FINANCIAL ADMINISTRATION IN INDIA PART 1 PUBLIC FINANCE

• FINANCIAL ADMINISTRATION IN INDIA PART 1
  PUBLIC FINANCE
  NET ECONOMICS
• MEANING OF FINANCIAL ADMINISTRATION

1. FINANCIAL ADMINISTRATION IMPLIES THE MANAGEMENT OF FINANCE OF THE PUBLIC AUTHORITY OF GOVERNMENT
2. CONCERNED WITH STUDY OF ANNUAL BUDGETS,ITS PREPARATION,METHODS OF ADMINISTRATION OF PUBLIC REVENUE,MANNER OF SPENDING MONEY AND MAINTAINING FINANCIAL RECORD
3. FINANCIAL ADMINISTRATION REFERS TO SUCH A SYSTEM OR METHOD BY WHICH ONE CAN ANALYSE THE FINANCIAL WORKING OF THE PUBLIC AUTHORITY
4. FOCUSES ON THE PROCEDURE WHICH ENSURES THAT LAWFUL USE OF PUBLIC FUNDS

• DEFINITION
• FINANCIAL ADMINISTRATION CONSISTS OF A SERIES OF  STEPS WHEREBY FUNDS ARE AVAILABLE TO CERTAIN OFFICIAL UNDER PROCEDURES WHICH WILL ENSURE THEIR LAWFUL AND EFFICIENT USE. THE MAIN INGREDIENTS ARE BUDGETING,ACCOUNTING,AUDITING AND PURCHASE AND SUPPLY.
• INGREDIENT OF FINANCIAL ADMINISTRATION

1. BUDGET : THE TERM BUDGET HAS BEEN DERIVED FROM THE FRENCH WORD “ BOUGETTT” WHICH MEANS A LEATHER WALLET OR BAG,THE CHANCELLOR OF EXCHEQUER IN ENGLAND USED TO CARRY HIS PAPERS IN THE BAG TO HOUSE OF COMMONS. BUDGET IS A STATEMENT OF THE ESTIMATED RECEIPTS AND EXPENSES DURING FIXED PERIOD,IT IS COMPARATIVE TABLE GIVING THE AMOUNTS OF THE RECEIPTS TO BE REALIZED AND OF THE EXPENSE TO BE INCURRED,IT IS FURTHER MORE  AN AUTHORIZATION OR COMMAND GIVEN BY THE PROPER AUTHORITIES INCURRING THE EXPENSES AND COLLECT THE REVENUE.
2. ACCOUNTING:- RECORD INGREDIENT. IT IS AN ART BY WHICH THE FINANCIAL EFFECTS OF EXECUTIVE ACTIONS ARE RECORDED,ASSEMBLED AND FINALLY SUMMARIZED IN THE FORM OF FINANCIAL REPORTS.
3.  AUDITING : FINAL STAGE.  INDEPENDENT DEPARTMENT ,THE CHIEF OBJECTIVES OF AUDIT IS ONLY TO SUPERVISE THE MANNER IN WHICH EXPENDITURE HAS BEEN MADE IN ORDER TO ASCERTAIN WHETHER THE EXECUTIVE HAS SPENT IN ACCORDANCE WITH RULES AND REGULATIONS.INVESTIGATION OF REPORT AND LEGALITY OF EFFICIENCY AND ACCURACY OF THE FINANCIAL TRANSACTIONS
4. PURCHASE AND SUPPLY:- CONCERNED WITH ACQUISITION OF PROPERTY. PURCHASING IS A REPORT OF A LARGE CATEGORY OF SUPPLY WHICH COVERS SPECIALIZATION,TRAFFIC MANAGEMENT.INSPECTION.STORAGE AND PROPER UTILIZATION OF DIFFERENT SOURCES

• PRINCIPLES

1. NO TAX SHALL BE LEVIED OR COLLECTED EXCEPT BY AUTHORITY OF LAWS
2. NO EXPENDITURE OUT OF PUBLIC REVENUE IS INCURRED UNLESS IT IS SANCTIONED BY PARLIAMENT
3. THE EXECUTIVE SPENDS THE MONEY EXACTLY IN THE MANNER AS PASSED BY THE PARLIAMENT . THE AUDITOR GENERAL AUDITS THE ACCOUNTS OF GOVERNMENT TO BE PLACED BEFORE THE LEGISLATURE.

• INSTRUMENTS OF FINANCIAL ADMINISTRATION

1.     EXECUTIVE

2.     LEGISLATURE

3.     FINANCE DEPARTMENT OF FINANCE MINISTRY

4.     AUDITING DEPARTMENT

5.     PARLIAMENTARY COMMITTEE

• EXECUTIVE

1. IN INDIA EXECUTIVE REFERS TO CENTRAL GOVERNMENT
2. RESPONSIBLE FOR RUNNING THE ADMINISTRATION
3. NO TAX OR EXPENDITURE CAN BE MADE WITHOUT THE PERMISSION OF THE EXECUTIVE
4. RESPONSIBILITY OF THE EXECUTIVE TO PREPARE THE BUDGET
5. FINANCE MINISTRY IS RESPONSIBLE FOR THE ADMINISTRATION OF THE FINANCES OF THE CENTRAL GOVERNMENT

• LEGISLATURE
• DEMOCRATIC PARLIAMENTARY SYSTEM,IT IS THE LEGISLATURE OR PARLIAMENTARY SYSTEM,IT IS THE LEGISLATURE OR PARLIAMENT WHICH IS TRUE REPRESENTATIVE OF THE PEOPLE.
• SPECIAL PROVISIONS TO CONTROL THE FINANCE
• CONTROL OVER TAXATION: INDIAN CONSTITUTION UNDER ARTICLE 265 PROVIDES THAT NO TAX SHALL BE LEVIED OR COLLECTED EXCEPT THE PERMISSION OF THE LAW. ALL TAX PROPOSAL ARE PRESENTED BEFORE PARLIAMENT IN THE FORM OF BILL TO BE PASSED INTO LAW UNLESS NO ACT IS PASSES NO TAX  CAN BE IMPOSED

• CONTROL OVER PUBLIC EXPENDITURE:- ARTICLE 266 OF THE CONSTITUTION  AL REVENUES RECEIVED ,ALL LOANS BY THE UNION OR STATES SHALL BE PAID INTO THE CONSOLIDATED FUND AND NO FUND CAN BE WITHDRAWN OUT OF THE FUND EXCEPT IN ACCORDANCE WITH THE LAW
• ENFORCEMENT OF FINANCIAL ACCOUNTABILITY:-BOUND TO SPEND FOR THE SATED PURPOSE

• FINANCIAL MINISTRY

1. SIGNIFICANT ROLE IN FINANCIAL ADMINISTRATION
2. CONTROL THE PRESENTATION OF THE BUDGET TO THE PARLIAMENT AND ITS EXECUTION AFTER APPROVAL BY THE PARLIAMENT
3. POSSESS THE EXPERT KNOWLEDGE IN FINANCIAL MATTERS
4. CONSIDERS ALL PROPOSALS OF EACH MINISTRY
5. FINANCE MINISTERS WHICH FRAMES  RULES AND REGULATIONS ABOUT THE PREPARATION AND EXECUTIVE OF THE BUDGET

• THE MINISTRY OF FINANCE HAS BEEN DIVIDED INTO FOUR DEPARTMENT:-

1. DEPARTMENT OF ECONOMIC AFFAIRS
2. DEPARTMENT OF REVENUE AND INSURANCE
3. DEPARTMENT OF EXPENDITURE
4. DEPARTMENT OF CO -ORDINATION

• AUDITING

1. MOST IMPORTANT INGREDIENT OF PARLIAMENTARY CONTROL OVER THE FINANCE OF THE COUNTRY AS WHOLE
2. SUPREME AUTHORITY VEST WITH THE LEGISLATURE
3. ENSURED BY THE PROVISIONS OF THE AUDIT OF PUBLIC EXPENDITURE BY AN INDEPENDENT STATUTORY AUTHORITY I.E COMPTROLLER AND AUDIT GENERAL
4. THE POWER OF THE AUDITING IS VESTED IN THE INDIAN AUDIT AND ACCOUNT DEPARTMENT IF INDIA WHICH IS HEADED BY THE COMPTROLLER AND AUDITOR GENERAL OF INDIA
5. THE AUDIT SYSTEM HAS BEEN BORROWED FROM ENGLAND WHERE IT WAS ESTABLISHED UNDER EXCHEQUER AND AUDIT DEPARTMENT ACT OF 1866
6. THE MAIN OBJECTIVES OF AUDIT IS TO ENSURE THAT THERE PROVISION OF FUNDS FOR THE EXPENDITURE DULY AUTHORISED BY COMPETENT AUTHORITY