FINANCIAL ADMINISTRATION
Budget as an Instrument of Control For any educational programme to be effective in the modern context, adequate financial resour- ces have to be provided. Qualified teachers, suitable buildings, competent administrators, good text-books, appropriate teaching aids and essential amenities all require considerable amounts of money Budget, therefore, becomes an important instru- ment of control over various educational opera- tions. The plans, procedures and organisation for the financing of education, however, have to be so divised as to serve as necessary adjuncts to the educational process rather than prove as hurdles and impediments.
Any budget generally foresees he sources of income in cash or kind. It earmarks the alloca- tions which could be spent on specified items. It also visualises a period in which certain jobs are to be completed in a set manner and with pre-fixed priorities. It has been repeatedly observed that the resources available for education are invariably scarce in relation to demand. A good budget envisages that every item of expenditure is worth its cost in relation to the rejected ones among the various competing demands. Appropriations and re-appropriations of the allotments are possible only after following certain established codes and procedures. A budget, balanced and drawn in accordance with the tenets of public finance, is thus an effective instrument for inculcating discipline and control of public expenditure.
Plan and Non-Plan Budget and Its Formula-
tion 2
Provisions in the budget of any state are classi- fied as plan or non-plan according to the nature of the schemes on; Which they are expected to be spent. There may be schemes of development e.g., opening of new schools to bring more children on rolls or introduction of work-experience pro- grammes in the existing schools or the like included in the annual or the five year plan. The allotments made for meeting the expenditure for implementing such schemes constitute the plan budget. All other items of expenditure and receipt and the funds needed to maintain the level of development reached in the previous plan constitute the non- plan budget. At the end of any plan certain items of expenditure are classified as committed in character. This kind of expenditure during the subsequent plan is also shown in the non-plan part of the budget and any additional development in the same area of activity is to be shown in the plan component of the budget. The expenditure in respect of activities connected with construction of buildings and roads and with the purchase of non-consumable stores etc. which are non-recur- ring in character belong to what is known as capital budget, whereas the rest belong to returning budget.
The formulation of the non-plan budget of the state education department in Uttar Pradesh is broadly based on the actual cost of the personnel including their pay and allowances of the preceding year and the average increase on account of institutions and officers is budgeted on a percen- tage basis, normally 15% and 5% respectively. The plan budget is prepared on the basis of teach- ing and non-teaching costs of new institutions or activities started or to be started during the plan year. The operational cost is budgeted on the basis of actual requirements. The non-plan bud- get, therefore, comprises committed expenditure of the preceding financial year, whereas the plan budget is for meeting the expenditure of the con- tinuing schemes or new schemes of the plan of the education department.
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In Uttar Pradesh, the two directors of educa- tion are responsible for submitting budget estimates of their respective charges to the government. The budget estimates prepared by individual insti- tutions and offices are scrutinised and consolidated by the directorates of education and are finally examined and okayed at the secretariat level fur obtaining approval of the state legislature. The budget proposals contain the estimated expendi- ture and receipts for government institutions and offices as well as grant-in-aid to privately managed and local body institutions. The budget provision for some of the schemes is directly made by the government itself.
Education F (2) section of the state directorate of education prepares the central budget for non- plan items and compiles budget proposals for the grant-in-aid prepared by other sections of the directorate dealing with schools of different levels and types. The drawing and disbursing officers of the education department (nearly 1000 in num- ber) submit their demands to the directorate for the budget year. These demands are checked and consolidated on the basis of the government sanc- tions headwise and sub-headwise at the directorate level and then estimates are prepared in accordance with instructions contained in the budget manual.
In case of local body institutions, budget state- ments from the district level are called for in the directorate in which the actuals of the three pre- vious years, revised expenditure for the current year and the estimated expenditure for the next year are given. On that basis, subject to the con- ditions that the saving will be resumed in the next year or for making up the short-fall, the grants are sanctioned when the funds are placed at the disposal of the director of education.
As regards private agencies, the budget estimate of aided high schools and intermediate colleges is prepared and grant-in-aid is assessed on these estimates. A lump provision is usually made in the state budget on the basis of estimated expenditure. As indicated in the chapter relating to administra- tion of physical resources, 20% of the income from fees is left with the schools to cover their normal miscellaneous developmental and maintenance expenditure. The entire extra amount needed for the disbursement of pay, dearness allowance etc. of ail the teaching and non-teaching personnel of the institutions is paid by the government and for this purpose also lump provision is made in the state budget.
Regarding the procedure for movement of the budget proposals from institutions to the directo- rate, it may be mentioned that these are prepared by heads of institutions on the basis of actual expenditure and then sent to district level authori- ties who, after due scrutiny, send them to regional level officers. These proposals are then submitted to the directorate for necessary action. This pro- cedure is followed in case of government schools. In case of other institutions, the method of grant- in-aid is operative.
As mentioned earlier in this chapter, it is the responsibility of the education directorates and the secretariat to supply the budget proposals to the department of finance. On this basis, the finance department prepares the annual budget. The planning department lays down the financial out- lays and approves the schemes on the basis of which the plan budget is incorporated in the bud- get estimates by the finance department.
After the budget has been passed by the state legislature, the finance department intimates the the same to all administrative departments and also to the heads of departments. While the com- mitted expenditure is incurred by the heads of departments, sanctions for continuance of posts etc. and also for new schemes are issued by the education department at secretariat level. With certain restrictions, power to sanction re-appro- priation within the grant between different heads subordinate to a minor head, which does not involve undertaking a recurring liability, has been delegated to the heads of the departments. Existing arrangement with regard to authorisation of expenditure after the budget has been passed by the state legislature is stated to be satisfactory. However, at the end of the seminar on modernisa- tion of educational administration organised by the National Staff College for Educational Planners a Administrators for the benefit of district and higher educational authorities of Uttar Pradesh, it was inter alia recommended that "In order to ensure a speedier implementation of plan schemes, the seminar recommends that suitable steps should be taken to
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clear the schemes through the finance department at the pre-budget stage so that the need for a further scrutiny at the post-budget stage and consequent delays in implementation are avoid- ed."
The Administrative Reforms Commission set up by the Government of India had recommended the adoption of performance budgeting as a supple- ment to the traditional line item budget. This was a transitional measure. Eventually, when the necessary reforms in the accounting system are brought about, performance budgeting was to replace the present budgeting practice. Uttar Pradesh is one of the states in India which has introduced this practice. Various departments of the state government have been preparing per- formance budgets and submitting the same to the state legislature since 1970-71. The state educa- tion department has also adopted the same practice from the year 1975-76. It has been clarified that sufficient care has been taken to incorporate in the budget as much relevant data as possible to facilitate an assessment of the validity of public outlay on education in that year.
The 1975-76 performance budget of education department of Uttar Pradesh comprises of three main tables. The first table gives financial require- ments of all educational programmes and activities which are required to be undertaken during the year 1975-76. Such a programme and activity classification is expected to be more meaningful and indicative of the objectives in furtherance of which the expenditure is proposed to be incurred. The second table gives information regarding expen- diture to be incurred on various aspects like sala- ries, equipments, etc. This object-wise distribution of the expenditure facilitates understanding of the implications of various amounts of money incor- porated in the budget. Under the existing system of accounting laid down by the Comptroller and Auditor General of India, funds are allocated under various heads of accounts. The third table indicates the heads. of accounts which are the sources of funds.
The first and the last tables provide informa- tion about the actual expenditure incurred in 1973-74, estimates for 1974-75, revised estimates for 1974-75 and estimates for 1975-76. Thus, like the traditional budget, the performance budget also contains information for three successive years. But where the new tables-depart from the tradi- tional approach is in regard to the three-fold way of looking at the budget : on the basis of progra- mmes and activities of the department of educa tion, on the basis of objects for which the proposed expenditure is to be incurred and on the basis of sources of finance.
The total budget for education in Uttar Pra- desh for the year 1975-76 is Rs. 226,15,92,600/-. Table I is an extract of the first table of the per- formance budget with respect to primary education alone as a sample. Similar details have been sup- plied with respect to middle and university stages of education, special education, technical education, sports and youth welfare and other expenses on education. Tables II and III are only copies of the other two tables in the performance budget.
A significant aspect of the performance budget of Uttar Pradesh for the year 1975-76 is a brief description of the educational pattern of that state and relevant details of various programmes and activites along with targets to be achieved through each of the provisions which have been incorpora- ted in the budget. Thus, there are three major aspects of performance budgeting which are the structural aspect, accounting aspect and analytical aspect. All the aspects combine to focus attention on the managerial or the decision-making role of the budget rather than the controlling role alone.
Uttar Pradesh, like other states in the country, operates a scheme of grant-in-aid to educational institutions administered by local government agen- cies and private managements. These grants are administered according to certain set norms and criteria in respect of junior high schools, high schools and intermediate colleges managed by private agencies and local bodies as given in appen- dices IV and V.
There are two types of grants-in-aid given to the aided high schools: recurring and non-recurring. These grants are sanctioned at the secretariat level on the recommendation of the director of educa- tion. The institutions managed by private agencies as well as local bodies are required to submit their
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Table I : Financial Requirements of Various Programmes of
Rupees
Actuals (1973-74) Estimates
Budget Heading -----------------------------------------------------
Plan Non-Plan Total Plan
Grant No. 28-Head 277-Education
Primary
Direction and Administration 2.407 15.010 17.417 1.680
Inspection 32.298 108.838 141.136 15.059
Government Primary Schools - 43.704 43.701 2.000
Grants to Private Primary Schools 1924.921 3803.135 5728.056 492.660
Grants to Local Bodies for Primary Education - - - -
Training for Teachers 12.808 333.761 346.568 34.685
Miscellaneous 49.759 59.552 109.311 72.331
Total 2022.193 4364.000 6386.193 618.315
applications for grants on the prescribed forms to the district education authorities who forward the applications to the director of education along with their recommendations. These applications are scrutinised by the education directorate and its recommendations are submitted to the government for sanction.
As regards recurring grants-in-aid, institutions are brought on regular grant-in-aid list by the government, but the regular maintenance, grant to these institutions is sanctioned by the district and regional officers in accordance with instructions laid down by the government. The non-recurring grants are sanctioned only to institutions included in the regular grant-in-aid list. In order to lift these grants, boys and girls schools are required to contribute their matching share in the ratio of 20:80 and 10:90 respectively.
The government has a statutory responsibility for the payment of salaries to teachers of high schools and intermediate colleges as provided in the U.P. High Schools and Intermediate Colleges (Payment of Salaries of Teachers and Other Emplo- yees) Act, 1971. According to the provisions of this act the management of every institution has, for the purpose of disbursement of salaries to its teachers and employees, to open a separate account in a scheduled bank to be operated jointly by a representative of the management and by the inspector of schools or his nominee. The inspector can also authorise the management to operate the account alone or can withdraw such permission. The management has to deposit in this account, by a specified date, 80% of the amount received as fees from the students.
Similarly, the government has taken over a statutory responsibility for payment of salaries to teachers and other employees of non-government aided degree colleges with effect from 1st April 1975. Accordingly, the colleges have to deposit 75 to 80
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Education Department of Uttar Pradesh, 1975-76
in lakhs
(1974-75) Revised Estimates (1974-75) Estimates (1975-76)
Non-Plan Total Plan Non-Plan Total Plan Non-Plan Total
22.283 23.963 0.480 23.553 24.033 0.750 26.152 26.902
151.964 167.023 4.964 196.970 201.934 12.080 193.105 205.185
44.084 46.084 2.000 34.516 36.516 37.774 37.774
8169.619 8662.279 419.180 8305.229 8724.409 486.080 9642.050 10128.130
320.846 355.531 3.190 319.326 322.516 7.250 317.271 324.521
102.687 174.918 46.150 89.260 135.410 52.400 111.973 164.373
8811.483 9429.798 475.964 8968.854 9444.818 558.560 10328.325 10886.885
percent of their income from specified fees to the salary payment account; and such amount as is needed for disbursement of salaries every month is also deposited as grant-in-aid to this account by the state government. This scheme is, however, not applicable to the colleges run exclusively by local government authorities. The latter colleges continue to get grants-in-aid according to relevant provisions of the state educational code, namely, "the main- tenance grant to a degree college shall not exceed (a) half of the approved tuitional expenditure of the college or (b) the difference between recurr- ing approved expenditure for the year and recurring approved income for the year, excluding govern- ment grant, whichever is less."
Ad-hoc grants are also available. But these are given only to degree colleges for development put-poses such as provision of laboratories, buildings, library books as also for participation with the managements in providing for matching contribu- tion in respect of grants sanctioned by the Univer- sity Grants Commission. Non-recurring grants, however, are sanctioned to colleges year after year by the government out of funds specially provided for in the plan budget of the education department.
The aided recognised schools and intermediate colleges apply for grant-in-aid to the district ins- pector of schools. He submits recommendations to the regional deputy director, who in turn sends them to the director of education. Applications are scrutinised according to the norms and criteria approved by the government and a decision is taken. The same procedure is followed in respect of girls institutions, in whose case the regional inspectress of girls schools sends the recommeda- tions.
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Table III : Source-Wise Classification of
(Rupees)
Actuals (1973-74) Estimates
Grant No. --------------------------------------------------------
Plan Non-Plan Total Plan
(1) (2) (3) (4) (5)
Grant No. 28-Head 277- Education 3174.697 9829.477 13004.174 1105.488
Grant No. 42-Head 299 -Special and Backward 46.164 100.432 146.596 139.087
Areas-Hilly Areas-Edn.
Grant No. 42-Head 299-Special and Backward - - 1.691
Areas-Hilly Areas-Residence Education
Grant No. 24-Head 259-Public Construction 0.082 0.165 0.247 0.415
Work (e) Education
Grant No. 34-Head 283-Residential House- 0.681 0.681 0.100
Education
Grant No. 61-Head 277-Education 0.935 0.935 1.220
Grant No. 67-Head 459-Expenditure on Public 5.512 5.512 2.851
Construction Works-Education
Grant No. 68-Head 477-Expenditure on Art and 92.469 92.469 76.682
Cultural Education
Grant No. 73-Head 499-Expenditure on Special - - 0.100
and Backward Areas
Grant No. 73-Hilly Area-Public Construction 16.970 16.970 45.625
Department-3-Education
Grant No. 73-VI-Construction Works for Schemes - - 14.870
relating to Boarder Districts of Chamoli, Uttarkashi
and Pithoragarh
Grant No. 87-Head 677-Loan for Art and 84.924 1.200 86.124 65.000
Cultural Education
Grand Total 3422.434 9931.274 13353.708 1453.129
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Expenditure on Education, 1975-76
in lakhs)
(1974-75) Revised Estimates (1974-75) Estimates (1975-76)
Non-Plan Total Plan Non-Plan Total Plan Non-Plan Total
(6) (7) (8) (9) (10) (11) (12) (13)
16352.945 17458.433 914.073 15150.858 16064.931 1034.357 19585.081 20619.438
863.287 1002.374 141.375 1484.855 1626.230 176.872 1689.991 1866.863
- 1.691 1.690 - 1.690 1.690 - 1.690
0.415 0.415 0.415 0.391 - 0.391
0.100 0.130 0.130 0.070 - 0.070
- 1.220 0.620 0.620 0.320 - 0.320
- 2.851 0.700 - 0.700 0.750 - 0.750
- 76.682 32.163 - 32.163 21.990 - 21.990
- 0.100 0.100 - 0.100 0.060 - 0.060
- 45.625 45.625 - 45.625 27.484 - 27.484
- 14.870 14.870 - 14.870 14.870 - 14.870
- 65.000 59.000 - 59.000 62.000 - 62.000
17216.232 18669.361 1210.761 16635.713 17846.474 1340.854 21275.072 22615.926
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Table II
Objective-Wise Classification of Expenditure
on Education, 1975-76
S. No. Object Estimate for
1975-76
(1) (2) (3)
Rs.
1. Pay 13,65,79,000
2. Dearness Allowance 18,08,88,600
3. Travelling Expenses 71,43,500
4. Other Expenses 57,32,100
5. Office Expenses 99.32,200
6. Printing Expenses 97,55,500
7. (1) Construction Work 12,49,300
(2) Expenditure on Cons-
truction from Different
Grants 67,62,500
8. Construction Work
(Maintenance) 17,72,700
9. Maintenance of Staff Cars
and Purchase of Petrol 19,87,000
10. Purchase of Motor Cars 1,40,000
11. Rent and Taxes 18,79,300
12. Water Tax on Residential
Houses 3,32,700
13. Scholarships and Stipends 1,75,65,200
14. Assistance Grants 1,75,46,17,300
15. Partial Grant 88,79,300
16. Pension/Gratuity 48,48,000
17. Balahar Scheme 1,40,50,000
18. Machines, Equipment and
Aids 37,07,500
19. Labour 6,00,000
20. Other Expenses 3,41,86,600
21. Expenses on Telephones 3,36,500
22. Technical Education 5,24,47,800
23. Loans for Art and Cultural
Education 62,00,000
Total 2,26,15,92,600
As regards degree colleges, only those colleges are eligible to apply for the grants-in-aid which have been in existence for at least three years and have secured permanent affiliation with a univer- sity. These applications are also scrutinised accor- ding to the criteria laid down by the state govern- ment and then forwarded to the government for decision.
The present system of grant-in-aid administra- tion has been reported to be working satisfactorily on the whole.
There is a separate audit organisation in the state directorate of education and audit units have been established at the regional level. The regional unit conducts the audit of aided institutions to check mis-utilisation and misappropriation of funds. These audit units are also responsible for auditing the accounts of government institutions. In addition, the Examiner, Local Fund Account, Uttar Pradesh and the Accountant General, Uttar Pradesh also conduct the audit of these institu- tions.
It has been reported that the existing audit arrangements are not considered satisfactory be- cause of the constant increase in the number of institutions which hampers thorough checking in the audit and the follow-up concerning compliance. It has been suggested that for audit to be really effective, the number of audit pat-ties should be increased.
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