Evolution of Indian Administration: Kautilya’s Arthashastra; Mughal administration; Legacy of British rule in politics and administration - Indianization of public services, revenue administration, district administration, local self-government.

The series of articles/posts beginning from this one will discuss all about Administration and administrative practices in the Indian context. 

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 EVOLUTION OF INDIAN ADMINISTRATION:
Indian 'Administration' traces its earliest known form to the tribal system which later emerges as a monarchical system. We gain a lot of knowledge about ancient Indian Administration from ancient religious and political treatises. In the early Vedic period there were many tribes who elected their own chiefs and he handled all their responsibilities and the administration of the tribes and the Sabha( Assembly of elders) and Samiti(Assembly of people) were the tribal assemblies. The chief protected the tribe but had no revenue system or hold over land thus wars were resorted to and the booty shared among the tribes.

The first form of the 'State' in India can be traced back to the times of Manu(original name Satyavrata) the first King and progenitor of mankind according to Hinduism.People were fed up with anarchy as there was no neutral judge/arbitrator in between to solve issues of society, and so they appointed Manu as King and paid service fees as taxes for looking after them and ensuring mutual benefit and justice to everyone in society owing to his wisdom and philosophical attitude & the King was divine and regarded as descended from God.

As per the Ramayana and Mahabharata/Later Vedic times it goes to portray the role of the King as the whole and sole of administration being helped by his principal officers who were the Purohit and Senani where the Purohit( Priest) wielded much more authority than the kshatriya(Warrior clan) kings. Other figures of administration were Treasurer,Steward,Spies and Messengers,Charioteer,Superintendent of Dices. This is also mentioned in the Manu Smriti and Sukra Niti.

No legal institutions were there and the custom of the country prevailed as the law and capital punishment was not practiced but trials took place where justice was delivered by the King in consultancy with the Priest and Elders at times. By the time Kautilya wrote the ArthaShastra the Indian Administrative system was well developed and the treatise of Kautilya gives a very first detailed account of the same. We will discuss that below.






KAUTILYA'S ARTHASHASTRA:
The Mauryan period was the era of major development in Indian Administration. Decentralisation was prevalent as the village units played a very important role as the base of administration since ancient times.Empires were divided into provinces,provinces into districts,districts into rural and urban centres for efficient administration.

Kautilya's ArthaShastra is a work on Varta ( Science Of Economics) & Dandaniti(statecraft/Management Of State Administration) existing in the Mauryan rule. It was written sometime between 321 and 300 BC. It was retrieved in 1904 AD and published in 1909 AD by R. Shamasastry. It touches upon topics like functions of the chief executive,hierarchy,bureaucracy,corruption,local administration,supervisory management,motivation,morale and job description.

The most noticeable aspect of the Arthashastra is its emphasis on Public  Welfare even in an autocratic agrarian State. That is where its timelessness lies.

It is composed in the form of brief statements called Sutras and is compiled in 15 books(Adhikarnas),150 sections,180 chapters(prakarnas),6000 verses(sutras).

The 15 books could be classified under:
i) Concerning the discipline of economics and statecraft.
ii) Duties of government Superintendent.
iii) Concerning the Law
iv) Removal of thorns
v) Conduct of courtiers.
vi) Sources of sovereign State.
vii) End of six fold policy
viii) Concerning vices of the king and calamities that may arise as a consequence
ix) Work of an invader
x) Relating to a war.
xi) Conduct of a corporation
xii) Concerning a powerful enemy.
xiii) Strategic way of capturing a fort
xiv) Secret means like occult practices and remedies to keep of enemies or traitors.
xv) Plan of the treatise and thirty two methods of treating a subject.

Kautilya viewed the State as an institutional necessity for human advancement. According to him the State comprises of eight elements - King,Minister,Country,fort,treasury,army,friend and enemy. And State's prime function was to maintain law and order,punishing wrong doers and protecting subjects.

The empire was divided in to a Home Province(capital territory/administrative unit) under direct control of the central government and four to five outlying provinces(States),each under a viceroy responsible to the central government. The provinces possessed a good amount of autonomy in this feudal-federal type of organisation.Provinces were further divided into districts,districts into rural and urban centres with a whole lot of officials in charge at various levels.Departments to carry out execution of policy were created in all of these divisions with specialists dominating in the Mauryan era. Elites were preferred in job recruitment and the procedure for appointing is the same as it is practiced today. A centralised data bank of all government transactions and records were maintained in an organisation of the centre just like the cabinet secretariat and this performed audit and inspection functions of the three tiers of govt that is local,state and central.

This set up is very much similar to our present times where Union Territories and National Capital Territory are administrative units under Central rule where representative of the centre in the form of administrators/Lieutenant Governor appointed by the President rule the affairs under the direct supervision of the President & Central government.The states are under a governor(viceroy in olden times) appointed by and reporting to the President(King in olden times). The President is advised by his minister(s) and the sovereign power lies in the country's people. Also, the federal setup of powers given to states under the state list,and the district administration organisation and hierarchy. Audit mechanisms were in place and civil servants were recruited to perform the duties of policy implementation.

The King was head and his functions were military,judicial,legislative and executive,similar to modern state's functions of the President. And he was to be well equipped in all areas of study especially economics,philosophy,statecraft and the three Vedas. kautilya stated that whatever pleases the king only is to be avoided and only that which pleases the people is what needs to be followed.
Kautilya stated that the king was like the Father and all the people/subjects of the country/empire were his children. That is how he is supposed to take care of them. This is conceptualised as Welfare State in Modern times.

Corruption was not tolerated at all and dealt with severely where the ill-earned money was confiscated. Kautilya had his own criteria for selection of officers for the same. Once basic qualifications were met he tested them on their attitude to piety,lucre/revenue,lust,fear. Those who completed this criteria of piety were appointed as judges/magistrates,and those who crossed the test of revenue became revenue collectors, and those pass the test of lust are appointed to the king's harem, The candidates passing the test of fear are appointed as king's bodyguards and personal staff. And those who pass all the tests are appointed as councillors.

There were two courts according to the Arthashastra called the Dharmasthya ( civil cases court) where the matters are disposed off on basis of dharma,procedural law,conventions,royal decree ; and Kantakashodhana ( criminal cases court) where accused is convicted on basis of testimony and eye witness of spies,etc. Similar to today's times where there are separate courts having the subject matter jurisdiction of civil or criminal issues.

Agriculture was the mainstay and taxes on the goods produced as well as its imports and exports were the source of revenue and the expenditure focused on public administration,national defense,army,salaries of govt. officials. Agriculture plays an important role even today in our country.

Therefore,as one can see Kautilya's arthashastra deals with a proper strategy and system of centralised autocracy with a welfare objective in mind before performing any function by the king and his ministers.





WEAKNESSES OF THE KAUTILYAN STATE:
i) Over charged with supervision - too much of checks and balances.
ii) Prominence on individuals instead of institutions.
iii) Fundamental mistrust of officials.


The Guptas carried forward the Mauryan legacy of administration in many respects.






LINKS BETWEEN KAUTILYAN ADMINISTRATION AND MODERN PERSONNEL ADMINISTRATION AND PUBLIC ADMINISTRATION:
1) Personnel Administration: A system of recruitment was there and job description as well. Salaries were clearly spelled out of ministers and government officials. It also stated a view of job permanency and increment in salary/position(promotion) if the official concerned provided extraordinary service. Personnel were to be transferred from time to time as per Kautilya because it would avoid corruption and misappropriation of government funds.
Removal and tenure of officials and ministers were at the pleasure of the King just like the Governor and Attorney General,etc. hold office at a term that specifies ' pleasure of the President'.

2) Public Administration: The King is the sole source of authority and appoints and dismisses personnel and divides the work of govt. into different ministries under several ministers and officials.  Kautilya stresses on the need for specialist and generalist personnel at different levels of administration with full accountability to the King,thus talks about division of labour and coordination between them for efficient administration. As discussed above there was a clear system of recruitment,pay,and terms and conditions of service very much resembling the modern State.
Modern state is more concerned about development whereas the Kautilyan model talks about collecting revenue and employing activities to help in expediting and ensuring revenue,so it talks mainly of control instead of development.
It talks about local self government  that very much resembles a precursor to the Modern State local self government model.

Kautilya's Arthashastra is more about political science that is how to conduct State affairs rather than focusing on the philosophy that underlies it. He is very practical in his approach with a strict focus on amorality(no moral principles or religious diktat) so that the King's rule & administration are neutral without offending anyone, and also on rationality and an organised as well as efficient way of running a system with a greta deal of focus on accoutability and honesty and vigilance.





MUGHAL ADMINISTRATION:
 The Mughal administration was the most organised and long lasting and has even carried on to to the modern times. The reason for this stability was the long lasting more than 3 centuries rule of the Mughal sultanat. Akbar was the architect of this system since his grandfather and father Babur and Humayun respectively had their hands full with battles and socio-economic uncertainties leaving little time for administrative activities.

A very detailed,reliable and brilliant account of Akbar's empire,society and administration is given in the famous detailed document/text by Abul Fazl titled Ain-i-Akbari(Constitution Of Akbar).
The Mughal administration did carry forward a lot of the earlier traditions in political and administrative matters already existing in India as mentioned above but they upheld greater centralisation and a rigid structure without paying much interest to social services of health and welfare as also morals as compared to the Mauryan rulers. Their's was an islamic state and right from the principles of government,church policy,taxation rules,departmental arrangements to the titles of officials all was imported wholesale from the Perso-Arab crescent of khalifs of Iran and Egypt. However, even though the recruitment was mainly based on caste and kin they also did recognise merit and talent and did open up the civil services for Hindu people. It's source of revenue was taxation on land and agriculture and was highly urbanised. In the lower levels like of politics,village and lower levels of officials the Indian usage and customary practices were allowed whereas at the court/darbar and in higher official circles the foreign imported model of policy prevailed.

The sovereign was the king who was paternalistic and he had supreme authority over everything. He did have a number of ministers to help,advise and assist him in the discharge of his functions,out of which the more important were four - the Diwan who was in charge of revenue and finance,the Mir Bakshi at the head of the military department,the Mir Saman in charge of factories and stores, and the Sadr-us-Sudur who was the head of the ecclesiastical and judicial department.

Administration was based on coercion in the name of the King by the officials. The main functions of the officials were to maintain law and order,safeguard the King's interests from internal uprising and revolts,defend and extend boundaries of the empire and collect revenue and taxes.

Every officer of State held a mansab ( official appointment of rank and profit and expected to supply certain number of troops for State military service),thus the bureaucracy was essentially monetary in character.  The officials ranged from Commanders of 10 to 10000 and were classified into 33 grades. Each grade carried a certain rate of pay,from which its holder was to provide a quota of horses,elephants,etc and the State service was neither hereditary nor was it specialised. Grading system is practiced even today in recruitment matters.

The pay was received in form of either cash or jagir for a temporary period from which he could collect revenue equivalent to his salary. Thus,the jagirs though having no hold over the land extracted revenue at their whims and fancies from the land.

The Army of the Mughal empire must be understood in terms of the Mansabdari system. And apart from that there were the knights who were called the gentleman troopers and owed exclusive allegiance to the King. The cavalry was the most important unit,the infantry was made up of townsmen and peasants and the artillery with guns and the Navy.
The corruption within the army where the soldiers payed more allegiance to the immediate boss rather than the king proved to be its undoing and thus could be easily overpowered by the Marathas during the time of Jahangir.

The Policing system of the Mughals was entrusted to village headman's and subordinates in villages and to Kotwals in cities and towns. And at the district level the faujdars took over. It was a precursor to modern policing system of India.

The administration at the Centre was personal and paternal and operated with a fair degree of efficiency as long as the King kept an eye and controlled effectively. The two highest officials were the Vakil and the Wazir of which the former was higher in position and functioned as the regent of the State and maintained over all charge of the same.
The Wazir was the head of the revenue department and was known as Wazir when he acted as a Prime Minister.

Chief Diwan supervised revenue collection and expenditure and was the head of the Government's administrative wing supervising work of all high officials. All provincial diwans and their subordinates reported to him and he signed and authorised all government transactions. A Musatufi audited the income and expenditure of the government and the Waqia Navis kept a record of all important farmers.

The Khan-i-Saman was the high steward of the royal expenditure and the Mir-i-Bakshi who was the paymaster General of the empire.

The Provincial or State Administration was also known as Subahs(for states/provinces) and was headed by the Subedar or the Governor. He was appointed by the King and was given a office insignia and instrument of instructions which defined the powers,functions and responsibilities. As executive head he was in charge of provincial administrative staff and ensured law and order there. He also handled local civil intelligence agencies and controlled the local zamindars and contained their political influence.

Provincial Diwan was appointed by the central diwan and was next in the line of importance after the Provincial governor. He appointed kiroris and tehsildars to extract revenue from the ryots in time. He also exercised audit functions and had full control over public expenditure. He was assisted in office by the Office Superintendent,head accountant,treasurer and clerk.

The provincial Bakshi performed the same function as the central bakshi.
The Sadr and Qazi were two officers at provincial level who were sometimes united in the same person but the Sadr was basically a civil judge but did not handle all civil cases and the Qazi was concerned with civil suits in general and also with criminal cases.





DISTRICT AND LOCAL ADMINISTRATION UNDER MUGHAL RULE:
The Subah/Province was further divided into Sarkars which were of two types. One was ruled by officers appointed by the emperor and those under the tributary rajas. Each Sarkar was headed by Faujdar,he was the executive head who had policing and military functions and could surpass the provincial rulers to speak directly to the imperial government.

The Amalguzar was in charge of the revenue and the other head of the Sarkar. The Kotwal did the policing. The qazi performed the judicial duties. The Sarkars were further divided into parganas and the parganas further divided into Chaklas headed by officials called Chakladars. Qanungos kept the revenue records and the Bitikchi was the accountant and Potdar was the title of the treasurer.This was the hierarchy for a sound and efficient administration

Akbar kept the land revenue at 1/3 and Todar Mal brought in reforms as in a standard system of land revenue collection that included survey and measurement of land,classification of land based on its fertility and fixing the rates.

Justice was administered based on the Quranic Law as the Mughal state was a Muslim State. Fatwas were issued when required and ordinances by the emperor. The principles of equity were followed and the Emperor's interpretations only was allowed till the point it did not run contrary to the sacred laws.






LEGACY OF BRITISH RULE IN POLITICS AND ADMINISTRATION - INDIANIZATION OF PUBLIC SERVICES:
Though many of Indian administrative and political features evolved post 1947 but there still are certain features that we can see as a legacy of the British times continuing for the sake of its efficient practices and no other better alternative to the same till now.

Under the charter ( official paper) of the British crown the East India Company came to India with the sole objective of making profit through commercial exchanges. The established factories here and for their protection set up a small base of soldiers. They started looking for monopolising their profits in India as her market and resources were unmatched. This led to the initial tussle with Bengal Nawab and the event of Battle of Plassey paved the way for the same. The company officials convinced the company directors that if they interfered and got a say in local policy making in india then it would lead to a lot of profit and surplus.

Lord Cornwallis developed the Civil Services Code and so he is aptly known as the Father Of Modern Civil Services. He regularised and specified the office of the District Collector and estabilished the office of the District judge. This helped the company achieve a well organised personnel administration through which control over territories/provinces in India could become more comprehensive.

Lord Wellesley's rule period saw the emergence of the office of the Chief Secretary(1799). The doctrine of Subsidiary Alliance was an aggressive policy that resulted in the active interest of company officials in political and administrative affairs of local kingdoms governed by local Rajas. The early 1800s could be seen as an era where company officials focused all their strategies in gaining interference rights in political,commercial and military policies of local kingdoms for their profit.

The office of the Commissioner and sectional arrangement in the Secretariat saw the light of the day under Lord Bentick's rule. Under the Charter Act of 1833,the Governor General of Bengal was appointed as the Governor General of India and policy formulation was centralised for all territories under the company at the council of the Governor General Of India(Head of the British Administration In India). Also there was an estabilishment of communication between the Governor general's office which was the headquarter and its various field units and formal units of organisation. 1844 established 4 departments of Finance, Home, Foreign and Military as well as a little later on under Lord Dalhousie the setting up pf Post and Telegraph Services,Railways and Public Work Departments. The Doctrine Of lapse theory of Dalhousie very blatantly spelled out the objective of the company in India as to have absolute control over the policy process in Indian  States.
Thus all these establishments and policies helped the English to set up a strong base in India along with rights of revenue by means of strong organisational infrastructures and institutions,and interference in legislation and policy making even in the remotest of areas.

The Revolt of 1857 then shook up this system and that led to the end of the British East India Company's rule in India. The govt of India Act 1858 passed in the British parliament led to the company's dissolution and all powers transferred to the British Crown which then created an India Office in India and a Secretary Of State post was established with Indian governance and policy formulation matters. the Governor General was converted to Viceroy General of India(chief administrator of the British Crown in India) who implemented the policies devised by the India office which actually only had the role of passing on orders of the British Parliament. Military was reorganised and more higher caste officials were appointed at the higher levels and lower level occupied by lower caste as well as Europeans held the titular positions in the army. All this was done to avoid another mutiny so that communication is minimum considering the caste biasedness prevalent in India.

So,in short the British East India Company paved the way for the British government to enter. As soon as the Company outlived its utility,it was removed and the British govt. directly entered the Indian domain.

Impey devised a civil procedure code and Macaulay devised the Indian Penal Code,Contract Act and Indian Council Act.The enactment of the Criminal procedure Code by the British Parliament in the 1860's brought immense joy to the local rajas and people as they thought that now all the English officers would function under a code of conduct and there will be uniformity in treatment. There was also formulation of Arms act,Vernacular press act,Relationship codes,Transfer rights,etc. Thus, this era of late 1800's could be seen as one that was dedicated to establishing a legal environment for the smooth functioning of the British officials as they felt that no rules and regulations earlier led to the situation of disarray and sepoy mutiny/revolt.

There was also the demand of indianisation of the Civil services that was first totally occupied by Europeans and was causing a lot of discontent among Indians and Indian associations. Thus,for this purpose the Aitchison Commission recommended the induction of 25% Indians into the ICS,but this only remained on paper.The Islington Commission was appointed in 1912 and its repirt,submitted in 1915 recommended a scheme of 2 entry paths to the civil services. One was for insuring induction of natives of India through competitive exams and the other exam for superior ICS and Home services preliminary exam to be conducted in England was open to all. The Civil services was under the control of the Secretary Of State.

The Govt. Of India Act in 1919, created the All India Services replacing the imperial civil services format. This act also advocated the setting up of Public Service Commissions in India. The provincial civil services were under the control of the provincial governments.

Lee Commission and the Royal Commission on superior civil services specially recommended for the establishment of central services. Subordinate services were advocated for removal from the classification of civil services and transferred to the regional levels for conducting exams and filling up of positions only by Indians. So,basically it was a system to prevent Indians from entering the higher civil services as everybody could not afford to go to England for training and exam purpose and the lower levels were more approachable and attainable by the Indians.Also English as a compulsory language offered little scope of success for non-westernised Indians.On the recommendation of the Lee Commission,the first Public Service Commission was setup at Allahabad in 1925. The Lee Commission recommended a 40-40 percent of Europeans and Indians to fill up the superior ICS and the rest 20% to be filled up with promotions from the provincial Indian sub ordinate services. thus he advocated 60% Indians. This led to the Britishers losing interest in joining the services as they feared a monopoly of Indians and so the number of Indians in the services increased gradually.The Govt. Of India Act 1935 provided for the setting up of federal Public service commissions and also recommended for similar institutions at the state levels. This was the realisation of giving the All India Service an Indian flavour and towards the Indianisation of Civil Services.


Portfolio system was introduced in the Central Secretariat under Lord canning and arrangement of departments under Lord Mayo,Lord Lytton and Lord Ripon. Tenure arrangement was introduced under the Secretariat staffing scheme of Lord Curzon in 1905.

A special mention needs to be made here of the administrative systems/features passed on:
Judicial administration system of the Mughal period still exists in Indian administration.





REVENUE ADMINISTRATION & DISTRICT ADMINISTRATION UNDER BRITISH RULE:
After the battle of Buxar ended with the treaty of Allahabad,the company obtained "Diwani" rights from Shah Alam II and was legally authorised to issue dastaks in the name of the King thus paving the way for the company officials to enter revenue assessments and collection duties.

This very event began the evolution of the system of district arrangement that we see today. The District Collector's office was established in 1772 and it played a leading role in stabilising the company's hold over the revenue at local levels. 1780 saw the establishment of a Revenue Board created as the apex advisory body for suggesting scheme of Land Revenue Settlement. This is where we see the shift of the company majorly from commercial activities to administrative control in india. The revenue Board's recommendations culminated into : Permanenet Settlement Act in Bengal,Orissa and areas of Assam, Ryotwari arrangement in Presidencies of Maharashtra and Bombay, Mahalwari system in areas under the control of North India.






LOCAL SELF GOVERNMENT UNDER BRITISH RULE:
This term originated during British rule. Lord Ripon is called the father of local self government in India but was unable to push for major reforms. They lacked autonomy and gradually declined by way of establishment of local civil and criminal courts,revenue and police organisations,increased communication, and starting of the Ryotwari system where peasants paid directly and individually instead of collectively or under the zamindar.Panchayats maintained the local social order according to the socio-political norms prevailing.

The Montague Chelmsford reform in 1919 made it a transferred subject under the dyarchy that led to the establishment of a number of panchayats in all villages to have a proper and efficient local self government/administration as well as revenue collection for the British but was still under the total control of the District collector and red tapism and corruption plagued it and funds crunch was always there as a deliberate attempt by the British to stranglehold the provincial Indian governments from having control over them and so had to depend on the centre/British government for everything.

So, the local self government though had control over certain aspects but in the others it was just a pawn of the British government for their colonial benefits.

IGNOU notes refer - 



http://www.scribd.com/doc/39746705/IGNOU-s-Public-Administration-material-Part-2-Indian-Administration





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The next post on this blog will cover:

Philosophical and Constitutional framework
of government:
Salient features and value premises; Constitutionalism;
Political culture; Bureaucracy
and democracy; Bureaucracy and
development.

Financial Administration: Monetary and fiscal policies; Public borrowings and public debt; Budgets - types and forms; Budgetary process; Financial accountability; Accounts and audit.

Today we are to talk about Financial Administration which is the fuel for all Administrative activities. As Kautilya said famously in his renowned book ' Arthashastra' that all undertakings depend on finance and so foremost attention should be paid to the treasury. Therefore, one can very well understand the immense value attached to this aspect of Public Administration.
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Let us begin.


FINANCIAL ADMINISTRATION: MEANING & IMPORTANCE -
As per the definition given by the USA Census department, Financial Administration involves all the activities of finance and taxation. Includes central agencies for accounting, auditing, and budgeting; the supervision of local government finances; tax administration; collection, custody, and disbursement of funds; administration of employee-retirement systems; debt and investment administration; and the like.
So,in simple words Financial Administration is an all encompassing term for all those functions /operations having the objective to make funds and finance available to the government for its duties and responsibilities to be carried out smoothly and also all those activities that ensure the lawful and efficient use of those funds/finance.
And these functions are collectively performed by the Executive(asks for funds),Legislature(that has the sole power to grant those funds),Finance Ministry(controls those funds) and the Auditor(to audit whether the funds were used for what they were demanded).
The steps involved are preparation of the budget for the ensuing financial year,getting it passed by the legislature,executing the budget and collecting the funds for it,managing those funds via the treasury and the audit of the Centre and State executive accounts by the Audit authority.

So one can understand the importance of Financial Administration in its element. A balanced and precise financial administration is the base as well as the means to attain successfully all goals of development as well as growth of a country.






MONETARY POLICY:
Monetary Policy is the process by which monetary authority(an authority that controls all matters relating to money) of a country, generally a central bank controls the supply of money in the economy by exercising its control over interest rates in order to maintain price stability,reduce inflation and achieve high economic growth. A sound monetary policy ensures that various sectors of the economy have sufficient tokens/authority to carry out their transactions. It provides the basis to the fiscal policy and the fiscal policy influences the monetary policy and gives it a direction to proceed in. Monetary policy helps in keeping the money supply and economy of a nation stable whereas the fiscal policy is more involved in development and infrastructural work and policy making and enactment of budget. A monetary policy is changed from time to time to combat inflation,deflation,price rise,imbalance in demand and supply,etc by mopping up excess money or infusing money in the market as the requirement may be. A sound monetary policy helps the government determine its fiscal policy and how much it will collect as revenue and spend as expenditure. The fiscal policy helps bring money into the market whereas the monetary policy helps in managing that money supply and keeping it stable. In India the monetary policy is managed by the RBI which is the central bank as well as monetary authority of the country.

The major operations/techniques of the RBI to implement its monetary policy for furthering the goals of economic growth are:
1) Supply of money/money supply : Printing currency or facilitating foreign inflow of the same.
2) Interest rates : By rising it or dropping it the bank controls money supply in the market.
3) Open Market Operation: Buying and selling of government bonds/securities from or to the public and banks as and when it wants to mop up excess money supply in the market or infuse money supply into the market.
4) Cash Reserve ratio: It is a certain percentage of bank deposits that a bank needs to keep reserve with the RBI. A high CRR is when the RBI wants to mop up excess liquidity in the market and a lower CRR is when the RBI wants to infuse liquidity into the market.
5) Statutory Liquidity ratio: Every financial institute needs to maintain a certain amount of liquid assets in the form of cash,precious metals,bonds,etc from their time and demand liabilities with the RBI. A high SLR is to mop up excess liquidity in the market and a lower SLR is the opposite.
6) Bank Rate Policy: Also known as discount policy. It is is the rate of interest charged by the RBI for providing funds or loans to the banking system.
7) Credit ceiling: RBI issues prior information or direction that loans to the commercial banks will be given up to a certain limit.This is done when the priority sectors need assistance support is given to limited sectors. It saves up funds for priority sector funding of government.
8) Credit Authorization scheme: RBI as per the guidelines of this scheme authorises banks to advance loans to desired sectors.
9) Moral suasion: RBI requests banks not to indulge in loan giving to unproductive sectors and maintain discretion so that the economy benefits.
10) Repo Rate and Reverse Repo Rate: Repo rate is the rate at which RBI lends to commercial banks against government bonds and securities and Reverse Repo is the opposite of the former. An increase in repo rate means that the banks have to pay more interest on loans taken from the RBI and thus excess liquidity is mopped up and a decrease in the repo rate means more money at a cheaper rate of interest to the banks. An increase in reverse repo infuses liquidity into the banks for the RBI pays a higher interest to the banks upon borrowing loans from them and a decrease in reverse repo rate ensures the opposite of the former.





FISCAL POLICY:
It is the policy taken out by the government regarding the use of revenue (taxation) and expenditure among various sectors to influence the country's economy and achieve welfare objectives like economic growth and development full employment,price stability and balanced demand and supply system within and outside. The fiscal policy is a statement of the same. And the most visible tool of the fiscal policy in action is the 'Budget'. Monetary policy and Fiscal Policy are complementary and equally necessary in managing a nation's economy as is already explained above under Monetary Policy.

There are three possible ways of Fiscal policy in the Public domain-
1) Neutral Fiscal policy - It implies a policy for a balanced budget where government spending is equal to the revenue/tax collected and so there is status quo in the economy.
2) Expansionary Fiscal Policy - Where govt. spending exceeds taxation revenue leading to a larger budget deficit.
3) Contractionary fiscal policy - Where govt. spending is less then what is collected as revenue. It is usually associated with a budget surplus remaining with the govt.






PUBLIC BORROWING:
When there is a deficit in the budget that means expenditure is more than income/revenue for the government then the government resorts to borrowing from the Public in the form of government issued treasury bills, post office savings certificates, National Saving Certificates,Provident Fund,Fixed deposits,etc as instrument of Public borrowings for the time period that the person takes it for and that is why we see attractive advertisements taken out from time through Public as well as private sector banks and institutions with good rates of interest to attract investors to invest with them, and all this is paid by the government through its fiscal policy in order to garner more funds year after year for their development activities and economic growth.Public borrowing also helps in curbing inflation and seize away the excessive and unnecessary purchasing power from the public during an inflationary period.However,when even that is exhausted to an extent then the government borrows from the Reserve Bank Of India when it wants to meet the remaining part of deficit in the budget and thus it is also known as deficit financing. Deficit financing helps the government meet their resource crunch expeditiously and also the interest that the government pays back to the RBI upon returning those borrowings actually come back to them in the form of profits so it is a beneficial tool for the government. However,deficit financing involves printing of new currency through RBI to give to the government and that leads to infusion of excess money supply into the market through government activities leading to money getting concentrated in the hands of a few who can afford and thus consumption increases leading to less supply and so prices rise which in short is inflation. Therefore deficit financing leads to inflation.





PUBLIC DEBT:
The money and interest/debt that the government has to pay back to the Public when it borrowed from it(please look above for the instruments used in Public Borrowing)  is known as Public debt. It has been on a constant rise in developing countries since a long time due to haphazard budgets and unforeseen circumstances that lead to a not so proper implementation of even a proper budget. Public debt can be both internal as well as external. Internal has been discussed above. External debt is when the government of a country borrows from global institutions like the World Bank and International Monetary Fund,etc.






CLASSIFICATION OF PUBLIC DEBT:
1) Reproductive and Unreproductive debt - Reproductive debt is when money is borrowed to invest in an infrastructural project like railways,irrigation,etc which when finished will be used by the public and provide revenue through taxes and be profitable for the government. On the other hand unreproductive debt refers to those borrowings that are done for meeting expenditures like war,etc which will not yield any direct revenue upon completion.

2) Voluntary and compulsory debt - Voluntary debt is when the public is free to decide whether they want to provide loans to the government or not and compulsory is when the public is legally compelled to provide funds like in 1971 the ' Compulsory deposit scheme' was introduced.

3) Internal and External debt - It has already been detailed above.

4) Long term and short term debt - Long term debt is when the debt has to be repaid after a year and short term debt is when it has to be repaid within a year.





BUDGET:
Budget is an estimate of income and expenditure for a set period of time in India's case it is of a year. It is the detailed implementation plan of the fiscal policy of the State in hard figures and facts and activities to be pursued for executing and implementing the same for socio-economic development of a country by the executive. It is defined as a series of goals with price tags attached. Where a line item is detailed and a price/cost is mentioned next to it.





UTILITY AND IMPORTANCE OF A BUDGET:
1) As a tool of financial control of the legislature over the executive.
2) As a tool of administration for carrying out its functions as per specified and approved budget.
3) An instrument of Public Policy for development and welfare as well as economic and social growth and development.
4) As a tool of accountability for the legislature over the executive.
5) Budget helps getting five year plans into action.






TYPES AND FORMS OF BUDGETS:
1) Short term - annual - long term Budget : If a Budgetary proposal happens to be for less than a year then it is considered to be a short term budget. Proposal for a year is classified as an Annual Budget and proposals for more than a year are classified as long term budgets.

2) Surplus - Balanced - Deficit : A proposal is considered to be a surplus budget if revenues in a year exceed the expenditure of the same year. A balanced budget is that where both the sides are equal. And a deficit budget is one where the expenditures for the year exceed the revenue for that year.

3) Cash Budget - Revenue Budget : That form of budget where the proposals are based on cash that means in terms of actuals and not based on accruals (increasing or projected increase). It is in practice in India,U.K and USA. Under this type of budget there is a 'rule of lapse' which means that once the validity of the budget appropriation is over,all remaining or unutilised funds will lapse and a fresh proposal will have to be put forward to the legislation for receiving further grants. This kind of budget is considered suitable because it allows re-prioritization of activities of the executive and is a more comprehensive format.
Revenue budget refers to that form of budgeting where proposals are based on accruals and appropriation for their authorization are linked to the completion of the activities and not the validity or life cycle of the budget.

4) Lumpsum Budget: It is a proposal where expenditures are not provided heading wise rather an overall estimate is presented for the approval of the legislature. It is considered useful when funds are required to be appropriated for some unspecified or unclear activity/area which is in the process of determination.

5) Line - Item Budget: It is considered as one of the most popular format as it is simple in approach as well as in understanding. It is that technique of budgeting where every item has a dedicated separate line and column for its complete description along with its rate and the total quantity required as well as the funds required for it are clearly specified. It helps in more accountability of the executive as well.
The drawback of this technique is that it fails to link expenditure with performance after such expenditure as the focus is totally on the expenditure and all the detailing goes into that. It is not comprehensive in its outlook.

6) Performance Budget: A result of the First Hoover Commission in 1949 ( refer - http://en.wikipedia.org/wiki/Hoover_Commission ) it was first applied for federal budgeting in 1950 by President Truman. It is a technique under which allocation of funds are based on functional classification. It specifies the demands with the heading as well as the objective it sets out to achieve. Thus the legislature has total control over the executive actions and knows what it is to expect at the end of the Budget life cycle and can evaluate it and hold them accountable. This type of budget shows a clear relation between inputs and outputs. It helps the legislature hold the executive accountable in a better manner,helps head of departments of administration as communication for activities is clear from top to bottom and they find it easier to direct subordinates and achieve the specified goals,it helps the auditor as well as he has a clear idea of each and every detail as mentioned above. This technique was first recommended by the Estimates Committee in 1956,however,it was introduced in Parliament for the first time in 1968-69 on recommendation of the first Administrative Reforms Commission.
The limitations to this technique are:
i) Difficult to measure performance of various activities of govt./executive for it is quite vague and cannot be directly measured.
ii) Expenditure made by govt. under number of heads do not present themselves in the form of results that are objective enough to be directly measured.
iii) For various govt. activities,it is not easy to determine the unit cost of such activities.
iv) Not easy to establish links between development heads and accounting heads.


7) Planning Programming Budgeting System (PPBS) :
This system was first developed by General Motors in 1920's for managing financial matters and then implemented in the department of defense. Impressed by the results it was first introduced into political fray for Federal budgeting in 1966 by President Johnson of USA as a replacement for the shortcomings of the Performance Budget system.
It incorporates planning function where basic goals of the organisation are determined along with the selection of programmes that are best suitable to achieve them. Programming encompasses the scheduling and execution of those programmes efficiently through clearly defined projects.Budgeting then takes over to convert the goals,programmes and projects into monetary estimates for a review of the administrative heads and then to be presented to the legislature for appropriation. This technique thus seeks to incorporate all functions of Planning,Decision Making and Budgeting of government goals and objectives/policies.
Limitations of this technique are :
i) Tries to incorporate different departments and agencies work together thus making the process cumbersome.
ii) Periodic reviews and evaluations needed to check its effectiveness along with good and clear coordination between different agencies like planning,bureaucracy,accounting/finance ministries and departments,etc.
iii) Analytical in nature and not practical.
iv) Socio economic objectives are difficult to follow in a calculated manner as a lot of variables come into play.


8) Zero Based Budgeting : This technique was developed at the Texas Instrument Company in USA by Peter Phyrr and adopted for the Federal Budget calculation in 1977 by President Carter.
It is an evaluation of all programmes and expenditures of every year requiring each manager/administrator/executive head to justify his entire budget request in detail.
Evaluation of operational activities are done in terms of costs and benefits. It is based on a comprehensive analysis of priorities,goals and objectives making it more realistic and practical. Targets are specified through efficient planning and control functions.It helps enable better communication and personnel development in organisations.
Limitations are:
i) Effective administration and communication is necessary to implement this technique.
ii) Requires a lot of investment and updated infrastructure and properly trained personnel.
iii) Large data processing and making.
iv) Human biasedness in selection of decisions cannot be overlooked.






BUDGETARY PROCESS:
There are two types of budget presented to the legislature for passing - General Budget and Railway Budget at the central level. They were separated in 1921 to preserve the business approach to the railway policy and after paying the annual contribution the Railway can keep their profit and keep the profit for their development.

 Once requisite data is collected from all ministries and departments and scrutinized in tandem by the controlling officers and the Accountant-General and the administrative departments,it is then reviewed by the Finance Ministry and again the same process is followed by the Union Cabinet. That is why there is collective responsibility of the cabinet for the budget in Parliament.

The budget is then framed by the Finance ministry in the proper format after consulting the Planning Commission for including the Plan priorities and the help of CAG is also taken for getting previous years data of accounts. All this work begins in September of the current year for preparation of budget for the next financial year beginning on April 1st.

The States have their own budget and the same procedure is followed but done by the State Finance Department following the same procedure as in the Centre and has to be approved by the respective State Legislature.

After compiling the budget then the Finance Minister presents the same in the Lok Sabha for the Parliament approval. Whether this much fund is actually required or not once put in front of the parliament for passing is sent to the Estimates Committee to do the scientific financial assessment of the same and report to the legislature whether funds demanded are estimated precisely or not. A general discussion then pursues in parliament over the budget document and then a voting on the demand of grants take place,it is then considered again and the Appropriation Bill is then passed for the government to incur expenses from the Consolidated Fund of India then another round of consideration takes place for the revenue/taxation proposals of the budget and after that the Finance Bill is passed authorising the govt. to collect taxes and revenue.
For more refer to - http://parliamentofindia.nic.in/ls/intro/p4.htm

Once the process of passing the bill is completed then the execution of the budget begins. The Finance Ministry then takes over as it has the charge of the treasury of funds. It then calls in the respective administrative ministries and departmental heads to present their plan of outcomes for the appropriated/granted funds and write the reasons for the amount to be disbursed to their departments/ministries. Once that is prepared and the scheme is presented to the Finance ministry then the ministries are provided with certain guidelines/instructions that they need to pursue in regards to their spending and the funds being disbursed to them from the treasury through the Finance Ministry. Regular check is kept on them from them on to ensure accountability.

If a Finance Bill is rejected in the House then the whole cabinet has to resign based on the principle of Collective Responsibility.






FINANCIAL ACCOUNTABILITY:
Financial Accountability or accounting refers to the system of recording and maintaining data of all financial transactions of both the Centre and State. It is a means of the legislature as well as executive to exercise financial control over funds granted. It gives the details of the financial health of the government and also provides a clear account of loss as well as profit to the exchequer and whether the funds granted by the legislature were utilised for the same purpose as demanded and whether the goal was accomplished or not.





CLASSIFICATION OF PUBLIC ACCOUNTS:
1) Control Accounts -  It contains data of all expenditure and revenue as well as funds receipts/financial transactions of the government.
2) Proprietary Accounts - Maintained for the purpose of internal control and are not subject to external audit and is helpful for departments and ministries in decision making process.
3) Supplementary Detailed Accounts - Prepared for providing information to the general public about government functioning in terms of various department spending. It is prepared after 2-3 years of actual funding and is so formatted to be easily comprehensible for public viewing.






COMPTROLLER AND AUDITOR GENERAL ROLE IN ACCOUNTING:
All accounts of the Centre as as well as States are maintained by the office of the Comptroller and Auditor General. Under the CAG there is an Accountant General appointed in each state who keeps that particular state's records in his office and then it is passed on to the CAG at the time of auditing.
Railway accounts are maintained separately under the Financial Commissioner of Railways and the Defence accounts are maintained by the Finance ministry through the Financial Adviser ( Defense) and Military Accountant-General.






ACCOUNTING SYSTEMS IN INDIA:
1) Initial Entry : It takes place in the administrative office where the actual spending takes place. It is done in real time.
2) Monthly compilation in the office of the Accountant General (AG): Every month all the details of financial transactions done through initial entry step of the respective administrative office is forwarded to the AG office where it is classified properly and maintained under specific account heads like capital expenditure,revenue expenditure,revenue receipts,etc.
3) Annual compilation in office of AG: Annual compilation of all monthly reports sent by respective administrative offices are classified and maintained in AG office.
4) Final compilation in the office of the CAG.






AUDIT:
Audit is a Union subject and it refers to the systematic examination of accounts carried out for the objective of verifying validity of the financial transactions carried about by the administrative depts under the executive to determine the correctness of its process as specified in the budget approved by the legislature.
The audit function is performed by the CAG which is an autonomous constitutional body under the govt. of India act 1935 and is appointed by the President under his warrant and seal. Indian Audit is governed by not by legislature/law but by an executive order - The Government Of Indian Audit and Accounts Order 1936.
At presents receipts of Income tax collected are not open to audit by the CAG,rest all are.
Once the CAG compiles the Audit reports it then presents it to the President and the Governor of respective States to be presented before the Parliament and State legislatures via the two respectively.
Once that is received by the legislature it is then sent for another audit and review to the Standing committee called Parliamentary Accounts Committee consisting of both the houses representatives,the same committee is present in each state legislature and performs the same function.Once that is done then its recommendations and findings are then presented back to the House for debate and suitable action to be taken.

This article ends here.

IGNOU notes - http://www.scribd.com/doc/39747412/IGNOU-s-Public-Administration-material-Part-5-Financial-Administration

And,the series of posts/articles covering the complete study of Administrative Theory completes here.

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The next post on this blog will be the first in the series of articles that sets out to cover the study of INDIAN ADMINISTRATION. 

So, the next article will be detailing:

Evolution of Indian Administration:
Kautilya’s Arthashastra; Mughal administration;
Legacy of British rule in politics and
administration - Indianization of public services,
revenue administration, district administration,
local self-government.

Techniques of Administrative Improvement: Organisation and methods, Work study and work management; e-governance and information technology; Management aid tools like network analysis, MIS, PERT, CPM.

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Administration or to be very specific,the Bureaucracy from a traditional point of view has always been change resistant,opaque and rigid. Therefore,in today's times,where the world is become a global village and the concept of Welfare State and Good Governance looms large it has become imperative to transform the administrative machinery and reform it for the best results in order for it to remain important and not become obsolete.


Therefore, administrative improvement and reforms are a priority. So, today we will discuss this very important aspect of administration.



 ADMINISTRATIVE IMPROVEMENT:
It is an artificial inducement of administrative transformation against resistance.
A.F Leaman asserts that Administrative reforms are an effort to mitigate the gap between reality and what is desirable of the administration. And this transformation is for a value laden and moral purpose or can be for the purpose of changing with the times to maintain continuity, or both of these.

Lets understand some terms associated with and collectively form Administrative improvement, and should not be misunderstood as meaning the same.
1) Administrative change - spontaneous,based on continuity,value-neutral,incremental that means small changes from time to time which are imperceptible or not noticeable.
2) Administrative reform: Periodical,value laden,and the change is substantial(large and important in size/value) and noticeable.
3) Administrative reorganisation: It is in house effort,which means within the administration itself and not necessarily serving a larger purpose.
4) Administrative revolution: A phenomena that brings about a radical change in the administration and its nature.

Any of the above when takes place,either in isolation or in continuum is administrative improvement.





OBSTACLES TO ADMINISTRATIVE REFORMS:
1) Excessive tolerance to maladministration.
2) Political and bureaucratic inertia.
3) Lack of funds and infrastructure.
4) Lack of research,knowledge and opposing ideas/ideologies,etc.
5) Reports on the same are considered to idealistic and not implementable practically.






INSTRUMENTS / TECHNIQUES OF ADMINISTRATIVE IMPROVEMENT:

I) ORGANISATION AND METHODS- Also used synonymously with Organisation and management. It originated from the pioneers of scientific management that is Taylor and Gilbreth and is the base for this technique. It is the systematic examination of activities in order to improve the effective use of human and other material resources. It is highly technical and is conceptualised and implemented by the specialists/top level officers of an organisation to eliminate delay,wastage and overlapping,etc. It is an in house mechanism that is undertaken to accommodate and implement administrative changes and reforms in Organisation and methods.

The basic steps involved in O&M(Organisation and Methods) are:
1) Select the area/process that requires attention (done by the strategists of the organisation)
2) Record the current situation prevailing in it.
3) Examine and analyse the existing scenario.
4) Develop,design and evaluate alternative solutions and recommend improvement opportunities.
5) Implement the chosen solution.
6) maintain and monitor the implementation of that solution to ensure adherence and benefits and whether it is effective or not.


Now lets go into the details/techniques used to follow these steps in O&M:

1) Work Study - The scientific and systematic study of the work being done or to be improved(refer to Taylor's scientific management).

Work Study's types or sub techniques are:
i) Method Study: Related to the the tools and techniques as well as path being used in the work which is being studied. It is a systematic scrutinizing of all aspects like what,when,how,why,where,who etc is studied of the work case in order to get a proper understanding of the same and develop a suitable strategy for improvement to avoid delay and wastage of resources.
ii) Work Measurement: It is a supplement of the Method study where a study is done on the type of work at hand and its content.
iii) Organisational analysis: It takes a holistic view by placing the work at hand as an integral part of the organisation and its contribution to the working of the whole organisation and how it affects the same.It helps understand how a single improvement in the work at hand will affect the entire organisation and how other work will automatically improve in tandem with this one,etc. Negative and positive affects,both are seen.




2) Work management - It is the integrated process that enables the manager to access efficient ways to do a particular work. It strategies in detail the work within the organisation to make work simpler,better and efficient.

Its important sub techniques are:
i) Task based design : It is the detailed outline of the overall work of the organisation in the form of a simple work chart.
ii) Work queue : Substantially arranging various activities within a particular task. It also includes the ' to do ' list of the organisation.
iii) Work management Groups: It is the group in charge of outlining tasks,queueing the work,performance evaluation,setting standards,etc.

Work management can be taken up at both the upper as well as mid or lower levels of an organisation/administration and takes into account not only the work at hand but also the personnel in charge and the skills they possess and what is required. Thus it is a very extensive as well as significant method.




3) Forward Engineering Process - It advocates that along with contemporary change,an organisation/administration must also look into the future and anticipate changes to remain ahead of others and that is to be done through the BOW(Barriers,Obstacles and Weaknesses) analysis,CINE MATRIX ( Controllable Internal factors and Non controllable external factors) analysis, SWOT ( Strengths,Weaknesses,Opportunities and Threat) analysis,SPOT (Space,Pace,Opportunities and Threats) analysis.









II) E- GOVERNANCE & INFORMATION TECHNOLOGY:
E-Governance is the term used for a technology driven governance. It is the usage of Information and communication technology(ICT) to deliver government services,exchange of communication transactions,government to citizen and government to business as well as govt. to govt. interaction through fast paced,accurate and transparent electronic medium. .It is based on the theory that the State can increase its capacity in the changing environment/ecology through the use of Information Technology.It helps eradicate boundaries. E-government refers to a government that employs ICT in administrative machinery together with organisational changes and improvements and support public and democratic processes as well as bettering public policies. E-governance on the other hand is related to a broader term where the govt. wants to reach out of their organisations to the people and communicate with them and eradicate boundaries.

This has been reinforced and advocated via many theorists and scholars of Public Administration as well as Management like Luther Gulick,Herbert Simon(refer to his decision making model and his views on the use of computers under the Programmed and Non Programmed decisions for the same - http://publicadministrationtheone.blogspot.in/2012/07/process-techniques-of-decision-making.html), Pfiffner and Sherwood ( who conducted a case study in 1960's and found that IT converted organisations into better models), Allen Schich ( theory of cybernetics),etc.

Let's discuss the view of Dr. Arie Halachmi on E-Governance and IT in Administration/Organisation on the same.
Dr. Halachmi in his paper/essay " E-governance - theories and practices" studied the Tennessee Valley Authority organisational system and put forward five models of e-governance based on the study:
i) Dissemination Model - The administration through use of ICT can place information into the public domain.
ii) Critical Flow Model - Only certain clientele in society are required to be intimated about a policy/change and so IT helps in selectively doing so.
iii) Comparative Analysis Model - Best practices of other systems can be efficiently and accurately and collectively shared through IT.
iv) E-advocacy/Mobilisation and lobbying Model - IT empowers people with knowledge and only empowered people/citizens with the required knowledge can ensure good governance.
v) Interactive State Model - Grievances of people can be communicated,addressed and resolved efficiently and without delay through interactive IT systems.
vi) Practical Aspects - Enables efficient delivery of government services,exchange of communication transactions,government to citizen and government to business as well as govt. to govt. interaction through fast paced,accurate and transparent electronic medium. It will reduce red tapism due to hierarchy and enables decentralisation of information and services,enable transparency,increase capacity of administration to bring about rapid socio-economic and political development,skilled manpower enters into organisation and is a boon,proper and timely performance appraisal is done to avoid delay and demotivation,etc.




Let's look at the concept of E-governance and IT in the Indian context:
IT enabling began in the 1970's and during the new economic policy time of :LPG in 1990's IT and E-Governance(1997 Chief Ministers conference on Good Governance) was given an impetus.
The National Information Technology Act,2000 gave this concept a legal identity and formal structure and power/authority. The act was subsequently modified in 2001 to adapt to new changes and demands of the society and globalisation.
The National E-governance Plan was brought out as well to bring about socio-economic development and consolidate culture and IT. The Finance Ministry,Railway ministry,Health ministry,etc are trend setters as well as rely heavily on IT and ICT.
At the state level, Andhra Pradesh first of all took the lead by inaugurating the SMART project ( Simple,Moral,Acceptable,Responsible,Transparent) of administration and its services to the people.
Kerala started the FRIENDS(Fast Reliable Instant Efficient Network for Disbursement of Services) project and Karnataka started the E-Bhoomi(on-line delivery and management of land records in Karnataka) project.









III) MANAGEMENT AID TOOLS - NETWORK ANALYSIS, MIS, PERT, CPM:
Management aid tools are those tools/techniques that help in work simplification and efficiency of management processes.

Let's discuss each one of them in detail.

1) Network Analysis : It is a method for studying communication and socio-technical networks within a formal organization. It is a quantitative descriptive technique for creating statistical and graphical models of the people, tasks, groups, knowledge and resources of organizational systems. It is based on social network theory and more specifically, dynamic network analysis. It helps identify local and global patterns, locate influential entities, and examine network dynamics.




2) Management Information System(s) or MIS: It is an integrated entity/system of information technology where interaction between different parts/department/projects of an organisation is enabled for better and efficient management practices (POSDCORB and others) and skills to solve problems that occur between the parties obstructing work and communication through systematically managed and stored information/knowledge. It helps automation.
MIS helps managers in extracting information of the organisation and its different departments for coordination in order to carry out his functions and responsibilities in a cost effective and time effective as well as efficient manner.
It helps the managers in conducting simulations and decision making as well.

MIS come in different formats suitable to the particular department it is used and the nature of work in question in like Accounting MIS,Human Resources MIS,Financial management MIS,Marketing and Sales MIS,Customer Service MIS,etc. The top most management however have models of MIS that incorporate all departments and processes of the organisation for their analysis.

MIS helps in decentralisation,democratisation, and participation by all through proper management of information and its sharing subject to the condition that the information is accurate and updated from time to time and the personnel are educated and trained regarding it and then asked to use it in order to harvest all its benefits.




3) Performance Evaluation and Review Technique or PERT: It is a relatively new planning and control system designed to help top management with planning,research,problem solving,decision making and control of organisational processes. It analyses the tasks involved in completing a particular project,especially the minimum time needed to complete the same. It is quite similar to CPM. It is probabilistic in nature as in it is based on the theory of probability that an event or situation or activity is likely to happen/be completed in future if things are done and followed in the very same rigid way as anticipated or designed , but not a 100% surety.

Its disadvantages are that :
i) There can be potentially hundreds or thousands of activities and individual dependency relationships and it is not possible to ensure things to happen the way it is designed as we are dealing with human beings and there can be any amount of natural as well as induced disasters in between.
ii) PERT is not easily scalable for smaller projects
iii) The network charts tend to be large and unwieldy requiring several pages to print and requiring special size paper
iv) The lack of a time frame on most PERT/CPM charts makes it harder to show status although colours can help (e.g., specific colour for completed nodes)
v) When the PERT/CPM charts become unwieldy, they are no longer used to manage the project.

However if planning is done well and and all pessimistic and optimistic factors are studied as well as a most likely time design based on experience of PERT can help overcome the above.



4) Critical Path Method or CPM : Brought out by chemical company Dupont in 1950's.It is essential for effective project management. It is an algorithm for scheduling a set of project activities. It was originally brought out for plant construction and maintenance purposes but now is used in various projects of different natures like aerospace and defense,construction,engineering,software development,etc.
The essential technique for using CPM is to construct a model of the project that includes the following:

1. A list of all activities required to complete the project (typically categorized within a work breakdown structure),
2. The time (duration) that each activity will take to completion, and
3. The dependencies between the activities.

Using these values, CPM calculates the longest path of planned activities to the end of the project, and the earliest and latest that each activity can start and finish without making the project longer. This process determines which activities are "critical" (i.e., on the longest path) and which have "total float" (i.e., can be delayed without making the project longer). In project management, a critical path is the sequence of project network activities which add up to the longest overall duration. This determines the shortest time possible to complete the project. Any delay of an activity on the critical path directly impacts the planned project completion date (i.e. there is no float on the critical path). A project can have several, parallel, near critical paths. An additional parallel path through the network with the total durations shorter than the critical path is called a sub-critical or non-critical path.

As compared to PERT,it is deterministic and not probabilistic as it does not look into circumstantial factors while completing activities of a particular project,but is only bothered about specifying how a activity is to be done and within what time it should be done.

Advantages of CPM:
i) It helps in scheduling, monitoring, and controlling projects.
ii) Project manager can determine actual dates for each activity and compare what should be happening to what is taking place and react accordingly.
iii)The activities and their outcomes can be shown as a network.
iv) Displays dependencies to help scheduling.
v) Evaluates which activities can run parallel to each other.
vi) Determines slack and float times.
vii) Widely used in industry.
viii) Can define multiple, equally critical paths.
ix) CPM determines the project duration, which minimized the sum of direct and indirect costs.


Disadvantages of CPM:
i)   CPM's can be complicated, and complexity increases for larger projects.
ii) Does not handle the scheduling of personnel or the allocation of resources.
iii) The critical path is not always clear and needs to be calculated carefully.
iv) Estimating activity completion times can be difficult.





CPM Vs. PERT - AN ANALYSIS:
Both CPM and PERT (Program Evaluation and Review Technique) provide the user with project management tools to plan, monitor, and update their project as it progresses. There are many similarities and differences between the two, however.

Similarities between PERT and CPM :
i) Both follow the same steps and use network diagrams.
ii) Both are used to plan the scheduling of individual activities that make up a project.
iii) They can be used to determine the earliest/latest start and finish times for each activity.


Differences between PERT and CPM:
i) PERT is probabilistic whereas CPM is deterministic.
ii) In CPM, estimates of activity duration are based on historical data.
iii) In PERT, estimates are uncertain and we talk of ranges of duration and the probability that an activity duration will fall into that range.
iv) CPM concentrates on Time/Cost trade off.
This article concludes here.


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The next post on this blog will cover:

Financial Administration:
Monetary and fiscal policies; Public borrowings
and public debt Budgets - types
and forms; Budgetary process; Financial
accountability; Accounts and audit.

Public Policy: Models of policy-making and their critique; Processes of conceptualisation, planning, implementation, monitoring, evaluation and review and their limitations; State theories and public policy formulation.

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This article is on Public Policy which is the heart,soul and identity of governments everywhere. It is the major reason on the basis of which they are voted to power by the sovereign(citizens of a country). Potential Policies advertised by them during election campaigning as well as the previous work/policies brought out and their implementation/non implementation by the party in question when they were in power are the reason people would like to see or not see them again at the helm of political affairs of the country.

And in the era of Welfare State it assumes all the more importance both as an activity as well as a discipline of study known as Policy Science.

We begin.






PUBLIC POLICY - CONCEPT & MEANING:
Public Policy in the broad term refers to the policy (plan of what to do) that is formulated and implemented for the benefit of the public. If read in light of the narrow view of Public Policy then it relates to plan of action to be pursued by the Govt.(because Public is also used as a synonym for Government in many places).

There is no unanimity on the definition of Public Policy. However,Public Policy can be described as the overall framework within which the actions of the government are undertaken to achieve its goals. It is a purposive and consistent course of action devised in response to a perceived problem of a constituency, formulated by a specific political process, and adopted, implemented, and enforced by a public agency.

Goals,policies and programmes are different and should not be used as synonyms of each other or interchangeably. Policies are devised to achieve certain goals by the government,for example the Sarva Shiksha Abhiyaan is a govt. programme to achieve the Policy of Free and compulsory education to all children between 6-14 in India that was established through the Right to education act 2009 which is a part of meta policy of  Education For All by UNESCO. Another example is the policy of poverty alleviation for which several programmes have been designed like the Integrated Rural Development Programme,MGNREGA,etc. Poverty alleviation also comes under a bigger goal of overall socio-economic growth of the country. Each of these programmes have their own goals to achieve which then all taken collectively achieve the unified goal of the original policy. There can be a number of programmes established for achievement of a single policy goal. And there are a number of policies that are formulated as well to achieve the goals of the govt.
Once a policy is declared(statement of goals) then programmes are devised within/under it to take action through it to achieve those overall goals.

Public Policy is a document that contains the broad outline as well as the detailed description of formulation as well as implementation of various govt. programmes and plans that are taken out for the goal/objective of public benefit and implemented through the constitutional authorities,bureaucracy and government organisations/institutions in collaboration with civil society organisations. It takes a variety of forms like law,ordinances,court decisions,executive orders,decisions,etc.

It is the authoritative declaration of the intentions of the government of what it intends to do and to not do & the success of Public Administration as well as government in a country is linked with the success of its Public Policy.

Once a goal is determined then the government has to develop a broad outline/policy document to show how it will be worked towards and then once that is done,programmes are developed which are the executive wing of the govt. to achieve those goals. Then organisations and institutions are set up to house those programmes and organise personnel in it to achieve the particular programme's goals which will in cohesion with other programmes and their organisations under the same policy help achieve the policy's goals and that will help achieve the overall goal of the govt.











TYPES OF PUBLIC POLICIES:
1) Substantive Public Policy - These are the policies concerned with the general welfare and development of the society like provision of education and employment opportunities,economic stabilisation,law and order enforcement,anti pollution laws,etc are its examples. It does not cater to any particular or privileged section of society and have to be formulated dynamically keeping in mind the goals and characteristics of the constitution and directive principles of state policy as well as the current and moral claims of society.

2) Regulatory Public Policy - These policies are concerned with regulation of trade,business,safety measures,public utilities,etc performed by independent organisations working on behalf of the government like LIC,RBI,SEBI,STATE ELECTRICITY BOARDS,etc. Policies pertaining to to these services and organisations rendering these services are known as regulatory policies.

3) Distributive Public Policy - These are the policies meant for specific segments of society especially the needy ones. Public assistance and welfare programmes,adult education programme,food relief,social insurance,vaccination camps,public distribution systems,etc are all examples of such policy.

4) Redistributive Public Policy - These policies are concerned with rearrangement of policies concerned with bringing basic social and economic changes. Certain assets and benefits are divided disproportionately amongst certain segments of society and so those need to be redistributed so it reaches where it is needed and does not lie about surplus somewhere else.

5) Capitalisation Public Policy - These policies are related to financial subsidies given by the Centre to state and local governments and central and state business undertakings,etc and is not directly linked to public welfare as the others listed above. it does contribute but indirectly. It is basically infrastructural and development policies for govt. business organisations to keep functioning properly.

6) Constituent Public Policy - It is the policies relating to constituting new institutions/mechanisms for public welfare.

7) Technical Public Policy - It relates to the policies framed for arrangement of procedures,rules and framework which a system shall provide for discharge of action by various agencies on the field.










IMPORTANCE OF PUBLIC POLICY AND ITS STUDY:
As listed above one can understand the significance of public policy and how it is the oxygen for growth and development of a country and its people. Good policies take a country to great heights and without a detailed policy no goals of a country and its govt can ever be achieved. Without Public Policy and Planning a country would become stagnant and lag behind the rest of the world and never evolve and keep up with the ever changing times and global scenario.
Policy studies are therefore of utmost importance as it helps scholars,administrators,politicians and political scientists analyse every policy in depth and its pros and cons and help improve its choices,formulations,implementation and feedback process immensely and help it be at par with its contemporaries.










MODELS OF POLICY MAKING AND THEIR CRITIQUE:
1) Institutional Model: Under this model certain institutions in society are seen as competent institutions for determining public policy objectives and processes. The institutions are chosen on the basis of democratic participation,bureaucratic specification and judicial adjudication and the functions performed by these certain institutions are the most major determining factor to implement various policies. This model also specifies and suggests the relationship between various institutions and how they all work together and collectively contribute to a successful policy implementation.


2) Systems Model: Proposed by David Easton. Already discussed in a previous post on this blog under the article title of "Organisations",please refer: http://publicadministrationtheone.blogspot.in/2012/07/organisations-theories-systems.html


3) Rational Model: Discussed under the article posted on this blog with title " Process and Techniques Of Decision Making",please refer to Herbert Simon part - http://publicadministrationtheone.blogspot.in/2012/07/process-techniques-of-decision-making.html


4) Bounded Rationality Model: Refer again to the same post again under Herbert Simon part : http://publicadministrationtheone.blogspot.in/2012/07/process-techniques-of-decision-making.html


5) Incrementalism Model: Refer to Charles E. Lindblom's part in http://publicadministrationtheone.blogspot.in/2012/07/process-techniques-of-decision-making.html


6) Game Theory : Refer to the Game Theory in the article http://publicadministrationtheone.blogspot.in/2012/07/process-techniques-of-decision-making.html


7) Optimal-Normative Model: Refer to Yehezkel Dror's part in http://publicadministrationtheone.blogspot.in/2012/07/process-techniques-of-decision-making.html


8) Elite Model: Public Administrators and politicians belong to the elite club of knowledge possessing group that is fully equipped to frame and implement policies and people are to follow it as they are not equipped to understand and know the same.


9) Group Theory : A few groups and lobbies possessing power and organised stronghold over the bureaucracy and legislature get their way in policy selection and implementation.


10) Market Exchange Model: It believes in a free market with minimum regulations by the State in the affairs and a lot of public-private partnership as well as a lot of private organisations taking over the government's functions and directing the policy making. It is believed that this will lead to higher competition and thus higher economic growth and this will in turn benefit the government in funds for its policies.









CRITIQUE OF THE ABOVE MENTIONED MODELS OF PUBLIC POLICY:
1) Institutional Model: It is possible when all institutions are studied thoroughly and the relationships it shares with other organisations and also in a developing society where one organisation provides overlapping services with another organisation then it becomes difficult to segregate and duplication occurs wasting money and resources of the country people.

2) Systems Model: Though considered useful still has various limitations. Thomas Dye points out that in the Systems Model significant characteristics of the political system,which plays a very important role in the policy process of transforming decisions into policies has been lacking. Furthermore,the the environmental inputs that influence the political systems have also not been clearly defined and described. It is also seen as too simple an approach to explain the complex cycle of policies. It employs value laden techniques of welfare economics and other factors like rationality,power,personnel and institutions,etc have been neglected and not shown as integral ingredients in the policy cycle.

3) Rational Model: Problems arise when put into practice since social and environmental values can be difficult to quantify and gather a consensus on the same . Not totally practical as it is based on the principle that the decision maker is aware of all facts and statistics that are to be considered in the current situation and knows the best way to deal and take a completely rational decision.

4) Bounded Rationality Model: It is only goal pursuing and does not take in a very detailed account of the means to attain it.

5) Incrementalism Model: It only looks at immediate problems and short term solutions by taking one step at a time and leaves behind the overall issue for which the root has to be pulled out otherwise whatever little work is done will be undone very soon. And also it gives way to steps that enter quietly and were never thought of in the first place which may or may not be useful.

6) Game Theory Model: It justifies selfishness in the name of self interest and values are extremely variable so you cannot say that everyone will behave/respond in the same manner as everybody is not completely rational as claimed by the concept of the Games Theory Model.

7) Optimal-Normative Model: it is based on a combination of rational and non rational factors but those factors have not been clearly specified. It also rests on the assumption that true optimality could be possible only in such cases where inter-relationships between various aspects of knowledge have been established and analysed. That means the decision maker has to have knowledge of two or more areas of concern regarding the situation to take a better decision and that is not feasible neither is practical in most situations.

8) Elite Model: Here it is stated that only a few people who are referred to as elite,who are the public administrators and politicians are the only ones who possess the knowledge to make policies and hence no need to interact with others who are not equipped in this matter. It does not take into account the importance of civil society organisations and other non profit and voluntary associations possessing grass root knowledge of issues and solutions to the same.

9) Group Model: It states that a few groups and lobbies who have stronghold on organised agitation and means to influence bureaucracy and legislature get their way in view of lack of other organised opposition.

10) Market Exchange Model: It is a very capitalist approach and leads to concentration of wealth and very rarely economic and social development of the people especially the lower rungs and underprivileged. It leads to crisis in welfare policy making as the market is only bothered about profit and will influence the legislature to pass policies that benefit them monetarily and not socially uplifting.


However,lets remember that all of these models of policy making are still in use and are very useful. A mix and match/blend of the right characteristics of each that is suitable to the environment and ecology of a country in question should be applied for best results.










                                                                   POLICY CYCLE

1) Policy Formulation : Out of all the options brought forward by different parts of society like interest and pressure groups,civil society,mass media,international organisations,etc as well as political parties in front of the govt. for action,the agenda(list of possible issues to be converted into policy) for policy formulation is then set. Then the goal and objective setting for the same is prepared realistically. It is then passed to enact a law by the legislature and give it legal status and authority to carry out its duties.And then the strategy of implementation is devised as well as the machinery needed to do the same.
Limitations are - paucity of time with legislature,corruption,not in session always,emergency needs to be addressed first.

Role of Bureaucrats in the Indian context: Due to the major information base,knowledge and experience,permanent service and advisory expertise ambits possesed by the bureaucrats in policy matters, it makes them instrumental to the formulation of public policy. The major role in the policy formulation part of the policy cycle of Indian bureaucrats is that of the middle level ones - ranks three and four from the top who are actively engaged in the above activity. They are the ones who fill in the details to the draft skeletons of bills/proposed amendments to existing legislations,etc. Their proposals are then scrutinised by the top level bureaucrats who are closer to the ministers who may accept them with or without alteration or resend it to them for changes,adjustments,etc while making policy decisions. However at times, these top level bureaucrats also perform the duties of executor as well where they themselves correct the drafts proposals sent to them by their subordinates and then pass it on to the minister for approval.



2) Policy implementation and monitoring: Machinery is developed and Bureaucracy is strengthened to implement the selected policy and every aspect of the same is taken care of like getting the knowledgeable and skilled personnel,proper organisational and infrastructural setup,technology,technical and financial aid. Decisions making is done at every stage to choose the best alternative out of available ones  by the administrators while carrying out the tasks allotted to each. Mid term appraisals are held of policy development and senior officers keep monitoring and directing the juniors at every stage of policy implementation to make it error free.
Limitations are - bureaucratic(nepotism,red tapism,etc) and rigid behaviour of administrators,lack of expertise and knowledge,lack of funds and infrastructure,citizens not cooperative.

3) Policy Education : People/target groups are made aware of the objectives of the policies and how it will be of help to them now and in the future and garner their support so that implementation is smooth without any roadblocks. This will also help in increasing participation of people in the policy process to provide true feedback and curb nepotism and corruption in implementation as well as provide their own expertise. This helps in the decision making of the administrator as well and helps in improving/bettering the policy implementation at the same time so that there is no conflict at a later stage.
Limitations are - lack of trust of people in bureaucracy,hostile attitude between both parties,etc.


4) Policy Evaluation and review : In order to determine the success and failure of any policy this step is necessary.Policy evaluation is weighed in many ways like cost benefit,welfare of the people,achievement of goals and objectives set,etc. The legislature,bureaucracy,judiciary(through its powers of judicial review) and voluntary and non profit organisations and associations play a huge role in policy evaluation.Policy studies help in reviewing the policies and improving them.
Limitations are- lack of will,lack of resources,data issues,ambiguous policy staements,equity or economical dilemma,etc.









THEORIES OF STATE AND PUBLIC POLICY FORMULATION IN SUCH STATES:
Theories of State and public policy formulation will help us understand the different kinds of State's and how policies are formulated under them.

The four major theories of State are:

1) Pluralistic theory of State: It is a liberal theory of State and states that the State acts as a referee and umpire who as and when required steps in to arbitrate between issues occurring. It believes that every individual of the society knows what is best for him and has mutually agreed into a social contract with other individuals to protect their interests and the duty to referee that social contract is in the hands of the State,so as and when that social contract stands violated by anybody the State will punish them neutrally.
This theory states that since the State is non partisan, and unbiased it brings out only altruistic,universal and benevolent Public policy.

i) Neo-Pluralistic State theory - However,the new or neo-pluralistic State theory state that the State is not completely insulated from influence and is influenced repeatedly by groups whose relative strength caused by huge investments like corporates,etc and so the State also bows down many a times and misuses its powers. therefore Public Policy formulated in such a State is influenced by these groups and many a times goes against the majority's will.

2) Marxist Theory Of State: Marx claimed in his theory of State that the State is an institution created to cater to the interests of the bourgeois (rich/upper middle class) and to perpetuate their vested interests. State wears the mask of the protector of the proletariat/peasants/poor but actually has a different face , that of catering only to the bourgeois.
Public policy formed in such a State will be coercive towards the proletariat and will be pleasing to the bourgeois or the dominant group.

i) Neo-Marxist or new-Marxist theory of State: Gramsci through his phrase " Ideological hegemony" states that Bourgeois does not only use the State for its vested interests but also uses other instruments like education,religion,etc to do the same. Public policy formulation in such a State tries to take care of religion,culture,education,etc. through public policy to perpetuate the bourgeois interest.

ii) Contemporary Marxist theory of State: Miliband and Poulantzas challenged the two class model of Marx and stated that even the bourgeois class consist of different levels. And beyond the two classes of bourgeois and proletariat there are also other classes like white collar jobs,etc. Miliband argued that the State will formulate policies that act like an instrument to serve the interests of business class and will also serve the poor and vulnerable but under the aegis of the business class. That is why Miliband is also called as an instrumentalist.
Poulantzas states that the role of the State is the outcome of the balance of the power of the society thus the public policy formulated in such a State arrangement is influenced by the balance of power in the society. Thus it is a structure that is formed on the basis of benefit of both opposing factors. Thus,he is also called the Structuralist.


3) Leviathan State: State is all powerful and having all potentialities and is all encompassing. Leviathan means Gigantic and powerful and was coined and theorised by Thomas Hobbes.
This state has two sides - Demand and Supply
Demand side refers to the demands of the society brought about by the big state and supply side refers to initiation of the State to become a big State.
Public Policy formulation in this kind of a State relates to all areas including developmental and non developmental. People get a chance to voice their view (demand side) and State on its own brings public policy which it feels is beneficial for people(supply side of State).


4) Patriarchal State: It is a feminist view of State as they believe that the State is exploitative towards females and justifies male values and orients towards males.

It has two approaches to it - Radical and Liberal Feminism
i) Radical feminism: These are radicalists and revolutionary ideas and do not believe in reform or gradual change. They believe in confronting the State and demanding their rights at the very moment.

ii) Liberal feminism: This view believes in gradual reform and states that the traditional sphere is believed to be for females and the public sphere is believed to be for males and the State supports this imbalance. However,they believe in taking one step at a time to rectify the gender imbalance in both sectors.


Now since we have studied the theories of State. Now let's move to the practical aspect of State and its various typologies.









TYPOLOGIES OF STATE / ROLE OF STATE & PUBLIC POLICY FORMULATION IN THEM:
1) Minimalist State: Believes in Laissez Faire "leave us alone" policy where state takes up only regulatory role and a non-development role.
Public policy here will be regulative,facilitating (New Right Philosophy).

2) Developmental State: It does allow private players in the public field but the State is proactive in developmental activities and there is private public partnership to achieve the same.
Public policy here is very detailed and gives a clear explanation of each issue.

3) Social Democratic State: Here the State focuses on equity instead of economy and democratic methods are used to achieve the same.
Public policy here is socially oriented.

4) Collectivised State: Private sector is majorly sidelined and the economic planning and development is centralised and in the State's hands.
Public Policy here will do the same and enforce the principles the State follows.

5) Totalitarian State: Here every aspect of society is centralised and controlled by the State totally like education,culture,religion,etc.
Public policy here is made on every aspect and the State performs all the functions alone.


IGNOU Notes - http://www.scribd.com/doc/41289471/Public-Policy


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Techniques of Administrative Improvement:
Organisation and methods, Work study and
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technology; Management aid
tools like network analysis, MIS, PERT, CPM.