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

Before we begin this article, many congratulations to all those who have qualified for the UPSC Civil Services Mains exam this year. All the best for your endeavours. May success be bestowed upon you as honest civil servants are the immediate need of the hour right now.

And to all those who could not make it this time, do not give up hope and keep going because Perseverance is an essential trait for Success.

To those who plan to appear in the future, good decision and wish you all the very best.

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This article will discuss all that is needed to understand the Philosophical framework and Constitutional framework on which the Government is based and within which it functions.

Terms to understand before proceeding:

1) Framework - An essential supporting structure of a building, vehicle, or object / A basic structure underlying a system, concept, or text / A system of rules,ideas or beliefs that is used to plan / decide or execute something.

2) Philosophical - Relating to the study of the use of reason in understanding the nature of a thing(s) / system / belief,etc.

3) Constitutional : How something is formed from different parts(Constituents) / Set of political principles by which a State or organisation is governed,especially in regards to the rights of the people governed.

4) State - There is no unanimous definition of State. However,
The state has four essential elements:

1. Population - They together form the government and all functions of the govt. are for them so without them there is no foundation for anything else.
2. Territory - Definite territory that includes lands,mountains,forests,water bodies,etc.
3. Government - Legislature,Executive and Judiciary.
4. Sovereignty- Vested in the people of India.

All of them together form the State and no one can be taken out.






PHILOSOPHICAL AND CONSTITUTIONAL FRAMEWORK OF GOVERNMENT:
As one can easily comprehend from the above meaning of  the term "Constitutional", that all aspects/parts of a State or an Organisation / System are to be based or governed by a set of political principles that are enlisted in its Constitution.

Therefore, the Constitution is the framework / foundation for all aspects of polity and governance and their functioning emerges from the principles of its Constitution. The Constitution of India elaborately specifies the problems of relations between Union and States,problems relating to public services,special classes,SCs and STs.

It also elaborates a list of Fundamental Rights and Directive Principles of State Policy. All of these together direct the functioning of all organs of State and whenever in doubt,one has to revert to the founding philosophy and principles of the constitution as envisaged by our freedom fighters to understand one's duties better. Therefore,the Constitution is the source of all legislation,policy as well as executive,military and judicial action in a country. They all function upon the framework of the Constitution and its philosophy which is detailed and enshrined in the preamble of the Constitution India and elaborated in the Directive Principles Of State Policy.

In order to understand the purpose and philosophy of the Constitution as well as the Philosophical framework of India and its government, one must tread into the minds of our constitution framers and freedom fighters. And to do that one can simply read and understand the Preamble of the Indian Constitution which is also called the philosophy and key of the Indian Constitution -http://en.wikipedia.org/wiki/Preamble_to_the_Constitution_of_India
where words like sovereign,socialist,secular,democratic republic,socio-economic-political Justice,Liberty and freedom of expression,Equality of status and opportunity,promotion of Fraternity and Dignity,Unity and Integrity are the cardinal principles of the constitution and beautifully describe the noble ideas, spirit and conscience of our Constitution and its framers' minds as well as how the future caretakers/governments of India should carry out their duties and functions and last but not the least, it depicts the way India should be in all its glory.






SALIENT FEATURES AND VALUE PREMISES OF THE INDIAN CONSTITUTION:
 The Indian Constitution is a remarkable document. It is the most lengthy and detailed constitutional document in the world as it has borrowed most of its provisions from all known constitutions of the world so in such a way that it is suitable to existing conditions and needs of the country and also it has embodied modified results of judicial decisions of other countries to minimise any uncertainty..It occupies an important place in the constitutional history of the world for its unique combination of both rigidity as well as flexibility and quasi- federal(Not completely federal) political setup. That's why it is termed as 'sui-generis' meaning Unique.

 India has a written constitution which means that all provisions are laid down in black and white and follow a process if to be changed or repealed or updated. Britain has an unwritten constitution where provisions are based on conventions and traditions of land instead of a detailed comparative study of a written constitution.

Indian Constitution is seen as an example of meta (underlying definition) policy of State governance based on the noble ideals of democratic governance. Its framework provides for an arrangement that is democratic in character and where the Rule of Law is seen as the cardinal principle. The other cardinal principles as well as ideals of a modern State can be seen highlighted in the Preamble(discussed above). Indian Administration could be seen as an example of a well organised people oriented administration where the popular will or sovereign which is the people are considered as the supreme authority  guiding all policies in the country. The Indian Political arrangement is provided with the unique feature of a Union arrangement with a federal setup.

Parliamentary form of government here is adopted from the United Kingdom. A Parliamentary democracy system of government exists at both levels that is Centre and States. In this system,government / political executive is responsible to the parliament and not to the President. It has a strong Centre and vests the constituent and residual powers of legislation coded in lists to the central legislature which is the parliament. Here the executive is part of legislature and so conflicts are less likely to arise.

The Indian Constitution as mentioned above is commendable in its unique combination of flexibility and rigidity in legislative process that is adding and amending to the Constitution. That's why it is also known as quasi federal because a federal system has a very rigid constitution. And in a federal system states have completely autonomy and function with no interference at all from the centre and also every state possesses its own constitution and citizenship. So, coming back to the Indian constitutions quasi federal framework, it is only a few provisions of it that require a ratification by the states legislatures and even then only half of them need to do so. The rest of the constitution is amended by a simple majority of the Union Parliament as in general legislation. One can see the flexibility of our constitution as since independence it has been amended 97 times already ( Constitutional Amendment Acts).

The Constitution in its very first article pronounces India as a union of states and article 3 specifies the supremacy of the Union where the states could be altered viz. their boundaries and their names,etc. So the states do have a federal character in regards to the State list and the subjects listed in them and decision making on the same is instituted in their level which is democratic decentralisation and also stabilises these states machineries.

Article 5 of the Indian Constitution then proceeds to detail citizenship followed by Fundamental Rights in Part 3 (article 14-32) that guarantee various types of rights to the people of the country and also how to enforce them if violated and is adapted from the Bill of Rights of the American Constitution.

Part 4 of Indian Constitution then goes on to describe such principles which could be seen as directions and integral to the process of policy making in the country and are known as Directive Principles Of State Policy,an idea taken from Ireland's constitution. The DPSP are not enforceable by law(which means that if not followed by the State in policy making process then one cannot approach the Judiciary to get it enforced). So these guidelines for making policies are to be applied in the policy making process as long as the government has the resources to do so. The importance of DPSP is that it cannot be ignored especially in a welfare, as it helps in achieving a socialistic and people oriented modern State that has always been the cherished dream of our country's founding fathers.

Indian Constitution's provision for separation of powers is an integral and cardinal principle followed at both Union / Centre and state levels and the three organs of legislature,executive and judiciary have been established with sufficiently exclusive domains so that a constitutional deadlock does not occur where all are interfering in each other's work and no progress happens ultimately leading to a breakdown of each and every institution of the country.

And Independent judiciary also derives its power of Judicial review from the constitution although not explicitly but impliedly from article 13. India has a single integrated system of courts for the Union and States that administer both the Union and state laws and the apex or head body is the Supreme Court of India. Below the Supreme courts are the high Courts and below the High Courts are the subordinate courts. Judges are appointed by the President under his warrant and seal and to ensure their independence their terms and conditions of service as well as removal are regulated and directed by the Constitution. There is a special process of removal through a special majority(majority of total membership of that house and by majority of not less than 2/3 members of that house present and voting) of each house of parliament on grounds of proved misbehaviour or incapacity,which is not easy. The Judiciary through the power of judicial review can pronounce upon the constitutional validity of acts of public authorities both executive as well as the legislature. It protects,guarantees and enforces the fundamental rights of the country's people and maintains federal equilibrium.

The 73rd and 74th Constitutional Amendment to the constitution in principle has provided for the establishment and recognition to democratic local self governing institutions of Panchayat and Municipalities at the local level which are the grassroots of governance. During the drafting of the Constitution of India, Panchayati Raj Institutions were placed in the non-justiciable part of the Constitution, the Directive Principles of State Policy, as Article 40. The Article read 'the State shall take steps to organise village panchayats and endow them with such powers and authority as may be necessary to enable them to function as units of self-government'. However, no worthwhile legislation was enacted either at the national or state level to implement it.
In the four decades since the adoption of the Constitution, panchayat raj institutions have travelled from the non-justiciable part of the Constitution to one where, through a separate amendment, a whole new status has been added to their history.

The Constitution also provides for special provisions for the underprivileged and backward viz. SC,ST and OBC. Elaborate provisions have been given to various constitutional authorities guaranteeing autonomy and ensures their smooth functioning as per the rights given to them in the Indian Constitution.

Emergency provisions of the Constitution were added in the light of the German Constitution.






CONSTITUTIONALISM:
Constitutionalism is an abstract term and is used to denote the spirit and quality of the Constitution. An example that can be cited to explain it in detail can be that of a patriot, a patriot is one who loves his country and patriotism is an abstract term denoting the feeling of a patriot towards his country universally and generally. Similarly,a Constitution is an entity/physical object whereas constitutionalism is the feeling / abstractness of  that constitution residing in policies made by that particular country,the code of conduct followed by citizens and the political leaders while carrying out their functions both professionally as well as professionally,etc. all abiding by the constitution while doing so and imbibing a feeling of constitutionalism inside them,that is a love towards or an adherence towards a system of constitutional ideals and directions as well as government.
Therefore, Constitutionalism is a complex of ideas, attitudes, and patterns of behavior elaborating the principle that the authority of government derives from and is limited by a body of fundamental law.
The Indian Constitutionalism is a thought that provides for an arrangement where the rule of law is seen as the guiding principle for managing the State.
It evolved as a thought in USA,France and other nations where people questioned their governments for their arbitrary behaviour and thus the idea was formed of a govt. limited by a set of rules.


Constitutionalism has been seen as having various essential aspects as its core premises which are:
1) Sovereignty - It puts forward democratic values where the source of power is seen vested with the people and popular will and not in the hands of a few elites / politicians or corporates.

2) Writteness of the Constitution: A properly codified constitution builds constitutionalism as a feeling among everyone as it directs the people in power as well as administrators in a specified and proper way so that no arbitrariness is practiced anywhere.

3) Separation of Powers between the three organs of government which are legislature,executive and judiciary.

4) Consensus of agreeableness: The Constitution provides for the State to be guided by the popular will and good always and also to respect and agree to the institutional legal structures so that social conformity is achieved as prescribed by the Constitution.

5) Entrenchment: Total reject of arbitrariness practiced by public officials and leaders beyond their powers and rules prescribed. And secularism is practiced to maintain unity in diversity.






VIEWS ON CONSTITUTIONALISM:

1) Prescriptive view - It advocates the incorporation of features which have evolved as the core value premises of the constitution. Under it the attempt has been to bring up such a philosophy that would enable and guarantee such an administrative arrangement  where publicness / transparency of all governmental functioning becomes the cardinal principle to be followed. Certain values like Rule Of Law,Writteness of the Constitution,consensus,separation of powers,etc can be counted.

2) Descriptive view - It provides for the historical struggle that has been there in the powers which ultimately resulted in certain core premises and principles of the constitution. Under it administrative arrangement of the State is analysed in terms of the changes incorporated and the reasons/revolts behind them are also analysed.







POLITICAL CULTURE:
 Political culture refers to the political psychology,values and attitude of a country / nation or a sub groups reaction towards their political leaders / political system, different political changes and public officials and their legitimacy.
It is not affected by different groups having different ideologies as even such groups can share the same political culture.  People of a society share a common human nature like emotional drives,intellectual capacities and moral perspectives and this expresses itself in the form of certain values,beliefs and emotional attitudes which get transmitted from one generation to another with lesser or greater changes / modifications and that defines the political situation in which political action takes place.
India has a multiple political culture due variety in traditions,tribalism,primordialism,religion influences,caste,traditions and conventions,etc existing in different parts of it.

Almond and Powell has discussed Political Culture in regards to the following three dimensions:
i) Cognitive Orientations - Implying knowledge accurate or otherwise.
ii) Affection Orientations - Implying feelings of attachment,involvement,rejection in regards to political objects.
iii) Evaluative orientations - Implying judgements and opinions about a political system.

Almond and Finer analysed Political culture from the perspective of the participation that the society allows in the political process.

Almond and Verba have given a 3 dimensional view of Political culture :
i) Parochial political culture - Is present in those societies where specialisation does not exist and only one  or two institutions are authoritative regarding all functions of that society and only one arch ruler is there who heads that institution thus having hegemony and unfettered power. People in such a society are not educated and informed about the mechanism and even if they have it is insufficient to form any opinion. And so the rule or dictatorship of the one ruler continues unopposed.

ii) Subject political Culture - Is present in such societies that were under colonial power at some point in time. Here two types of people's attitudes towards political system prevails,one of absolute subordination and one of absolute revolt at different points in time.

iii) Participant Political culture -  Is present in such societies having a high level of development and people in it have sufficient awareness and knowledge regarding their rights and duties and thus, play an active role in the discharge of functions. This type of a culture is practiced in India to quite an extent.

Robert Dahl has bestowed upon Political culture the title of the single most important factor that explains different patterns of political opposition:
i) Orientation of problem solving - Whether the opposition is interested in being rational and pragmatic in solving the issues raised.
ii) Orientation to collective actions - Whether the opposition is cooperative or not in discharge of functions of itself or others.
iii) Orientation to political system - Whether the opposition is active/passive or alienates itself.
iv) Orientation towards other people - Whether the opposition is full of tests or not.

Talcott Parsons look to find out the role of predispositions of people like historical memories,norms,emotions,symbols,etc. towards political actions  Their studies in Political culture have been done using two traditional approaches:
i) Individualistic Approach - It examines the values and attitudes of individuals through some technique of survey or feedback obtained from respondents(people). It is a direct method but limitations are that the respondents may not be able to express their feelings at many times. Further, the questionnaire itself may be so designed as to eliminate the political view of the people. The feelings mentioned by the people also may lead to all sorts of understandings and be very subjective.

ii) Institutional Approach - Involves documents analysis to discern collective behaviour of political institutions. It pursues the following three dimensions:
a) Academic deliberation to surface features of constitution,political structure and legislative framework.
b) Analysis of the Geographical and social operators in the State.
c) Analysis of historical events that have shaped political views.





TYPES OF POLITICAL CULTURE:

1) Traditional Political Culture - Where the political system and people's attitude towards it are influenced by primordial characters and conventions / traditions.

2) Modern Political culture - Where the political system and people's attitudes towards it are influenced by constitution,rule of law,Independent Judiciary,Liberalism,duly elected body of public bureaucracy as an efficient instrument to enforce the law.

In India there exists an amalgamation of both living in confrontation and cooperation.  Like bureaucracy is there but it functions keeping in mind the conventions and traditions of the society. Reservation system in politics is based on caste and tribe division. And the constitution spells out the rest that consists of modern political culture.






CRITICAL APPRAISAL OF POLITICAL CULTURE:
 1) Strengths - It helps in providing a comprehensive analysis to the part of political science dealing with political aspirations and people living in the State.
It links the beliefs,attitudes and value of the people in the State with the political system of the State.
It helps bridge gaps of philosophy since it deals with human psychosis that could not be explained by other principles.
It has encouraged political scientists to take into account the social and cultural factors in their analysis for the purpose of better framework of their policies and connect between different societies.
It helps in gaining a better view of human behaviour towards political arrangement in different societies.
It provides a conceptual basis that facilitates forecasting to an extent.




2) Limitations  - Its findings are considered to have subjective aspects in its conclusions as it is dealing with factors like human emotions,feelings,perceptions,etc.
It has been observed that in the studies of Political culture there is always a risk that researchers may neglect certain factors in order to achieve validation of their hypothesis.
Diversity in society may create problems in deriving conclusions.
Embodiment of the feelings/perception may not be verbally in the desired direction.






BUREAUCRACY AND DEMOCRACY:
It has been considered by some theorists that Bureaucracy and Democracy are two opposing ideologies. Democracy is associated with free will and self control whereas Bureaucracy has been considered as formal and rule bound.

So in both,academic as well as literature they are seen as anti-thetical approaches.
Democracy governance is based on the integral premise of control by people and expression of their will is seen as the core thought backing the execution of functions. Democratic institutions are considered responsive to the wishes of the public and attempts to arrange those preferences in order to give a positive outcome to its citizens.

Bureaucracy on the other hand is conceptualised as being typically legalistic and largely coded mechanism indifferent to the people's wishes and emphasising purely on legal framework.

Democracy has been seen as one of the most significant philosophy and value of the modern State arrangement as it is seen as a guarantee for the policies to be oriented towards the public at large and the resources in the State to be employed as per priorities set by the people. In a democratic setup to have a specialised Bureaucratic machinery appears paradoxical and its observed that the two have opposing elements. The presence of Bureaucracy is democratic arrangement has been questioned and studies have been made to establish the reasons for such an existence and the reasonability behind the existence.

At first sight, it appears that the complicity in society and the aim to have a high degree of speciality in a State somewhere must have necessitated the discharge of functions by specialist Bureaucracy. Various studies have been attempted to understand the comprehensional as well as the paradoxical aspect of the two.

Caplin in his studies in 2007 produced that Bureaucracy shall be required in the exercise of State function as people out of their pure democratic will may select inconsistent goals which may not be possible to be applied practically.

Richard Rose in 1991 observed that a linkage between voting and policy choices in conventional democracies may not be as clear as what most of the democrats may like to believe. Relationship between Bureaucracy and Democracy has been seen both supporting and opposing. The relationship between the two have been shown paradoxical because Democracy is free will while Bureaucracy champions the cause of pre established structure. It has been observed that an effective Democracy shall require an efficient Bureaucracy for attainment of the goal determined in a Democratic manner. Similarly, an efficient Bureaucracy in order to be effective requires directions coming from people's will so that its relevance in the society could be validated. The thought has surfaced the necessity of such an arrangement where the complimentary aspect of the two gets reinforced and the policy process in a State could be effective and efficient in its functioning.

It has been observed that these two aspects of the government may appear anti thetical on face,but both of them are necessary for providing effective and responsive governance. The responsiveness of the Democratic government is required to balance with impartiality and predictability assumed to reside with the Bureaucratic institutions. Likewise Democratic process is seen important in conferring legitimacy to the functioning of the Bureaucratic arrangement. Democracy provides for value of participation which is seen as a highly significant. An important trend has surfaced where association with a political party has been on the decrease and the representative democracy has been facing some sort of disinterest and alienation from the side of the people. In the democratic arrangement where involvement of people in the political process has been seen limited to casting votes during elections, disinterest and alienation have been very high. Under such societies people are not able to see some meaningful expression in the process of participation and for this reason they develop a feeling of disinterest,alienation or helplessness about the system.

Participation at the execution level thus has been seen as an important mechanism through which people could be introduced back into the system and Bureaucracy and citizens could be seen as a collective entity for this purpose.

Further the linkage between Bureaucracy and Democracy has been seen as necessary in a multi group situation transaction. The new philosophical paradigms have suggested achieving a balanced relationship between the formal Bureaucracy and the will of the people.

Goodin in his studies of 2004 has suggested for an arrangement of output democracy where establishment of such arrangement has been recommended through which delivery could be facilitated. Goodin has observed that there shall be a mechanism where conventional good of Democracy gets the directional of formal consent Bureaucracy. Arrangements like video conferencing,e-governance,direct participation could be seen providing the necessary space to will of the people in discharge of functions. Under New Public Management Osborne and Gabler had considered bureaucrats in the role of public manager and has asked them to play as facilitators. Bureaucracy has been seen in a catalytic role for the same. Democratic components in the governance,community owned government are prescribed. Controls have been suggested to be pushed out of Bureaucracy and handed over to the people.






BUREAUCRACY AND DEVELOPMENT:
Bureaucracy and development are two components of development philosophy if seen from an overview seem to possess opposing values(ideas) as Bureaucracy represents static or orthodox and rigid values while Development advocates dynamic(moving) values. Bureaucracy viewed by the Weberian model and other theorists pertains to same routine,unchanged and repeated procedures that enable it to continue,achieve its pre-established goals and handle its problems like a system without being influenced by external factors. Development as a concept on the other hand is seen as a phenomenon influenced by the concept of change and is quick to adapt and adjust to changes coming in through both external as well as internal factors on the way to development. It is the administrative process evolved for developing countries. And in the developing countries till now Bureaucracy by shedding its Weberian character is the only neutral,biggest existing and stable machinery that can achieve and lead the way towards the process of development in the developing countries. Therefore in the context of developing countries Bureaucracy and development are complementary and inter dependant instead of being hostile to one another for the purpose of Development Administration. In order to sensitise the bureaucracy for development processes it is suggested to provide them training in attitudinal changes and incorporate dynamic and social values in them to know the requirement,preparation of strategy and implementation of programmes in the present ecological setting in order to uplift the socio-cultural and economic status of the country. Bureaucracy,apart from its own duties like development policy formulation and implementation as well as educating people about the policies has been suggested to utilise their specialist knowledge in order to play the role of a friend,facilitator,coordinator,guardian,philosopher and guide to the factors like market and civil societies as well as other instruments of development administration(as listed above under the same heading) in the process of development and the bureaucrats have been asked to patiently assist people in the same. Therefore,as one can understand now that overall evaluation and implementation of Development Administration programmes are carried out by the Bureaucracy playing the leading role in developing nations.



This post ends here.

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The next post on this blog will deal with:

Public Sector Undertakings:
Public sector in modern India; Forms of
Public Sector Undertakings; Problems of
autonomy, accountability and control; Impact
of liberalization and privatization.

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.