Question

General Structure of Financial Administration
in India.

Answer 1

of administration:

i. Public administration (it is also called general administration),

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ii. Judicial administration, and

iii.Financial admin­istration.

The last one is our concern. In general terms, financial administration implies administration relating to the management of collecting revenues and expenditure for running the public administration. There are various ways of collecting revenues such as levying taxes, borrowing money from public and financial institutions, collection of money for development works etc. Collection of money in any form is not all.

Since the government is a public organisation it is legally bound to give explanation to the public for the money it collects from which source and in what way, and for what purposes it spends the money it collects. Here ties the planning for collecting money and spending it for various purposes. Both the income and expenditure are guided by plans or certain definite rules and regulations.

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This is, in general terms, financial administration. The financial activities of a state can reasonably be compared with the management of a household. We know that the head of a family prepares a budget of income and expenditure and runs the family in accordance with the budget.

The financial management or administration of a state is the bigger edition of the financial management of a family or household. The term financial administration refers to certain rules and methods relating to revenue and expenditure.

The financial administration is the crucial aspect of public administration because the running or management of administration is impossible without money or finance and for that reason the financial administration occupies the centre of public administration. The task of public administration or government is to levy taxes and this job is performed by the legislature. But the executive organ cannot levy taxes beyond what is needed. Again, the executive will have to give explanation to the legislature for the money it has collected and spent. Thus financial administration includes both the earning or collection of money and expenditure of the collected money.

The term financial administration has a different content in the present day situation of India. During the British raj the government collected revenues from the public and spent a major part of it for the private uses of foreign rulers. The foreign ruler had no concern for the development of India. The main purpose was to plunder the wealth of India and to transfer it to Britain. In this situation there was practically no existence of financial administration (hereafter only).