  Adjustment of Income and Expenditure:
An individual usually adjusts his expenditure to his income. But the public
authority generally adjusts its income to its expenditure. In other words, we
can say that an individual cuts his coat according to his cloth. While the
public authority first decides the size of the coat and then tries to produce
cloth according to the size of its coat. The public authority prepares on
estimate of the total expenditure to be incurred during a fiscal year and then
devices ways and means to raise the required amount. The individual on the
other hand tries to live within his own means. His expenditure is generally
determined by his income.

2.  Unit of Time: The public authority
balances its budget during a given period which is generally a year. For an
individual there is no period of time in the course of which the budget must be
balanced. The individual generally continues earning and spending without
keeping any record of his budget by a particular date. The public authority
however has to keep full records of its income and expenditure and the accounts
are to be in balance during the financial year.

3.  An individual cannot borrow from
himself: If at any time an individual is in need of money, he cannot borrow
from himself. He can raise the loan from other individuals or can utilize his
past savings, but he cannot borrow internally. The public authority, on the
other hand, can borrow internally from its own people and externally from other
nations.

4.  Issue of Currency: Government has full
control over the issue of currency in the country. No other person except the
state can print notes. If an individual does so, he will be put behind the
bars.

5.  Provision for the Future: The
government has to make a solid provision for the future. It spends large
amounts of the money on those projects which the future generation is only to
benefit. The individuals on the other hand are not generally liberal and
far-sighted. They discount the future at a higher rate and so usually make
inadequate provisional for the future.

6.  Big and deliberate changes in public
finance: It is easier for the government to make big and deliberate changes in
its income, and expenditure but for an individual it is very difficult affair.
A few individuals may succeed in increasing their incomes but all the persons
cannot do so. The public authority can also make deliberate decrease in its
income without feeling any difficulty. But for individuals, reduction in income
is very painful as they are used to certain standard of living.

7.  Surplus Budgeting: For an individual,
excess of income over expenditure or surplus budgeting is considered to be a
virtue but for the public authority it is not as such, it is expected from the
government that it should raise only as much revenue as it needs during a
calendar year. After all what is the fun of showing persistently surplus
budgets? It is not better to give relief to the tax-payer than to show surplus
budgets.

8.  Mystery shrouds Individual Finance:
Individuals finance is usually shrouded in mystery. Every body likes that his
financial position should remain a closely guarded secret but this is not the
case with public authorities. The government publishes its budget and gives due
publicity to it.

Ramona  Vandusen Profile
Ramona Vandusen answered

public finance is a branch of economics that deals with the expenses and revenues from government to government in the economy.

The long-term financing is revenue and expenditure. If you have a link to the private sector, private financing is needed. On the other hand, if it related to the public sector, ie, the public finances.

Anonymous Profile
Anonymous answered
Public finance refers to governments finance and distributing it to the various activities of government.
Lily James Profile
Lily James answered

Public Finance is basically a field of economics. It deals with payment of collective or governmental activities and their design. The terms Public economics and governmental finances.

Public finance helps in issues such as Taxes, Debt, Seigniorage etc. When the Private markets no longer remain efficient, then in order to remain in limelight.

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