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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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