CHAPTER - I INTRODUCTION

Of all the millions of creatures inhabiting this planet, the human be~ng is

unlque as t ~ e alvne possesses a sense of discreiton which helps him i o

d s t n g ~ ~ s h between rlght and wrong Education, whch is more an actlvlty than

a concept, certainly helps an lndlvldual human being ~n reallslng h s full

potential It plays a very significant role in transforming the instinct-driven

human beng nto a rational creature who can think logically In other words.

educatlon 1s ~ntended for the iritellectual, moral and sp~r~tual progress of human

belngs in ancient times, only oral education was available and the teachers

passed an the~r knowledge to thelr dlsclples orally Gradually. education

underwent many revolutionary changes In accordance with the needs o i the

socety and reached the present system of scholaslc educat~on to serve the

varods purposes of present times The status of education and ihe ever-

growing demand for it even in the past necess~tated careful financog of

educalloi, Based on thls assurnptlon, the vrhole period of Indian hlstory can

be dlvided into epochs like the Vedic Period, the Buddhlst Period. the Post-

Gupta Period the Medieval Period, the Brit~sh tlmes and the post-

independence era The education during the Vedic Period was dependent on

f~nan~ ia l munificence ul the ruling class The teacher-priest dld not collect any

tu~t~on iee from the dsclples During the Buddhist Period, the chlef sources of

fsnance were chaiit\es and donabonsfrom the rulers and noblemen The pupils

had to pay feeseither in kind or In the form of selvlce to the teacher during their

stay In the educational centre In the Post-Gupte Period. sources of

educational income were almost the same as pointed out Teachers were pad

either in cash or kind During the Medieval Period, a new source of income

2

towards education was the fees pad by students in addlion to state's a d and

endowments from noble persons During the British Ra] the East lndia

company rcallsed 11s responsib~llly for hnanclng educatton after a lapse of

nearly 400 years Consequent upon the Charter Act of 1813 and Charles

Wood's Despatch of 1854. Ilhe Governmenvs iinanclal assstance to education

increased steadily In 1817, the responsiblity of promollng education was

transferred to the provnces by the Central Government In the mlddls of the

n~eteenth century, grants-ln-aid were sanclioned to the privately managed

institul~ons provided these ~nst~tutions charged fees and followed the norms laid

down by the Government ~n this regard However, the unversltles had to wait

for about half a century to receive any grant regularly from the Govetnment

The two economic depressions and the Second World War forced the provlncisl

governments to impose cuts on educational expenditure

In the constilutional scheme of dlvlsion offunctlons between the centre

and the states. education 1s a subject allotted to states The major responsb~lty

of pro~notng education, therefore, rests with the State Government Presently

educaton 1s on the concurrent list Allhough the resldual responsib~lities to

fiiance educational programmes rest with the Slate Government, the Central

Guvernnlent has been entrusted with certain specific responsibilities These

include matters of national importance such as coordination of educational

faclhtas, determination of standards ofhlgher education, scientific and techn~cal

educai~on, promotlng llngulstlc research for the development of Indian

languages etc The Government of India determines educational priorities an

a national scale and allocates resources to central and centrally sponsored

sectors of education, apart from allocating resources for plan outlays to be

3

sllenl through Slate Governments Several organsat~ons are concerned w th

the provision of financ~al asslstance to un~vers~t~es There IS no n-built

meclianisln of mutual consuilat~on among these oryanlsatlons The Un~varsty

Granls Comm~ss~on (UGC) the nlafn instrument of the Central Government

through uwhch hgher educatlon in the country IS be~ny financed, has an

extremely truncated responsibility The Stale Government is generally guided

lhy the UGC In Ihe niatter of extendng financal asslstance for the development

and expalison proyralnmes of unlvers~t~es If there 15 no synchron~sat~on

between the prlorltles set down by the UGC and those of the State

Government, many development and expanston programmes will have to be

abandoned snce the rnatchlng grant would not be lorthcomng even f t he UGC

approves a parilcuar scheme or course In some nstances, the unverslty

losses because ofthe reluctance of the UGC whle n others because of that of

the State Government In the ultlmate analys~s, the development and

expanson programmes of the unlverslty wl l be adversely affected because of

the reluctance of both the UGC and the State Government Such Instances

!.<ere r,ot rare n the h~stoly of un1vers111es In the country In n d t a n the post-

i~idepelldence perlod, the experlrnlents In educatlon. for the purpose of

provlding equal opportunltles to a the ctzens and to supply skfled manpawel

to tile economy, have created a tremendous amount of pressure on both the

educatlona system and the economy These experiments whlch aim at

ntroduc~ng cedar specflc measures to reform some aspects of the system,

have necess~teted larger allocation of flnances for educat~on In view of these

measures, t IS necessary to conduct a crltlcal evauatlon of the sources and the

use of scarce financial resources ~n hlgher educaton at the un~versity level

1 Flnanclng of educat~on ~n the planning era :

After independence the education scene in India entered a new era

This was the era ofpromoting education in a planned manner As lnd~a was an

impoverished nation at the time of independence, development of education in

a systematic and planned manner became imperative With the exceptlon of

foreign ad, the sources of financing educatlon in the planning period continued

to be the same as in the premdependence period The foreign aid IS received

tlirough the Government of India in the form of scholarships, equlpment,

personnel and development programmes in education S~nce independence,

Fve Year Plans have advocated systematic dstr~bution of financial resources

arid pant ing of human resources Educat~on was considered an important

subject in all the Five Year Plans The First F~ve Year Pan ' emphasised the

unlversalisation of prlmary educatlon and strengthening of secondary

education The Second Plan2 laid stress on bas~c education, expansion of

eementaiy education, diversification of seconday education, improvement in

the standards of college and university education and extension of facilit~es for

teclinica and vocational educatlon The Third Plan placed emphasis3 on the

requrement oftrained manpower for the economy which was considered to be

a major determinant of the measure of advance that could be achieved in

dlfferent directions Incorporating the recommendations of the Education

Commsson of 1964.66, the Fourth Five Year Plan4 aimed at providing free

and compulsory education upto the age of 14 For secondary and higher

stages of education, more emphasis was aid on consolidation and

diversification so as to meet the diverse needs of trained manpower of requisite

standard Tlie Fiffh Five Year Plans a d emphasis on establ~shing closer Inks

5

between the pattern of educaton and the needs of development and the

enl~loyrnent ma~ket It also a d stress on involving the academc comrnunlty

ncludlng students In the task of socla and economc development The Sxth

F~ve Year Plani assigned the h~ghest prlorlty to the programmes of

unversasation of elementary educat~on and t proposed a ten-year strategy to

reallse ths const~tut~onal drectlve The Seventh Flve Year ?an7 accorded

over-ndnq priorty to the mprovemeniofthe quallty ofeducatlon Consol~detion

and optmum utll~satlon of exsilng infrastructura facilities, thelrupgradatlon and

modernlsation, ldentlflcat~on of crltlcal areas and creatlon of Infrastructure n

nebs$ areas of emerglng technology. effective management of the overall

system, and nkage between techncal educatlon and other development

sectors at ~nstltutlonal level were consdered durng the Seventh Fve Year Plan

The un~versal~satlon of elementary education, eradlcaton of lllteracy among

people beonglng to the age group of 15-35 years and strengthen~ng of

vocat~onal educaton so as to reallse the emergng needs of the urban and rural

settngs are the malor thrust areas ofthe Eighth Flve Year Plan a

Turling to allocat~on of plan resources, we f~nd that the plan expendlure

on education recorded a rap~d Increase For education, n the F~rst Plan, Rs

170 crores were allocated vs-a-vs Rs 19,600 crores In the Eghth Plan (see

Table 1 I ) The amount spent on higher education Increased from Rs 15 crores

to Rs 1,516 crores durng the same par~od The outlays on educai~on and

hgher educaton have rnultpl~ed by 115 tlmes and 101 tlmes In the Elghth Plan

over the Flrst Plan sequentally There was a gradual Increase In the publc

sector outlay on educatlon n plan after plan In absolute flguras except durlng

the three annual plans Here it IS to be noted that the perlod 1s 3 years as

agalnst 5 years n the case of rernanng plans There are fluctuations n the

rale of qrowth The share of educatlon n the plan outlay declned from 8 21

per cent durng 1951-56 lo 4 52 percent dur~ng 1992-97~1 th relatlve ups

and downs Of all the pans. lhe Slxth Plan recorded the lowest growth at 2 5

per cent The allocation was less than 5 per cent upto the Fourth Flve Year

Plan The proporllon of outlay on hlgher education In the overall outlay on

erlucat~on was 8 82 per cent dur~ng 1951-56 as compared to 7 73 per cent

dulng 1992-97 In the meantime, nuctuatlons were htghly consderable In the

three plans between 1966-69 and 1974.79. the propolton of outlay was more

than 20 per cent and in the rernan~ng cases, it was in the range of 14 64-19 26

per cent The actual expendture on educaton was Rs 7,633 crores ~n the

Seventh Plan as agalnst Rs 153 crores ~n the Frst Plan On hlgher educaton.

~t was Rs 1,092 crores and Rs 14 cores ~n the former and the latter seilally

The prov~sional expenditure during Elghth Plan for education and hgher

education was Rs 25,414 crores and Rs 2,361 crores respectlveiy In the case

ofeducatlon, actual expendture was below the target n all the plans excudng

I hrd. Sixth. Seventh and Elqhth plans, whch formed 105 18 percent, 103 72

percent 139 87 percent and 129 60 percent sequentialiy In respect of hlghei

educaton, a contraly plcture exlsls except durng the Flrst Flve Year Plan The

proportion of actual expend~lure n the target was 93 33 per cent dur~ng

1951-56 In the restofthe cases. the share of actual expendture In the amount

proposed was in the range of 102 13.115 23 per cent

Thus, a study of the progress of expendlture on educatlon and hgher

educaton hlghllghts the fact that the expendlture on hgher educatlon, In

proporllon to the overall expendlture on educatlon, as w e as plan outlay, had

8

beell an l icreasng one In general. actual expendlture surpassed the outlay

or~qnally panned The pan outlay/expenditure on both educatlon and hgher

educat,on llad not steadily ncreased The resources allocated for education

were usually cut down at varlous declslon making stages In the plennng

[process Actual plan expendture was much less than what was recommended

by the expert 'workng groups on educatlon' and was usually less than the

proposed plan outlay Expanslon of hgher educat~on was accorded a hlgh

prlorlty upto the Fourth Flve Year Plan Since then, consol~dat~on and

tmprovement of hgher education was on the priorty list Quant~tatve growth

a1 lower eves and qualtatve mprovement at h~gher levels, both ~n the general

and technical educet~on are noteworthy features of plan prlorltles slnce the

beg~nnnq of the plenn~ng perlod It can be summed up that, by and large, hgh

prtorty was accorded to hlgher educaton as far as allotment of resources n the

successive plans are concerned It 15 not clear whether even after gettlng

sonle wtiat preferential treatment In the alocatlon of resources, the funds made

aveabe to hgher educaton are adequate to meet t s egltmate needs

The Educaton Commsson recommended that 6 per cent of the gross

natlonal product (GNP) should be spent on educatlon to realse plan targets of

educat~ona advancement by 1986' It IS evldent from Table 1 2 that the

~nvestment on educat~on was much below the level recommended by the

Educaton Commlsslon The expendlture on educat~on was 1 3 per cent of

GNP In 1951 as agelnst 3 9 per cent In 1997 It can be obselved that educaton

In the scheme of plan prlorltes could not get as much attention as t was

envlseged Relatively smaller amounts were spent on educat~on T h s IS e

dscouraglng feature of plan alocatlon for educaion The resources allotted for

educalion In the Fve Year Plans were reduced at different stages Furiher.

though elementary education was reccgnlsed as crucial for natlonal

reconstruction plannlng was sharply skewed n favour oihgher education from

the Second to the Seventh Plan There IS ample evidence from wuntrles such

as Japan, South Korea, etc ,that the ~nvestment ~n pilmary educat~on yelds

hqh returns both In terms of social development and economic growth A

UNICEF documentlo ponted out that, n lnda, 55 per cent of Government

spendng on education was used to subsdise the best-educated 10 per cent

Note From 1992, Government expenditure only Source J B G , Tilak, Cast and F~nancing of Education en India,

Tr~vandrum, CDS, 1995, p 25

Table 1 2 Expandltureon Educat~onasPercentage of GNP durlng 1952-97

2 Revlew o f Ilteraturs:

In ths secton, earller studles relatng tothe present theme are revewed

to f~nd out ihegaps n the existlng ilterature Goodwin", while covering a perlod

Year

from I860 to 1933, traced out the relationsh~p between the fees charged and

% o f GNP

10

the economc cycle HIS f~ndngs lnd~cate that the movements n the level of

iultlon fees tend to lag somewhat behlnd the movement In whoe-sale prces

Fa l l~ ig prlces are not followed by reductions In fees n colleges but prlce

increases ore typlcaly followed, after some delay, by Increase n tuition fees

The chef adjustment of tu~ton fees to changes In whole-sale prlce level seems

to be made In tlmes of llicreeslng pilce levels then in times oidecreaslng prlce

levels Tulton fees seem to be adjusted much more exactly to an Index of

wages than to an Index of prlce levels, although the economc data on whch

Goodwn's study of relat~onsh~p between fees and wage levels was made were

not suif~c~ently camprehens~ve to dial" dafln~te conclus~ans The Central

Advisory Board of Educat~on'~ n t s report of 1943 emphaslsed the need for

unversty educat~on but cautoned that thegrowth should be ~n propadlon tothe

expanson of educat~on faclht~es at the lower stages and subject to the~r

~ntroduction !n a planned manner The document provlded the detals of cost

of educatlon, sources of ncorne end ways of brlnglng educat~on nto a

nieaningfu relat~onsh~p wlth national resources and expectattons

R I Z V I ' ~ reported that the publ~c funds and fees were the ma~nstay of

f~nanc~ng hlgher educat~on The proportion of funds allocated to hlgher

educat~on was small and below the optlmum level of nvestment The

contr~bution of the state in flnanc~ng educat~on was largely based on

value-judgement He opned that snce the a m of hlghereducaton 1s economlc

development, larger funds should be asslgned to sclentlflc and techncal

educaton, prlorlty should be accorded to higher education In the unlon and

state budgets, the system offlnanclng hlgher educatlon should be based on the

sovere~gnty of the lndlvldual and not ofthe educational Instltutlons, the support

should be strictly made on an lndlvldual bass but not on an lnst~tut~onal baas

11

as had been done so far, and the state should subsd~se selected students for

general education and advance loans to deserving students who wlsh to

Improve thall economlc praductv~ty by acqulrng technical education etc The

Unlverslty Education Commission ' appointed by the Government of lndla

durng 1940 under the Chalrmanshp o fS Radhakrshnan, made the following

recommendations establishment of rural univers~tles on the llnes of

Shanlnekatan and Jamla h411a, Increase of grants for schoarshp and stpends

so that the poor may not suffer, mprovement of standards In the taachng

professton. promotion of teachers from one category to another solely on the

bass of ment, and ellmlnatlon of danomlnatlonal or sectarian and r e g ~ o u s

consdeiatlons n educatlon

MlsIiral%ade an lntensve study of educatonal flnanoes from 1698 to

1956 and assessed the poicles, purposes and lapses nvolved I" their handlng

by both the publc and prlvate agences He found that educat~on was always

considered an unlmportanf subject ~n the country's budget second to imper~al

needs The Government subvent~on never crossed 50 per cent of the total

expendlture on educaton The assgnment of local bodies was small for want

of statutory obllgatlon Fees had been the maln source and other sources

declned wth time The admn~stratve changes were not always conducive to

hlgher expenditure on educatlon The economlc condltlons and natural

cala,nltes reduced the flnanolal resources for ~t The author suggested the

follow~ng the Central Government should help to resolve the dlsparlt~es In

educat~on between different areas by reorganislng pnvata enterprise n

educaton and evaluating its own effori from tlme to tme, at the state level,

educational adm~n~straton should be decentrallsed Ateest 20 per cent of the

budget should be allocated to educatlon, local bodes should levy educetlon

12

cess and assgn 40 per cent of ther revenues for educat~on, and private

snterprlse sliauld be accorded a deflnte status In the fled of education The

author emphaslsed the need for emlnating wastage In educat~onal

expendlture, advisab~ty of giving general grants by the Centre, glvlng

Importance to research and organsing education for soclal and emotonal

inlegraton of the people

The Educaton Comm~sson '~ , constituted under the Cha~rmanshp of

D S Kotharl. opned that the sluatlon ~n hlghereducatlon was unsat~sfactory

and alarmlng In ceriain areas, general standards had fallen and raprd

expanson resulted In poor quality Ths was supported by examlnatlon results,

repolis of Public Sewce Commiss~ons, vew of employees. assessment of

teachers. results of research data etc It was found that the share of

expenditure on education ~n the natlonal income was 4 1 per cent n 1676 as

aganst 6 per cent n 1986 Further. while studyng the I~nkags between

unlverslty autonomy and finances, the Kotharl Cornrn~ss~on lamented that the

flow of funds from the Government restrcted academc freedom It was ponted

out that "Unlverslty autonomy cannot become real and effective unless

adequate provision was made to meet the flnanclal requirements of unlverslt~es

and colleges" Whlte the UGC was establshed to provde the necessary

f~nances to unlversltles wlthout government control or ~nterference, state

unversltles had to depend. for rnalntenance grants and matching share on the

funds provded by State Governments Thls curbed the freedom of unlversities

Ths IS obvously undeslrabe In addtlon, w h e examlnlng the pros and cons

of 'block grant system' of fundlng unversitles the Education Commsslon of

1864-66 recommended the following block grant should be flxed on a rollng

basis, piovlson should be made for lnevttable lncrasse In expendlture durtng

13

tile Iperlod of grant, special grants should be made for unforseen developments,

and a cushion against unforeseen eventualities must be provided To do this

a special contingency fund may be created whose utilisatlon will be lefl to the

dscreton o i unvers~tles The report warned that whle enjoying autonomy.

universities should be governed by one over-riding consideration, i e

commitment to truth in all fields ofactivity Its implementation has lefl much to

be desired even now

Vaizey and Sheehan" have concluded that there has been a decline In

fees In England since 1920 It was the result of a deliberate policy and the

authors attributed the following reasons for it Education was provided freely

as part of a policy that families shall be no worse off because they have

children than childless couples or bachelors and spinsters Another cause was

the policy makers felt that families with clever or abnormal children should not

be unduly penaised by collecting more foreducation than families with o r d n a ~

children Finally, it was felt that society needed educated cttzens" Smith'"

analysed tlie cost of further education in British colleges and made use of

various definitions of marginal cost Flrstly he defined marginal cost as the

addition to total financial cost due to educating an addltiona student in an

exisiing course Secondly, he defined marginal cost as the addition to total

financial cost of educating an additional student if a course had to be duplicated

and had been accompanied by some improvements In efiiclency Smith found

wide variations in marginal cost between courses and between definitions But

the financial cost under marginal cost concept was much lowerthan under the

average cost concept

14

Maynard'', in h ~ s study, examined the cost per student across the

institutions ofvarying sizes The findings include long-run cost function In the

~nstltutions of higher learning (HL) was traditionally 'U' shaped, parabola 1s

superior to a linear function for explaining IHLvariatons in the cost per student,

slze of the institution signif~cantly explains thevariation in the cost per student

among slrnllar students, plann~ng for hrgher education was predicaled on the

belief that capital outlay was en enormous drain on the exchequer, and careful

planning and locatlon of large institutions was essential The author suggests

that more individual campuses might be a wise economic course for states to

follow If the argument is at ell valid, it would suggest that states should look

Inlore carefully at assisting private institutions in having an economically viable

size as a means of fulfilling their responsibtl~ties in education It seems to have

been devoted primarily to non-wconom~sls end was written in an unusually

fectous style, a style not found frequently in economic treatises

D JhaZo found In a study on Patna University that when it became a

teaching-cum-residential university in 1952, the expenditure increased

substantially Government grants were the main source There was a deficit of

funds during 1964-65 itself The Finance Committee failed to function properly

due to the absence of a financial code K Mukerlii' studied the finances of

Calcutta University The author concluded that the admin~strative expenditure

was 30 percent ofthe tatel expenditure between 1948.49 and 1969.70 Dunng

the same period, the salary of teachers was in the range of 13 12-18 76 par

cent The trust and endowment funds went a long way in sustaining the

finances of the universtv

15

NanlundappaiZ carrled out a study on the finances of Karnatak

U~xversity He found that the share of state government n the Income of the

~lniversity was 54 percent The proportlon of fees was 35 per cent There was

a decl~ne n the per caplta grants The per capita expendlture was Rs 80 durlng

1950 as compared to Rs 3,306 durng 1973 There was an enormous increase

in expenditure especlaly in the academ~c depariments But the grants for

teachng stall in the total grants constituted a mere 13 per cent The share of

expendlture on examnatlons ncreased from 19 8 per cent durng 1950 to 27 4

per cent durlng 1973 He IS of the vlew that the expendlture on auxliary

enterprises should be curtaed conslderably because ~t IS a potentla1 source of

nput whch could help augment incorne In the long-run Flnally, he concluded

that there IS an urgent need to curb rapldly increasing expendlture In a

report." t was ponied out that the raspond~ng lnstitutlons showed little

enthusiasm whle ralslng prlvate contrlbutlon to hlgher education Fufther,

ncreaslng taxaton and spirall~ng nflatlon, paricularly n the post-ndependence

perod had serously llmlted the capacty of the people In the lower and m~ddle

income groups to contribute to educaton The tendency to leave as much to

the government as posslbe is a d~rect cause of declin~ng prlvate contrlbuton

It was also noted that, u n k e In the pre-independence perlod, the call to

'nat~onal riuty'fals to get an enthuslastlc response from the publlc It 1s feared

that, f no special measures were lnltated to stimulate prlvate contribution, 11

could be wr~tten off n the not-too-distant future as a dependable source of

f~nancng university educatlon

A~ed~~rev iewed the trends in the flnanclng of hghar education in India

In the post-independence era The author observed that the Increase n

16

Pxpeliditdre on higher educat~on was much faster than the Increase n

enrolment There were wde varatons In the allocaton of flnanclal resources

amongst the dfferent states n the country The present pollcy of ad-hocsm

n government support should be replaced by rationally devlsed crlterla The

agencles of f~nanc~ng should have an n-bult mechanism of mutual consultailon

and coordlnat~on All hlgher educal~on should be placed under the control.

supervls~on and adm~nistratlon of the UGC, whose work~ng should be

dece~ilral~sed and membershp enlarged The states should have thelr own

UGCs lndlvlduais and corporate sector contrlbutng generously to prlvate

enterprise In thef~eld of educatlon should be exempted from Income tax The

state should prlmarlly develop under-graduate educatlon and extend

assistance liberally to prlvate agencles for settng up of ~nst~tut~ans of hgher

educaton The author felt that lt IS necessary to adopt a pollcy of planned

~nst~tu l~onal spread so as to conserve the flnanclal resources available for

hgher education It appears necessary to adopt a bold and real~stc polcy of

educational expanson under whch the uneconomic unlts are closed down

The author analysed the growlh of expend~ture on h~gher educaton In terms of

naiona income for certain select years To facllltate compa~~son dur~ng the

perod of study, he deflated the expend~ture wlth the help of whole-sale prce

ndces Furiher, he felt that In v e c of the peuclty of resources and the

competng demands of 'core' areas like defence, lt may not be possible to

allocate a larger share of the nat~onal Income to educat~on An optimum

ut~l~sat~on of avaable resources for educat~on IS an mperative under the

uresent c~rcumstances

17

Panchamukh~" made an attempt to evolve prlnclples of resource

mt lh~lsat~on and ut~l~saton in 'non-proill lnstitut~ons of hgher education v z ,

Bombay Unversity The study observed that a major share of expend~ture

was clamled by adm~n~straton, though non-salary component cla~med a larger

share ~n expendture, expenditure on salary Increased faster than non-salary

expendture fee Income played a mlnor role In meeting supply costs ndlcatng

that there IS a higher degree of subs~dsat~on to students and cost of students'

assstance programme had substantally Increased over a period of tme The

author suggested that the untversty should make a serous effoii to attract

donattons from prlvate sources for flnancng development programmes, iee

Income has to be product~vely enhanced by iormulatlng magnatlve plans and

wldenlng the scope of extenson courses, In the budgetary system, t IS

necessaly to present details about opanng balance, effect af budget and

closng balance for the year, and even if the universty is a non-proflt rnaklng

lnsttutlon tlie balance sheet IS to be prepared In such a way as to glve an dea

of the nagntude of expenditure ncurred on certan speclfc actlvlties durng the

year

Mathewzo conducted an enqury into the flnances of Kerala Un!versty

The petod of the study was from 1947 to 1975 The author observed that a

major share o i plan grants was prov~ded to deparlments of study and researcli

The proporton vared between 52 per cent and 99 par cent As far as the

overall revenue of the Universty s concerned, lt registered an average annual

rate of growth of 13 5 per cent The grants from the State Government decllned

from 83 per cent In 1948 to a meagre 35 percent In 1975 The plans are not

based on a clear understanding of the of development needs but are

18

clia~artelsed by ad-hocsm WhIe formulating plan proposals, sufflclent care

was not exercsed Consequantly, there 1s a wide gap between the proposals

and response as far as the quantum of flnancla assistance 1s concerned The

author suggested that at the t ~ n ~ e of f~naisng plan proposals, the Syndicate

should also take Into account the resolution passed earller by the Senate of the

Upilverstty regadlng such matieis as start~ng new departments of study and

research establ~shment of new un~versity centres, addit~onal f a c t ~ e s for

studenlsetc Thereshould be a clearunderstandngoithe development needs

of the unlverslty

Kranmay~~'compared the varlous sources of funds of three unlverstes

namely. Delh~, Andhra and Nagarjuna The author stated that state un~versltles

were fac~ng severe problems n securlng funds from the State Government and

the UGC whereas central unlversltes were foriunate enough n securlng around

DO per cent of ther total requrements from the UGC WhIe commenting on

expendture, all the unlversltes spent around 70 per cent ofthelr expendture

on non-academlc actlvltles The aulhor underlhned the need for sclentlflc

flnancal ma~iagement for efhcent and effective utllisation of funds and opned

that unless the un~versltles bestow their aitentlon on managlng the funds

effectively, they cannot overcome tlle present flnanclal crsis SubramanyamiB

revewed the work~ng of Andhra Unversiiy for a parlod of 48 years He used

both the prlmary and secondary sources of data The obseivat~ons were as

follows commencing with 23 students durlng 1932, the Unverslty grew by

leaps and bounds with 5,054 students durlng 1974 The Sclence and

Englneerlng students accounted forover 50 per cent and the rest belonged to

ads, commerce and law courses The number ofteachers had gone up from

19

6 to 489 durlng the perlod referred to But thls Increase In the number of

teachcis was not found to be adequate due to the teacher-student ratlo whicli

"creased from 1 4 durng 1932 to 1 10 durlng 1974, and Increase In student

enrolment was matched by a proporlonate Increase In the teach~ng staff only

n the case of Sclence and Technology courses Among the unlverslty

colleges, the Scence College had a better teacher-student rato, the income of

the Unlversty had shown a tremendous ncrease of more than a hundred fold

durlng the perlod of study, academc sourcesof Income constituted 80 per cent

of the total ncome whle tile non-academc sources constituted the rest. n the

Income, the State Government's share formed over 97 per cent, the

expendlture on general admln~strat~on was In the range of 20-30 per cent, the

expendlture on teachlng deparlments vared behveen 40 per cent and 69 per

cent, and the expend~ture on llbraiy was ~ n t h e rangeof2 58-9 12 per cent The

author suggested a method of providing for depreciation on the fixed assets of

the Un~versty

Paramanand Slngh" hlghllghted the problems of fnancng of unlvers~ty

educaton n Bhar The authorwas of the view that the per caplta expeodture

on educat~on was o w De~pl te ncrease In expendlture on education. there was

a declne In relative terms after 1965 The percentage of fees decreased from

52 6 per cent durng 1951 to 28 4 per cent durng 1967 The contr~butlon of

local boards was almost n I and that of endowments ~nslgnificant The author

suggested that all ava~lable resources should be tapped to ralse per student

expendlture In Blhar unlversitles, effective steps should be nltated to ensure

that the funds sanctioned for construction of bulldlngs are not dlverted to other

uses, the system of block grants should be continued but reorganlsed on the

20

IIFS suogested by the Educat~on Comm~sslon of 1964-66, and attempts should

he made lo invlte the attantlon of the potential donors to educat~onal

~nst~tutlons The author concluded that the un~verslties are grossly under-

f~nanced n vlew of Ihe tasks to be periormed More un~versltles. more

enrolment. more staff, better-pad staff, more equlpment, more scholarship.

more Ilbrares, more extra-currlcuiar faclltes, more hostels and more buld~ngs

-a l l these are urgently required All ths means growtng expenditure wh~ch can

only be met by aunchlng a campaign for tapplng resources both from public

and prlvate sources No doubt, the role of prlvate sources s not unlmpoltant

but as things are, the publlc sector has to play the major role In a planned

economy, the state can no longer afford to reman a passlve spectator In a

modern democratic socialst set up, there will have to be increasing paliicpat\on

of state In bearlng the burden of ever-incraas~ng expenditure on educat~on.

part~culary unlverslty educat~on The stale, therefore, should come foward

with niore funds and a well thought out effectve pollcy of allocation for a

balanced growth of university education throughout the country Besdes, the

~ndtviduals. who are drectiy benef~ted by the unlversty education, should also

be made to pay more

Cark3%xamlned how hlgher educatlon was organlsed and governed in

USA The author opined that tile power groups withln the hlgher educatlon

system have the capacity not only to shape i h e ~ r lmmedlate work environment

but also to affect the world Clark trles to analyse the bas~c structure of hgher

education system To do thls, he embarks upon a cross natlonal perspective of

hlgher educatlon system by focussing altentlon on "%ve generlc questlons"

about academic systems n largely post-industral socletles HIS contentlon I S

21

that the answers to these questions will lead towards systematlc answers to

tssues ~ k e what deiermlnes access, how general educat~on can be supported,

how the lntegraton of teachng and research can be maintained n systems of

mass hgher educaton etc Clark then narrowsdown hafindngs and polnts out

that all these Issues are heavily condltloned by the structural bases of higher

education system HIS contrlbutlon to the theory of hlgher educatlon 1s a major

one It needs further refineinent and arnpl~f~catlon through case stud~es In a

varety ofcontexts before t can be applied In a rneanngful framework to study

hlyher education system n the Thlrd World Countres Specfcaly, a continuous

underlying ernphass should be placed throughout any study on the strong and

growng trend oistate interventon in the field of education and en attempt to

evolve a natlonal system of hQher educat~on Thls affects the democratsation

of hlgher educatlon Clark IS r~ghtly aware ofthls but has not pursued thls n hls

analyss to the extent that 11 desewes, partcularly at thls juncture of the

development of hlyher educatlon throughout the world

Garg3' conducted a mlcro level study confined to Punjab Univen~ty (PU)

Tlie author concluded that the ilnences of PU were Inadequate and, at tlmes,

uncerlan and ad-hoc For nstance. n 1984. non-plan budget showed a def~c~t

of Rs 71 83 mllllons whereas In 1951, the unlverslty had a surplus of Rs 1 65

mllllons It was also found that there are osc~llat~ons due to Inflat~on,

dlspacements In admln~strat~on and organisatlons Further, demand ior hlgher

educat~on came malnly from the mldde class households So iar as equa iy

ofaccess was concerned, subsdlsat~on definitely helped the erstwhile under-

privileged class, women and the rural poor But n the case of proiess~onal

educatlon, access was slow due to select~v~ty Therefore, the author

22

recommencled that there was an urgent need to restructure the currlculum In

favour of vocal~onal courses, pari~cularly n colleges located In mofussil areas,

where there 1s a dire necessity to convert general faculties n to professional

ones However, the author felt that a careful plannlng and pre-nvsstment

survey was necessary before the currlculum was restructured

Sulochana3' analysed the financing of hlgher education wlth reference

to Osmanla Unlversty (OV) coverlng a perlod of 16 years startlng from 1970

The author noted the Increased dependence on Government assstance.

d~mlnshng contribution of fees and near ext~nctlon of endowments n the

fnancing of university education In tile country The share of fees in the total

Income decreased from 8 per cent ~n 1971 to a meagre one per cent In 1986

The author advocated the need to charge cost-based fees whle continuing

grantng of schoarshlps to the needy The authors ofthe oplnon that n view

ofthe hard days ahead, unlversty-lndustrycollaboratlon s h~ghly desrabe and

that t needs to be promoted It was also pointed out that the OU author~t~es

had not avnced any Interest ln clearnq the long pendng audlt objactons

Local fund audit was neffective due to lack of punltlve powers vested wlth the

audtors V Ramamuiihy3' n lhis study, evaluated the efforts of D e h Unverslty

n ntroducng computer system for Rnanca management Furiher he analysed

the f~nancal performance of the Unlverslty by working out the de tas of

resource aloceton, per student cost for dfferent depaltments, percentage of

expendture under dfferent heads k e capltal and revenue etc

A UGC Cornmttee", under the Charmanshlp of A Gnanam suggested

that corporate sector (both prlvate and publlc) should be encouraged to suppon

higher education Establshment of irrevocable endowments for specal c h a w

research act~vlt~es etc , could form part of such support The author rlghty

23

polnted out that there IS little scope for meaningful analysls on the bas~s of

financial data presently available from the universities The available

nformation does not reveal the true financial health of a university The

modern concepts of budgetng, whch relate expenditure to the objectives of

unversty. are lacking The author opined that ihe expenditure on various

ac t~v t~es of unversity outgrew ~ t s resource base due to lack of correlation

between resources and expendture He advocated l~beral tax exemptions for

donat~ons to lnstitutons of hghcr educat~on on a parwth donations to scent~flc

research by extending 100 per cent tax exempt~ons He also recommended

establishment of 4-5 regional offices of the UGC for effective implementaton

and monitoring of the funding of universities and colleges Sharma" made an

ndepth study of financial management in universities under different fve-year

plans The following are some of his conclusions the share of education In the

GNP was far below 6 per cent, the growth in Government expenditure on

education was insignificant. government grants to hlgher education are to be

deterinned on the bass of expenditure Incurred in the preceding base year and

by adding i 0 per cent for prlce rlse end internal income should not be

deducted from expenditure while fixing grants-in-aid so as to provide incentives

to university to generate more income and to help in improving its financial

position The author recommended the folowlng measures for improvement

of various methods of financial management in the universities Adequate

funds, flexibility in allocation, t m e y allotment and release of funds by the

funding agencies and an efficient system of audlting should be ensured for

smooth running of various departments, uniform grants-in-aid rules should be

formulated for all types of university institutions in the country so that there are

no varying standards for thelr financing, performance budgeting should be

24

n ? p I ~ n i ~ n t e d , accounts should be prepared on the basls of single entry

system, and the balance sheet should be prepared only for commercial units

It should be attached to accounts as annexure

The Punnayya Cornniittee3~eported that the government cannot Ignore

its responsibilities in the field of higher education It states that "the state must

cnntlnue ta accept the malor responsibility for funding the essential

maintenance and development requirements of universities "en f l although

primary educat~on is fundamental to the nation, higher education determines its

entre development including academlc and technological progress While 11 is

mandatory that natlon achieves universal elementary education and total

literacy, at the same time. we cannot afford to neglect our quest to achleve

global standards of higher education" However, the report lald stress on the

need lor the unlversltles to raise their internal earnings wlthin a lead period of

10 years, to about 25 per cent of 11s total resources The World Bank1'

document pointed out that "higher education also contributed to self-sustaining

growth through the impact of graduates on the spread of knowledge"

Institut~ons of h~gher education have the main respansblllty for equ~ppng

nd~v~duals with the advanced knobvledga and skills required for positions of

responsibility in government, business and profession These institutions

produce new scientific and technical knowledge through research and

advanced trainlng and sene as conduits for the transfer, adoption and

dissemination of knowledge generated elsewhere in the world Estimated

social rate of return of 10 per cent or more in many low and middle-income

countries indicates that investments in higher education contr~bute to increase

in labour productivity and to higher long-term growih"

25

UNESCO" ~n a p o c y paper maintains that there 15 a well established

correlat~an between investment n hlgher educailon and the level of socal.

economlc and cultural development of a country It expresses concern overthe

observed trend towards a reductlon In state contr~butlon to h~gher educailon

and reallocating these funds to primary and secondary levels of educatlon The

report states 1hat"state and socety must perceve higher educatlan not as a

burden o r federal budgsl but as a long term domestic ~nvestmenl, n order to

mcrease economlc competthveness cultural development and soclal cohesion"

Ths UNESCO p o c y paper concludes that publc support to hgher educaton

s essenta ~n order to ensure i s educatonal. socal and ~nstltut~ona mlsslon

Further. provld~ng people access to hlgher educat~on and to the broad range of

servces t can render to socleiy The support from the publc should be part

and parcel of any sustalnabe development programme In whlch hlgh-level

human expertse and professorial skill are required

Swam~nadhan~~ reported that the hlgher and technical educat~on

systems have done a commendable job In largely fulf~lllng the roles assigned

to them despte cerialn imtatons The author oplned that unlverslt~es should

nleracl w lh lndustral as well as research and development organlsatlons

The author had recognlsed the lnstllutlon of corpus fund as an approprate

mechanism to acheve the objectlvs of self-rellance Rao'" made a general

study of hlgher educaton from 1947 to 1996 The author oplned that n a

country lhke lndfa wllh so much cultural, geographic and llngulstlc dlverslty,

education IS a key factor for development Educaton can petform ths mle only

11 hlgh standards are rnalnta~ned at all levels Slnce educat~on 1s on the

concurrent Ilst, plann~ng IS essential In the senlng up of new lnstitutlons We

have to adopt different strateges for the development of educat~onal

26

~ n s l t ~ ~ t n ~ ~ s To make hgher educat~on effective, there 1s a need to ~ntroduce

~nnovatve methods The study of functonlng of instltutlons of hlgher educatlon

needs lo be updated so that decsions can be taken quickly To achieve these

goals, 11 should be ensured that economlc development fulf~ls socla polcy

objectives The author concluded that ~nstltutlons of hlgher educatlon should

thnk In terms of generatng ther own resources so as to reduce dependence

on state fullding Swamraf' studied the growth and expansion of hlgher

educatlon and at tmes the conflct~ng roes of maln agences such as the

government, prlvate sector etc HIS suggestion of eavlng day-to-day

edmn~slrat~on to instltutlons IS tlmely Further, he lamented that current

infrastructure is Inadequate to meet the needs of the educatlon sector In the

21st century

Deshmukh" arrived at the conclus~on that there s a tremendous

explos~on of knowledge n India but that 11 has not reached world standards

One of the deficencles of hlgher educat~on In Inda IS t s narrow focus and 11s

not beng properly ntegrated wlth the other levels of educatlon Besdes. the

knowledge sought to be mparted through higher education IS also not upto

date Another major deflcency is lnablltyto malntan requlste standards in the

level of ntellectual sk~lls to be atta~ned by the learner Yet another deficency

IS the lack of commltment to ensurng excellence ~n the chosen f led by the

learner Absence of a stated object~ve for the mstltutlon IS another major

drawback Because of thls, there IS no common goal for the teachers and

students to achieve It IS held that there IS a need for a bold. visonary and

lnnovatve leadershp in the unlverslty system In ths era of global~sat~on and

new trends amerglng In the iteld of educatlon

27

Guptaal concluded that the managements of unlversltles should

constantly montor the efficiency of university system, especaly its flnanclal

management Flnancral management IS directly related to academlc and

admnstratve functonlng "1s-a-vs the use of resources drawn from the state

exchequer phllanthroplsts etc Flnally, the author felt that lf unlversltles

riianage the~r flnanclal resources properly. they can hope to achieve their

objectves Tilak4'deaIt wth the emerglng trends, the recent reforms and ther

nipact on hgher educat~on in n d ~ a It 1s stated that some ofthe reforms are

necessary to mprove the efficency ot h~gher educat~on And some of the

attempts to reform higher educatlon seem to go agalnst well-cherished

funcllons of hlghar educat~on Further, he argues that focus is lald on financial

efficiency measured n terms of resource generation rather than acadamlc

excellence The author points out that there is a need to malntaln a balance

between the funcions of higher educaton and ~ ts resource requrements The

publ~c good and soclal value of hlgher educatlon on the one hand, and the

needs of new globalsed Indan economy on the other, should be kept in m n d

wlllle farmulatlng policies for the development of hgher education

I ~ l a k ' ~ found tliat the phlosophy of glvng loans l o students does not

recognse the comrnlnrnent of hgher educaton to promotion of '~ndv~duel ' and

publc weliare It treats hgher educat~on like any other prlvate good That

h~gher educallon IS an ndspensable ntelleciual soclal Investment IS no more

regarded as a valld argument The author concluded that the concept of glvlng

loans to students to enable them to joln lnstltutlons of hlgher educaton has

~nherent weaknesses because ~t does not recognlse the basic character of

h~gher educatlon Hence. thls philosophy IS dangerous to society The gains

28

I s supposed lo provde are mag~nary and the assumptions behnd ~t are

i~nreal~st~c Emplr~cally, ~t has not proved to be a feas~ble solutlon to the

oroblem of inadequate resources for hyher educat~on nor an antdote to the

regressive effects of Increases n fees It may Indeed be a deterrent to the

yrowth of hgher educaton

3 Need for the study

Though there are qute a few siudes on h~ghe i eduoat~on cancernng

student-teacher ratlo economcs of education. adm~n~strat~on, organ~satlonal

structure, contr~but~on to soco-economlc development rmpact on soc~ety,

resource moblllsat~on, cost-anayss e lc , studles related to management of

flnance n un~versit~es are Imted n number Though the SVU came nto be~ng

some 45 years ago and grew numerically ~n terms of number of departments,

students, teachen, non-teachers, strength of afflllated Instltutlons, courses

offered, research projects undertaken elc ,there is no spec~f~c study even on

I s i u~~c t i on i l g as far as ths researchers knowledge s concerned For that

matier no research st~ldy has been undertaken to determ~ne how the resources

afSVU are yenerated and utlisod Thus, a mcro-level study ofthis unexplored

area, namely, ftnances of SVU, and e reference to related studies, can throw

g h t 011 the way this unlverslly is beng admlnstered Puhl~c interest and

government concern seem lo have Increased In the matter of the proper

functonng of SVU An In-depth analyss ofthe sources of t s funds and thelr

uses may reveal certaln areas of weakness and may help suggest ways to

overcome these deficlencles Apart from this, the researcher has chosen the

present theme of the flnances of SVU slice he has been assoclated w~ th SVU

for the past 10 years as a student The researcher IS famlllar wlth men and

29

~natters of SVU n general and 11s ijnances n partcular It s fe l t desirable to go

n ta the fnances of SVU to have a close look at ~ t s functlonlng Therefore.

there 1s an urgent need to carry out a detalled study ofthe flnances of SVU In

addition, the present study can fill the gap n the exist~ng lhterature as already

ponted out A modest atte~npl I S made In th~s dlrectlon by anaysng structure,

pattern and trends in the sources of income and the pattern and magnitude of

expendlture The researcher has also made an attempt to know how funds are

oiita~t~ed from publc and prvate sources, revenue and capltal recepts, faculty

and depari~nent wse expendture, cost per student, transfer of funds iron? SVU

to GovernmenUagencles generatton of surplus, and debts depos~ts. advances

and nvest~nents

4 Present study

A synoptc v e w of thls study 1s presented In the following sectlon

4 1 Objectives The spec~f~c objectives of the study are

I to revew the progress of SVU,

I to examlne the flnancla admlnlstrat~on of SVU,

III to analyse the trends n the ncome of SVU,

IV to assess the expendlture of SVU In terms of objeck, patterns

magnitude and growth, and

v to study the unit cost of education, surplus and debts. deposits,

advances and Investments

4 2 Data collection The present lnvestlgat~on IS carrled out on the bass of

documentary evidence Frst hand Informailon has been collected from the

off~clals of SVU through lntelvlews Secondarydata has been collected from

30

books, lournas per~odcals annual accounts, budgets and aud~t reports of

SVU pubicatons afthe UGC. A U Government of India and Andhra Predesh

4 3 Use of deflators The revenue, expendture surplus, debts, deposlts,

advance etc. of SVU ere arlaysed at constant prlces Money costs Increased

due to pllenomenal lncrease In prlces Hence, lt IS desirable to measure them

in real terms Thls has to be carrled out w~ th the help of prce-deflators It 1s

unl~r tunale that In splte of a ong-felt need, no speclal~sed mdex numbers of

prices for activties other than the general economlc situation and consumer's

welfare are avaable for the whole of Inda, much less for a pariof the country

Pait~cularly no ndces are avaable whlch take Into account the 'relevant

welghts and prlce-factors for unlverslty nputs Thus, d there IS an Increase In

revenue and expendlure of a unlverslty, 1tw11I be only due to InflatIan wh~ch IS

a world-wlde phenomenon The following stud~es have employed Index

numbers in analyslng and lnterpretlng the data A.~ad'~appled whoe-sale prlce

ndces (WPls) w h e deflatng educat~onal expendlture of lndia In the case of

Punjab Unlverslty Garg" ew loyed WPls for capltal expenditure and

consumeis prce ~ndces [CPls) of urban non-manual employees for revenue

expenditure MukarjtB deflaled the financial data of Calcutta Unverslty wllh the

help of Calcutta Cty CPls Pan~hamukhl'~deflated the expendture of Bombay

Unlverslty by adoptlng WPls Atmanand M~shra'Odeflated drect expendlture

on educat~on In lndla by uslng CPls

By taklng all the relevant factors Into account, revenue, expendlture,

surplus, debts, depos~ts, advances, nvestments etc, at current prlces are

converted into constant prlces The average ~ndex of whole-sale prlces IS

adjusted for the base year 1981 as 100 The WPls for 1987 stood at 133 90

3 1

In athewords, lf we defale factors such as revenue mentioned earller by this

pice-deflator. then ther real level w be reduced by 33 90 per cent n 1987 at

~ o i ~ s l a n t ;price (1981=100) Tile ~ndces are furn~shed n Annexure I Another

lnipoitarit consderal~an n the converson of monetary flgures from current

prlces ta constant prlces was the select~on of base year, whch measures price

effect Generally, lt should be a normal yea?' In the present ~nvest~gaton,

1981 IS taken as base year There are hvo reasons for t SVU prlorto thls year

was experlenclng a perlod of consolldatlon Consequently, this may be

regarded as a development per104 Therefore, the per~od prlor to that year

cannot be taken Into account w h e comput~ng real estimates Although

prce-level stalled rlsng after the war wth Chlna I e in 1962. 11 was held that

prce effect after 1962 was mlld and that t dld not affect univers~ty costs n

monetary terms s~gn~fcantly But post-emergency per~od i e the perlod aHer

1977. experencad sharp prlce ncrease By conslderlng the aforesad factors,

W P S are employed to deflate the financal data of SVU

4 4 Statlstlcal tools af analysis. In the present research study varloLs

stat~sl~cal tools such as coefflcent of varation (CV), compound growth rate

(CGR) student's 1-test for the slgniflcant d~fference between two CGRs.

studenrs I-lest for the slgnlflcant difference between two sample means,

Arialysls of Varance (ANOVA) for one way classified data and Income elastcty

were appled to anayse the emplrlcal data on receipts and expenditure of SVU

forthe period 1987-96 The tme serles data an recelpts and expenditure are

deflated wlth the help of WPls for the correspondng years

Cneiflc'ent of varance (CV) 18 employed to measure dlsperslon between

t5vo or more serles of data I t s def~ned as

Here. I X Sum of ' n obsewatons ~n the data, I X 2 Sum of squares af 'n' obserdatlons In the data

4 4 2 Statlstlcal estlmatlon of CGR Under statlstlcal lnethod of estmat~on.

we flrst flt an exponentlal model to the glven tlme seres data Later, the CGR

inay be computed by usng the estmates of the parameters of the model

Suppose the values of a study varlable (y) at tlme perods t,, t, t, be

y , y,, y, respect~vely, we denote the coded time varlable by x w~th the

slartng pelod as 1 and subsequent per~ods by 2, 3, n Now, the time

serles data may be represented as

T~me (1) 1, 1, 1,

Coded tlme (x) 1 2 n

Study vanable (y) y y, YO

Let there be an exponentlal functons relatonship between y and x as

y , - a b ' e i ' = 1 , 2 , n

or simply y = ab" e'

vulieri. y Dependent variable lrecelpts or expend~ture),

X Independent varlable (coded tlme varlable),

E Error var~able

a, bare the parameters of the model

Snce drect f t tng of an exponentla model ~nvolves several d~ffcult~ea.

wegenerally transform the model lnto a log-llnearform and then t may be fitted

to the data The loyar~thm~c transformation of lhe modal s ylven by

log y = log a + X log b + E or

Y = A + BX + E whlch s a h e a r model

where Y = logy, A = log a. 8 =log b

The least squares est~mates of A and B are glven by

and & t %

a,,,. ,I Z, K E

Thc estimated h e a r model I S glven by A * * Y = A + B X

An estimate of orginal parameter b 1s given by

b = Ant log (8)

Thus, an estlmale of CGR is glven by

C G R = [ " b I ] 100

4 4 2 1 Test of slgnlflcance o f CGR To test the signiiicance of CGR, we use

the following studenis 1-test statstlc

\Ye compare the calculated value of I t with ~ t s cr~tlcal value for ("-2)

degrees af freedom at an appraprlate level of signlflcance and draw the

inference accordingly If the calculated value of / t 1s greater than its crltcal

value, then the CGR 1s said to be slgnlflcant at an appropriate level of

s~gnlf~cance, athelwse. lt $5 sad to be nsgnficant

4 4 2 2 t-test for the slgnlficant dlfference between the CGRs of two series A h

of data Suppose 8, and B, are the estimates of the slope parameters of the

log-near models, whch may yeld the CGRs of the two serles of data

respectively, to test the sgnifcant dlfference between the two CGRs, we use

the folowng studeni's t-test statstlc

Where

S E ( ~ J A A =standard error of B2

Here X and X, are the coded 11me var~ables for the two serles of data

respectively

Y , and Y , are the study varlabesiorihe two serles of data seraly. and

n, and n, are the number of tme per~ods for the two serles of data

sequentally

We compare the caiculated valua of 111 wlth 11s crltlcal value for (n.+n,-

4) degrees of freedom at an appropr~ate level of s~gnlfcallce and draw the

mference accordingly

it should be noted that n, = n, = n = 10 for the present study

4 4 3 t-test forthe s~gnlflcantdlfference between the two samples means

Suppose !and .y are the ar~themat~c means of two random samples of n, and

n. obsenelions respectively, to test t l ~ a signi~cenl dlfferenca between the

,means of these two samples, we use the follow~ng student's t-lest s latst~c

We compare the calculated value of ltl with ti's crltlcal value far

(n.+n, - 2) degrees of freedom at an appraprlate level of slgnlflcance and draw

the nlerence accordtngly

The t-test statlstlc 1s used throughout the present study Thls test IS

hased on the assumptons of normality and Independence of the random

sample observatlons n the data Generally, these assumptions may be hard

to ~ ~ i s l f f y ~n the case of tlme serles data However, many stat~stlclans proved

that t-lest is a robust tesl even in the absence of these assumptions (see

Annexure 11)

4 4 4 Analysts of varlance (ANOVA) for one way classlf~ed data Suppose

a one way classlfied data consists of K groups (samples) of n,. n, n,

observatlons respectvely and IS represented by

Data Group (sample)

Total

(T~ta)~/salnple size

G

I(Ti!n)

1

Y~ I Y 2

Y , .

TI

T2,1n,

2

Yrl Yi*

Y,*

T,

T;/n2

K

Yrj Yi2

Yc,

Tk

T,2!nb

where, y's are the o b s e ~ a t o n s In the data, Ts are the sample totals, G IS the grand total

The vailous steps nvolved In the ANOVA technique are glven by

Step ( 1 ) We flrst compute correcton factor (cf) as

cf = G in

where, n = n t i n , t t n, = total sample slze

Step (2) The sum of squaies between samples (BSS) may be computed

as

BSS = I(T"n,) - (cf)

Step (3) We calculate the total sum of squares (TSS) as

TSS = l y 2 - cf

Here, Zy9= sun1 of squares of all 'n'ind~vldual obsewatons In the

data

Step (41 i he sum of squares withn samples or error sum of squares

(ESS) may be caluclated as

ESS = TSS - BSS

Step (5) To test the significant dfference among the means of K samples,

we construct the following table known as ANOVA for one way

classifled data

ANOVA

Between groups

Error n-k

Total n-1 TSS

38

'Ate comOare the calculated value of F statlsttc wlth 11s crltlcal value for (k-

1 P-11) deQines of freedom at an appropriate level of slgnlflcancs and draw the

nference accordmgy

4 4 5 Statlstlcal estlmatlon of dncoms elastlclty. Income elastlclty of

evpendture s dsflned as the rato of Ihe proprotonate change n expenditure

lo the propoitonate change n Income Suppose Y = f(x) 1s the expend~ture

functlo~i where, Y denotes expend~ture and X denotes ncome

ivlatlielnalcally. the elast~city of expenditure wlth respect to Income 1s deflned

as

,, . d log x

The present study proposes expendtture functon as

y = a xQe'

Where. y - Expenditure

x = Income

E = Error varable

a and bare the parameters

The logarlthrnlc transformat~on of the above rnadel IS given by

log y = log a + b log x t E

This g~ves dlogy ~ h d log r

In other words, b glves a measure of Income elastlclty We wrlte the

logar~thm~c equatron as

where. Y = logy

X = log x

and A = log a

The least squares estinate of b is given by

Here, n =Number of years

Thus b gwes an sstlmale of income elast~clty with respect to expendllure

It can be interpreted that 1% increase or decrease in income will result

in b% ~ncrease or decrease In expenditure The significance of income elasticity

can be tested by using student'st-test statistic as employed in the case of CGR

4 5 Reference period Since 45 years is a fairly long period, a period of 10

years comlnencing from 1987, is cllosen as a perlod of study

4 6 Scope and llmltations The study has made use ofavailable data only

Tile core area ofthe study is restricted lo SVU as financial analysis needs to

be carried out at micro-level Hence, we could not consider a the

admin~strat~ve aspects of SVU The issues concerning sources and uses of

funds are primary taken up for study An attempt is made to examine these

on a general plane and to illustrate the ideas developed with the h a p of basic

data Hence, we propose to cons~der the study not only as presentatton of facts

about the finances of SVU but also to treat it as a study of economics of

university finances with speclfic reference to SVU

4 7 Chapter out l~ne The thesls IS organlsed Into seven chaplers The flrst

ci'apler is ntroductoiy ~n nature while the last one contans a summary of

f l ~ l c i~~ l ys and conclusions The middle flve chapters analyse the flnances of

SVU ~n tert?is o l specfic themes of study The core Issue, runnng through all

the ilve chapters, IS f~nanclal adnl~nistrat~on at instltutiolial lave The i~rst

chapler deals wlth the research deslgn and methodology of the study includng

revew of avalabe ilterature concelnng the theme of enquiry as discussed

earller The second chapter describes the profile and progress of SVU snce

its ~ncepton The fnancla admn~straton of SVU n terms of organ~sat~onal

structure, budgetlng, accountlng. aud~tlng etc, are d~scussed In the third

chapter The sources, growth, trends etc , In the Income of SVU are analysed

In the fourth chapter The fifth chapter evaluates the objects, pattern. magntude

and progress oiexpendture of SVU The unlt cost of educat~on, surplus, debts.

deposts, advances and Investments of SVU are provlded n the penultimate

chaptor Summary and conclusions era incorporated in the last chapter The

Issues for fullher resea~ch n future are also covered

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