Here is an essay on the ‘Finance Ministry in India’ for class 9, 10, 11 and 12. Find paragraphs, long and short essays on the ‘Finance Ministry in India’ especially written for school and college students.
Essay # 1. Origin of Finance Ministry:
The origin of the Finance Ministry in India goes back to the year 1810 when a separate Finance Department was created out of the Public Department.
But a separate Secretary for the Finance Department was appointed only in 1843. From 1810 to 1816 it remained under the charge of the Secretary of Public Department, from 1816 to 1830 under the Secretary of the Territorial Department, and from 1830 to 1843 under the Secretary of the General Department.
In 1879 the Finance Department was re-designated as the Department of Finance and Commerce which designation continued up to 1905 when it was renamed as the Department of Finance.
With the constitutional changes brought about by the Government of India Act, 1919, the Finance Department was organised into seven Branches, viz., General Finance, Revenue, Currency and Banking, Salaries and Allowances, Civil Accounts, Army Finance and Military Accounts.
The Auditor-General was assigned a statutory status. Though the Finance Department was given a measure of control over the Indian finances, yet the Secretary of State for India had full power to exercise control over the entire revenue and expenditure of the Government of India. He was assisted at the India Office by a full-fledged Finance Department.
The Haldane Committee (1918) has very well explained the pivotal position of the finance ministry vis-a-vis other state departments in the words, “The Department of Finance must necessarily have an exceptional position among all the State Departments. The service which it has to perform- that of supervising and controlling all operations of Government in so far as they affect the financial position… involves not only the direct administration of taxation and other branches of revenue but also the control of all forms of expenditure.”
The Government of India Act, 1935, did not relax the control of the Secretary of State over Indian financial matters. The Act also increased the powers of the provincial governments. The powers of the Finance Department were greatly restricted.
On the attainment of Independence, the office of the Secretary of State for India was abolished. In 1947 the Department of Finance was now designated as the Ministry of Finance. It was organised into three wings, viz., Expenditure, Economic Affairs and Revenue. In 1949 it was organised into two Departments of Revenue and Expenditure and of Economic Affairs.
In 1955 it was reorganized into four Departments:
(i) Department of Economic Affairs.
(ii) Department of Revenue;
(iii) Department of Expenditure;
(iv) Department of Company Law Administration.
In September, 1963, a new Department of Co-ordination was added to the Finance Ministry. In November, 1964, the Department of Company Affairs and Insurance was set up which took over the work relating to ‘Company Law Administration’. In January, 1966, the Department of Company Affairs and Insurance was abolished.
In June, 1967, the Department of Coordination was abolished. Now there remained only three Departments under the Ministry of Finance, viz., the Department of Revenue and Insurance, Department of Expenditure and the Department of Economic Affairs. In August, 1969, a Department of Banking was added in the Ministry of Finance.
Essay # 2. Functions of the Finance Ministry:
The Ministry of Finance is responsible for the following functions:
(i) The administration of the finances of the Central Government and dealing with financial matters affecting the country as a whole like inflation and recession.
(ii) Raising the necessary revenues for carrying on the administration and regulating the taxation and borrowing policies of the Government.
(iii) The administration of problems relating to banking and currency, and in consultation with the Ministries concerned arranging for the proper utilization of the country’s foreign exchange resources.
(iv) Controlling the entire expenditure of the Government in co-operation with the Administrative Ministries and departments concerned.
These functions of the Finance Ministry reveal that it is a very powerful organ of the Government of India. Hence its political head happens to be a senior minister in the government who is known for unimpeachable integrity and maintenance of financial meticulousness.
Essay # 3. Organisation of the Ministry of Finance:
The Ministry of Finance is under the charge of a Minister of Cabinet rank. He is assisted by two Ministers of State.
The Ministry of Finance at present is organised into the following three departments:
1. Department of Revenue:
This Department is responsible for all matters relating to Central Board of Revenue, Customs, Income Tax, Central Excise, Sales Tax, Insurance, Opium, and Stamp Duties on bills of exchange, cheques, promissory notes, bills of lading, letters of credit, policies of insurance, transfer of shares, debentures, proxies and receipts, and Foreign Exchange.
It also advises the Government on fiscal matters, reviews tax structure, examines fresh proposals of taxation, promotes legislation for the modification of tax laws and administers Gold Control regulations.
Through the tax laws and their administration the Department of Revenue strives to attain three objectives to build an atmosphere of mutual trust between the tax collector and the tax payer and to give incentives by suitable legislation in furtherance of socio-economic policies of the Government.
In respect of revenue matters, the Department is assisted by two statutory Boards viz., the Central Board of Direct Taxes, and the Central Board of Excise and Customs. The chairman of the Board holds ex-officio status of Additional Secretary and other members of ex- officio Joint Secretaries to the Government of India.
The Department has under it seven attached offices and a large number of subordinate offices.
The attached offices are: Department of Insurance, Shimla; Enforcement Directorate, New Delhi; Directorate of Inspection, New Delhi; Directorate of Inspection (Income Tax), New Delhi; Directorate of Inspection (Income Tax), Investigation Wing, New Delhi; Directorate of Inspection (Customs and Central Excise), New Delhi; Directorate of Intelligence, New Delhi.
The subordinate offices are: Offices of Collectors of Customs, Bombay, Calcutta, Madras, Visakhapatnam and Kandla; Offices of the Collectors of Central Excise, Bombay, Calcutta, Madras, Bangalore, New Delhi, Shillong, Hyderabad, Allahabad, Baroda, Patna, Poona, Nagpur, Cochin, Kanpur, Panjim and Pondicherry; Statistics and Intelligence Branch; Central Revenues Control Laboratory; Office of the Narcotics Commissioner.
The Department looks after all the affairs relating to Insurance and for this purpose the Life Insurance Corporation has been set up.
2. Department of Expenditure:
This Department is responsible for financial rules and regulations, delegation of financial powers, financial sanctions relating to all Ministries and offices of the Government of India, advice to Ministries and government undertakings on Cost Account matters, expenditure proposals relating to the Delhi Administration, Indian Audit and Accounts Department, Defence Accounts Department, Local Taxation, State Finance, Capital Budget, Planning and Development Finance.
The Department consists of following Divisions:
(a) Establishment Division.
(b) Civil Expenditure Division.
(c) Defence Division.
(d) Staff Inspection Unit
(e) Cost Accounts Wing.
(f) Plan Finance Division.
(a) Establishment Division:
Establishment Division is responsible mainly for the administration of the various financial rules and regulations including those relating to the conditions of service of the Central government employees, administrative matters relating to the Indian Audit and Accounts Department, financial work relating to the Department of the Ministry of Finance and administration of the Department of Expenditure.
The Head of this Division is also in-charge of the Staff-Inspection Unit.
(b) Civil Expenditure Division:
There are ten Divisions each headed by an Additional Secretary or a Joint Secretary.
In addition to rendering financial advice to the Ministries/Departments of the Government of India, officers of these Divisions also function as financial representatives of Government on Board of Directors of various public sector undertakings and on the governing bodies of autonomous organizations which receive substantial financial assistance from Government.
(c) Defence Division:
The Division is constituted with the Financial Adviser at the head assisted by four Additional Financial Advisers and a number of Deputy Financial Advisers attached to the various Principal Staff Officers of the Army, the Chief of Naval Staff, the Chief of the Air Staff and the Director General of Ordnance Factories.
This Division renders financial advice to the Defence Headquarters, the Defence Ministry and to the officers directly subordinate to the Ministry.
The Financial Adviser (Defence) is also a Member of the Board of the Border Roads Development. The Division is responsible for scrutiny, sanction and accounting of the expenditure of the Defence Ministry. The Financial Adviser is also responsible for the internal audit, correct accounting and compilation of the Defence receipts and expenditure through the Controller General of Defence Accounts.
(d) Staff Inspection Unit:
The function of the Staff Inspection Unit is to keep the staffing position in Ministries/Offices under the Government of India under constant review in accordance with pre-determined programmes of work measurement studies.
The Unit also undertakes ad hoc reviews, by special request, of Ministries/Offices not included in the programme as well as of the public sector undertakings. The other aspects of work study, such as procedures and methods simplification, etc., are the responsibility of the Department of Administrative Reforms under the Ministry of Home Affairs.
(e) Cost Accounts Wing:
It deals with all cost accounting work arising in the various departments. It also undertakes, on request, cost and economic studies and investigations into accounts of both private and public sector undertakings.
(f) Plan Finance Division:
It deals with State plans for economic development. It advises on proposals of states for investment in industrial enterprises, irrigation, power and flood control projects. It is also associated with the scrutiny of proposals of Central Ministries for large projects involving heavy capital outlays.
3. Department of Economic Affairs:
The Department of Economic Affairs of the Ministry of Finance, headed by a Secretary, is one of the most important Departments of the Ministry. It monitors the economic trends in the country and advises the Government on all matters pertaining to internal and external economic management including the working of commercial banks, investment regulations, external assistance to term-lending institutions.
It prepares the Government’s Budget, makes periodic assessments of foreign exchange needs and resources and takes necessary steps to mobilize and allocate resources, both internal and external, in keeping with the country’s Plans and development needs. The Department is also responsible for policies regarding currency, banking, financial corporations and foreign exchange, including private foreign investments.
Control over capital issues is also under the administrative charge of the Department. Recently, the work relating to the administration of Securities Contracts (Regulation) Act, 1956, and regulation of stock exchanges has been transferred to this Department.
The Department of Economic Affairs has the following Divisions:
(a) Budget Division.
(b) External Finance and Foreign Aid Division.
(c) Internal Finance Division.
(d) Economic Division.
(e) Administration Division.
(a) Budget Division:
This is one of the most important Divisions in whole of the Ministry of Finance. It prepares the Central Government’s Annual Budget (other than that for Railways) and Supplementary and Excess Grants for presentation to Parliament. It deals with questions of Public Debt-market loans, small savings schemes, the Compulsory Deposit Scheme and other investments in Government securities.
It also looks after the way and means position of the Central and State Governments and their market borrowings and administers the Contingency Fund of India and deals with the implementation of the recommendations of the Finance Commission and matters of audit and accounting.
The fixation of rates of interest on loans given by the Central Government, the administration of the Central Treasury Rules and the submission of reports of the Comptroller and Auditor-General to Parliament are also handled by the Division. The Division is in overall charge of the National Savings Organisation.
(b) External Finance and Foreign Aid Division:
This Division is concerned with all matters relating to foreign exchange including exchange control, foreign investments and economic, financial and technical assistance received by India or rendered by her to foreign countries. All proposals in regard to trade and payments agreements with foreign countries as well as broader questions of policy in regard to foreign trade are examined in this Division.
(c) Internal Finance Division:
This Division deals with all matters connected with currency and coinage, banking, industrial finance and control of capital issues. It is also responsible for the administration of Mints, Assay Offices, the Silver Refinery Project, the India Security Press, the Security Paper Mill Project, and the Kolar Gold Mining Undertakings.
(d) Economic Division:
The Economic Division advises the Department on questions of economic policy. It’s important functions include analysis of events of economic importance and research and study on economic problems. The Economic Survey, the Economic Classification of the Central Budget and the Pocket Book of Economic Information are prepared annually.
The Division also prepares briefs on economic matters for consultation with the International Bank for Reconstruction and Development and the International Monetary Fund and for the Indian Delegations to the United Nations General Assembly, the Economic and Social Council Economic Commission for Asia and Far East, Colombo Plan and other International Conferences.
The work of the Division is organized under five units:
(i) Internal Economics.
(ii) International Economics.
(iii) Public Finance and Planning.
(iv) Tax Research.
(i) Internal Economics Unit keeps under constant review developments in the money, capital and commodity markets. Trends in agricultural and industrial production, stocks, prices, controls, money supply, bank advances, etc. are reviewed periodically.
(ii) International Economics Unit reviews trends in balance of trade, foreign aid, foreign exchange resources and economic developments in other countries.
(iii) Public Finance and Planning Unit looks after the analysis and consolidation of Central and State Budgets, the reclassification of transactions of Government and their departmental and non-departmental undertakings, review of budgetary trends and assessment of resources for the Plan.
(iv) Tax Research Unit works in close collaboration with the Central Board of direct Taxes the Central Board of Excise and Customs, the Finance Department of State Governments, the Planning Commission, the Central Statistical Organisation and other Divisions of the Department.
(v) Briefing Unit prepares briefs and submits material on financial and economic questions relating to India’s participation in the United Nations and Allied Organizations.
(e) Administration Division:
This Division looks after the administrative matters of the Department. The work relating to the Administration of grants for the Indian Institute of public Administration, the National Council for Applied Economic Research and the Indian Economic Association is also looked after by this Division.
In the field the work relating to expenditure is carried by a regular hierarchy of administrative officer called drawing disbursing officer and controlling officers. Each of them invested with competence to sanction expenditure up to a prescribe limit specified by financial rules.
In 1985 a new agency the Economics Bureau was established under charge of a direct general who is of the rank of additional secretary to the Government of India. The Bureau coordinates and strengthens the activities of intelligence, investigation and enforcement agencies’ dealing with economic offences and the enforcement of economic laws.