Finance is the fuel for the engine of Public administration. Mr. Lloyd George is reported to have once remarked that Government is finance. This is quite correct, because almost everything the Government does, requires money. According to Kautilya, “All undertakings depend upon finance. Hence, foremost attention shall be paid to the treasury.” Financial administration consists of those operations the object of which is to make funds available for the Governmental activities, and to ensure the lawful and efficient use of these funds.

 These operations are performed by the following agencies :

(1) The Executive, which needs funds;

(2) The Legislature, which alone can grant funds;

(3) The Finance Ministry which controls the expenditure;

(4) The Audit which sits in judgement over the way in which the funds have been spent. Financial-administration is a dynamic process, which falls into five well defined divisions namely :

(1) Preparation of the budget, i.e., of the estimates of the revenue and expenditure for the ensuing financial year, (2) Getting these estimates passed by the Legislature called ‘Legislation of the Budget’,

(3) Execution of the budget, i.e., regulation of the expenditure and raising of revenue according to it,

(4) Treasury management, i.e., safe custody of the funds raised, and due arrangement for thenecessary payments to meet the liabilities;

(5) Rendering of the accounts by the executive and the audit of these accounts.

According to L.D. White, “Fiscal management includes, as its principle sub-divisions, budget making followed by the formal act of appropriation, executive supervision of expenditure (budget execution), the control of the accounting and reporting system, treasury management and revenue collection and audit.”

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