Finance occupies a very important place in the study of public administration. Of the several factors that enter into the problem of efficient administration, none is of greater importance than that of Financial Administration. Finance is the fuel for the engine of public administration. It is the life-blood of a government. It keeps the administrative machinery on its wheels. No administration can function without finance.
The success of administration depends upon the availability of finance. ‘Lloyd George’ once remarked that ‘Government is Finance and rightly so. It is hardly going too far to say that the government has worked out and is employing a satisfactory system of Financial Administration has gone a long way toward putting the administration of its affairs upon an efficient basis and conversely that the government which has not done so cannot possibly have that economical and effective management of its affairs to which its citizens are entitled.
Financial administration means the management of the finance of a state or of a public authority endowed with taxing and spending powers. Sound financial management is vital to the success of any enterprise. This is all the more so for the government. Financial administration is one of the important aspects of public administration. As a subject, it comprises several factors concerned with public finance and deals with the principles and practices concerning the proper administration of the finances of the state.
In the words of Jeze Gaston, Financial administration is “that part of government organisation which deals with collection, preservation and distribution of public funds, with the management of credit operations on behalf of the state a with general control of the financial affairs of the public household”.
Check out public administration notes in detail.
Relation Between Financial Administration And Public Administration
Every administrative act, says Dr White, has its financial implications, either creating a charge on the treasury or making a contribution to it. Nothing can be done without the expenditure of money, at the very minimum for the payment of the salary or wage of the official or employee who acts. Available financial resources set a maximum limit on the administrative activity as a whole and each of its separate parts. The management of finance is therefore one of the first and one of the inescapable responsibilities of administrators. As a matter of fact, Financial Administration and Public Administration are closely intertwined.
- Firstly, most administrative acts have their financial implications. They either spend money from the public exchequer or bring money to it.
- Secondly, financial operations may be designed to develop and promote particular public policies, e.g., tariffs may be so levied as to protect the home industries, or taxation may be so imposed as to bring economic equality.
- Thirdly, financial administration raises important issues of administrative organisation and relationships, e.g., what machinery of financial administration there should be, or what should be the relation between financial machinery and administrative machinery, or what should be the proper sphere of jurisdiction of the financial officers and the administrative officers.
It is not going too far to say that the government which has worked out and is employing a satisfactory system of financial administration has gone a long way towards putting the administration of its affairs upon an efficient basis and the one which has failed to do so cannot possibly give to its citizens what they are entitled to. To quote, M.J.K.Thavaraj, financial administration is similar to the circulatory system in complex living organisms.
In the circulatory system, the arteries carry blood to every part of the ‘body, veins carry it back, and the heart regulates the flow. The circulatory system is integrally linked with other systems of organisms. The intestines digest the food carried through the alimentary canal and augment the bloodstream which helps the young to grow and the old to renew and sustain. The lungs a part of the respiratory system help to purify the blood.
Scope Of Financial Administration
Financial administration includes all the processes involved in collecting us in collecting, budgeting, appropriating and expanding public money crediting income and expenditures and receipts and disbursements, accounting for assets and liabilities and the financial transactions of the government and reporting upon income and expenditures. receipts and disbursements, and the condition of funds and appropriations Operationally.
Monetary Policy and Fiscal Policy
Monetary policy refers to the monetary system along with the measures to man measures to manage the money and credit supply in the economy. Fiscal policy includes matters like the taxation theory the debt theory, the social implications of taxes, “said * the realm of economics.
Fiscal Accountability :
- Public administration requires the administrators not only to act honestly but also to show that they acted honestly.
- They are supposed to follow the Picchu rules and procedures. The financial officers should maintain the accounts in proper forms and follow the rules of expenditure without any departure.
- Public money is a trust and it should be spent cautiously. But accountability does not end with proper maintenance of accounts and strict adherence to financial rules, it also involves the principles of wisdom, faithfulness and economy.
- It goes farther than custody and stewardship and enlists the dynamic policy determining qualities of management”.
Financial administration thus involves the management of finance in such a way as to accomplish the targets with the minimum expense of money and energy within the specified time limits.
Fiscal Administration :
- Fiscal administration is a dynamic process involving a continuous chain of operations which are:
- Preparation of the budget, i.e., of the estimates of revenue and expenditure for the ensuing financial year; D Securing legislative sanction for these estimates;
- Execution of the budget, i.e., regulation of the expenditure and raising of revenue;
- Treasury management, i.e., safe custody of the funds raised and due arrangements for the necessary payments to meet the liabilities;
- Rendering of the accounts by the executive and the audit of these accounts.
Here are the notes for Monetary And Fiscal Policies.