Easy understanding of difference between public and private finance & similarity

1. PUBLIC FINANCE AND PRIVATE FINANCE
PUBLIC FINANCE:
Dalton defines Public Finance as one of those subjects which
lie on the border line between Economics and politics. It is
concerned with the income and expenditure of public
authorities and with the adjustment of one to other. The term
public authorities refers to the Government or the State.

2. Private finance
Deal to income and expenditure
by the private sector
Public finance
Revenue and expenditure of the
Government sector
Private finance :
A method of providing funds for major capital investment
where private firms are contracted to complete . It is
beneficial or profitable to him. (Single consumer)

3. The motive of public finance is
social benefit. The government
spends money for public welfare
The government sets an
objective standard of utility of
public expenditure , like social
justice and full employment.
The pattern of government
expenditure is guided by the
economic policy followed by the
government.
•The motive of private finance is
profit.
•Individual sets a subjective
standard of utility of his
expenditure.
•The pattern of expenditure in the
case of private finance is often
influenced by customs, habits
,social status etc.

4.  Government Revenue and
expenditure is regularly monitored
by an audit system
The government maintains a
permanent record for finances
and Audit.
At first government determines
its expenditure, and then tries to
collect revenue (TAX) from public .
Government can borrow from
• In public finance there is no
regularly monitored by an audit
system.
•The private sector may or may not
keep records
•Individual determines its
expenditure according to his her
income.
• Individual can only borrow from

5. Public finance is mainly related
to Maximum social welfare for
people Government prepares
budget for 1 year.
All the times marginal utility of
money expenditure is not
maintaining in case of Public
expenditure.
•Generally there is no specific
time table for preparing budget
in case of individual . Individual
always prepares Surplus Budget.
•All the time individual try to
maintain marginal utility of
money expenditure.

6. SIMILARITIES BETWEEN PUBLIC AND PRIVATE FINANCE:
SOME SAME FACTORS LIKE:
 AIM
 WORK
 BORROW
 SATISFACTION
 PRINCIPLE OF RATIONALITY(Benefits)
 Both private and public finance have income & expenditure .
The ultimate aim of both is to balance their income and
expenditure.
Borrowing
 Both the states and individual at times have to depend on
borrowing.
(when their Expenditure are greater than incomes)
 Both kinds of finance are based on the principle of
rationality. A rational individual tries to maximize his
personal benefits through his expenditure. A rational
government tries to maximize social benefits through public
expenditure.

8.  Work: Public works projects such as Schools, Hospitals and
infrastructure, Tollgate road. Private firms construct them and
then make their money back through long term repayments
from the Government.
Thus most of the difference between private &public finance
arise due to the nature of their organization. some of the
differences are bound arise when we try to boundaries of
individual satisfaction and take the goal of public welfare on the
whole, it should not be concluded that private & public finance
are not related to each other. They are really Complementary to
each other.