Both are Based on Rationality of Thought When an individual spends some money he makes it certain in his mind that money is spent inthe best way. He applies his rational faculties. In the same way any irrational step taken by thegovernment may bring wastage and misuse of finance. This irrationality lead them to damageswhile rationality to prosperity and achievement of goals.Differences between Public Finance and Private Financei. Individual determines his expenditure on the basis of his income but governmentdetermines its income on the basis of its expenditure. As far as an individual is concernedhe determines his expenditure on the basis of the income, in the sense that he cannot thinkof spending more than his income. He distributes the amount of income to be spent onvarious subjects with income at his finger tips. The position is quite contrary in the case ofgovernment. The government first decides the amount of expenditures to be done during a period of time, and then frames scheme to secure money to meet the expenditure.Government has the power to increase its income be internal borrowings but this is not possible for an individual.ii. Government’s source of income is more flexible in comparison to private source.Government has legal power to extend the sources of its income according to the needs ofthe time. Government has the control over the whole national property but individual has torely upon his own individual standing. Moreover, government can take the help of theforeignment and this is not possible for a person to secure such supports. The last resortavailable to the government is the printing of new currency notes to increase its income. Butan individual will be definitely but behind the bars for such an office.iii. It is easy for an individual to base his expenditure on the law of equal marginal utility, butfar difficult for governments. Individual is free to measure his expenditure in the sense ofutility and spends his money on the certain weighted subjects. These subjects may not be ofsocial need or may not add anything to social advantage. Such expenditures are very prominent in the democratic countries for example building of hospitals, roads, parks.iv. Private finance is narrow and short lived in comparison to public finance. Private financefaces suspension with the end of the individual’s life or with the closure of the particular business enterprise. But governments are more tenable. It is well said in this context is that‘king may come and king may go but government is eternal.’ Governments keep on movingform generation to generation interlinking past from present with an eye on future.v. Public finance is subject to public censor but not the private finance. A complete secrecymay be maintained by an individual regarding his income and savings

management and control of public finance
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