Public provision
Topic: Government Budget, Fiscal Policy and FRBM · NCERT: Class 12, Ch 5 "Government Budget and the Economy"
Meaning
Public provision means a good is paid for through the government budget and people use it without paying directly. It answers the question "who pays?", not "who makes it?". A good can therefore be publicly provided even when a private firm produces it. NCERT separates this from public production, where the government itself makes the good.
Example
A private contractor builds a highway, and the government pays for it from the budget. People then use the road without paying at the point of use. The highway is privately produced but publicly provided.
Don't confuse with
- Public production: here the government itself produces the good, for example through its own department or a public-sector unit. Public provision needs only public funding, not public production.
Related concepts
- Allocation function
- Redistribution function
- Stabilisation function
- Public goods
- Private goods
- Non-rivalry
- Non-excludability
- Free-rider problem
- Club goods
- Merit goods