Importance of Financial Administration

Importance of Financial Administration:

Public Administration can be legitimately described as the backbone of the government. Likewise, we can say that Financial Administration is the backbone of Public Administration. No administration, least of all Public Administration can carry out its work without finances and an effective and efficient system of Financial Administration. The developmental role of Public Administration in this era of welfarism has made Financial Administration a key area of work. The developmental functions of the state have increased, are increasing, and are destined to increase further and consequently, the importance of Financial Administration has increased and is still increasing day by day.

In this era of technology and development, Financial Administration has gained greater significance for exploring ways and means to generate resources to meet the ever-increasing demands of the public. For this purpose, resource mobilization and planned and controlled expenditure-making have become highly important activities. These two form the mainstay of Financial Administration.

Based on the Keynesian perspective, the state has assumed a more active and positive role for expanding national income and employment. The fiscal policy of the government has become a powerful instrument for influencing the socio-economic life of the people. In fact, it has become an instrument of a modern government for making ‘Popular Sovereignty’ a social reality because with the advent of democracy, the concepts of “Parliamentary control over the public purse” and “no taxation without representation” have become grudging concerns. These have in turn increased the importance of Financial Administration.

The use of performance budgeting and other related budgetary innovations represent the remarkable achievements of the Financial Administration. From the early 1980s onwards, resource crunch has been posing a very serious problem before all contemporary governments. Economic problems, issues, and objectives have emerged as the top most realities of the present day life. This has enhanced the importance of economic factors of social life. The economic issues have come to dominate political issues. Financial Administration as such has assumed a new and high importance. Hence, a study of Financial Administration and Management, which is a part of Public Administration, has become very important. It alone can enable us to find out ways and means for eliminating unwanted expenditures, to secure effective and full mobilization of resources, and to ensure optimization of output even if the resource base remains limited. Zero budgeting is an attempt in this direction.

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