Promoting development in private sector:

To promote development in the private sector:

In a mixed economy, private sector forms a significant constituent of the economy. Despite the growing significance of the public sector in accelerating the procedure of economic development, the interest of the private sector can’t be neglected. Hence rebates, reliefs and liberal depreciation allowances might be granted to boost up the private sector.

In underdeveloped economies, public finance has to suppose yet another role, while in developed economies; it aims at sustaining economic stability. In underdeveloped economies, desirous of attaining quick economic development, the function of public finance is to promote quick economic development of the country, besides sustaining economic stability.

The significance of fiscal policy in current economies occurs from the fact that the State beneath democracy is termed upon to play an active and significant role in promoting economic development and giving a vast number of necessary public utilities and services such as drinking water, civic services, sanitation, primary education, public health, social welfare, defence, and so on. Most of such goods are characterized by the property that is, non-marketable; that it can’t be sold in the market to the consumer. However payment has to be regulated in another manner, via taxation.

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