Question

Explain the major theoretical theme (or idea) that seems to be driving the evolution of public budgeting & finance. When applied to the world of public budgeting, what are the significant advantages and disadvantages of this theme (or idea)? Does this theme make public budgeting & finance better, or worse?  

Answer 1

Public budgeting & finance is the process of analysing the financial planning policies of the government. It shows the methods used by the government to increase its revenues while meeting its expenditures. The general public can be educated and informed about the government’s finance and accounting procedures. It is often driven by three aspects: optimum allocation of resources, sharing of income and achieving macroeconomic stability. The government can allocate limited resources by rationing, provision of funds for their buying by others or by direct spending. It shares its income among the provinces or states. Moreover, it is the role of the government to ensure macroeconomic stability by minimizing volatility in inflation, economic growth, interest rates, etc.

Some of the advantages of public finance & budgeting are the increased government accountability, it ensures better communication with its citizens about its priorities, and quantifies its goals. On the negative side, there could be disagreement among different divisions of the government in allocation of funds, lack of flexibility, delayed decision making process, etc. However, the advantages outweigh the disadvantages of public finance & budgeting.