SOURCES AND USES OF

INCOME AND EXPENDITURE

Introduotion

In the last Chapter, the evolution of financial

ad8lnistrati ve syste8 and its structure were traced. the

ortanisational structure for financial ad8inlstration in Central

Universities with spcial reference to PU was also discussed.

Yith this backtround, the structure of income and expenditure of

PU is rnalysed in this Chapter. The sources of funds and its

uses are studied. As university is a service sector, the

receipts and payments are prwsented yearvise and accountvise to

trace their lrowth trend. As a new University, plan funds and its

appllcatlon for the first five year priod is discussed first.

Then revenue part of th8 receipts and payments is rnalysed under

the incoae and expenditure analysis under two classifiutions - sourcwwise and purposeuise. the i8plications lor ti~ncial

ad8lnirtratlon are incorporated in the relevant portions alont

With the J M / ~ S ~ S and discussions.

4.1 STRUCTURE AN D SOURCES OF FUNDS

Structure of Recurring Income

University being a non-trading organisation devoted to

the cause of higher education and research, provision of adequate

finance is the first and foremost factor influencing its

effectiveness. Though, the University is a corporate

organisation by its administrative procedures, mostly it depends

on funds from Government and its own resources. Normally

Universities do not raise their own capital through issue of

stocks, shares or debentures and hence they are left with no

flexibility in raising and controlling funds mix except certain

University receipts like fees, publication, income from land and

building etc. There is no need for portfolio management or for

application of the technique of leverage.

Less funds, more problems

If the University could get adequate funds it could go

ahead with effective fulfilment of its planned objectives but it

is never the case. As the funds are scarce, it has to plan FU

strategies carefully to optimise the use of available funds.

Financial crisis is the order of the day in almost all

Universities. Inadequate, untimely and inefficient financing

system adversely affects the performance of the University

administration.and hampers the development and academic growth of 1

the University. There are many studies on funding system of

1. Y.S. Kiranmayi, 0~.Cit., p.279.

Universities and the consensus is that the funding system is not

co~ensurate with the needs of Universities in fulfilling the

objective of higher education as a lever of development through

advancement and updating of learning and research.

Punds Position in Central Universities

As far as Central Universities are concerned, the

entire funds - both for maintenance and development are provided

by the UGC and if UCC could provide funds adequately and in time

the major problem of raising finance will be sorted out. The

othtr part of FM will be, in respect of improting the internal

sources of funds. External source is the major sector and a

study by the A X u concluded that the academic and non-academic

programmes were adversely affected to a significant degree by 1

lnefficlent and inadequate functioning of the financing system.

Sources of Income

The sources of income for Central Universities are as

indicated below:

Non-academic

1. J. Veera Raghrvrn,Bigher Education in the Eighties, Lancer international, New Delhi, 1985, p.206.

Under 'other agencies' State Government, DST, ICSSR,

ICHR, NBHY, DOEn, NIEPA and other Institutions provide funds for

specific research projects and studies.

Sourcewiee Structure of Recurring I n w m e

The following Table indicating the structure of recurring

income clearly shows that 90 per cent of the recurring income

for Central Universities was from the UGC.

TABLE 4.1

SOURCEWISE STRUCTURE OF RECURRING INCOME IN CENTRAL UNIVERSITIES, 1985-86

( Percentage) ................................................................. S1. University Central UGC State fees Endow- Other No. Govt . Govt . ments sources ................................................................. 1. AUU

2. BHU

3. DU

4. HU

5. JNU

6. NEBU

7. VB

8. YEAH

9. cv

................................................................. Note: Figures in bracket8 pertain to 1975-76. Horizontal total

is 100 per cent in each case

Source: h m Reddg, Paper presented in National Convention of Univertitg Administrators, Pondicherry, 1992.

Since PU and IGNOU were commissioned only in 1985-86,

the figures for 1985-86 were not included for reasons of

comparability.

Next to UCC, the source of income was "fees' which was

10.6 per cent in 1975-76 and 8.9 per cent in 1985-86. There was

decline in fee income as compared to the total, because fees can

not be raised to match the actual expenditure due to political

reasons.

The percentage of endowments had gone down from 1.2 per

cent in 1975-76 to 0.3 per cent in 1985-86. The other sources

had also gone down from 4.1 per cent to 3.6 per cent.

Variance

Another feature to be noted in this analysis is that

the coefficient of variation was only 10.3 in 1975-76 and 7.7 in

1985-86 in respect of income from UCC. This implies there was

not much variation among the Universities. But when we consider

CV for fees, endowments and other sources, the CV's were very

high, more than 100 per cent except the CV for fees in 1975-76

which was 59.4.

There was no uniformity in respect of income from fees,

endowment and other sources. It varied much from University to

University.

A similar percentage composition is worked out in

respect of PU for 1990-91. These percentages &re compared with

the rvera#e proentager for 1985-86.

TABLE 4.2

SOURCES OF IlCOYE CENTRAL UNIVERSITIES (1985-86) AND PU (1990-91)

Percentage ................................................................. Detail Central UGC State Fees 8 Endow- Others Total

Gov t . Govt. other ments income

Central - 89.5 0.1 8.9 0.7 3.6 100.0 Universities Mean for 1985-86

Pondicherry 0.9 83.8 - 11.5 0.8 3.0 100.0 University, 1990-91 ................................................................. Source: Table 4.1 for Mean of Central Universities and Annual

Accounts of 1990-91 for PU.

The percentages are nearly equal except for slight

variation in UCC' and fees' percentages. In 1990-91, University

receipts was higher for PU.

Salaries and Other Charges

The componentwise expenditure of different types of

universities are given in Table 4.3.

In University education, salaries take half or more

than half of the total expenditure. Other charges take another

half or less as rhown in the table.

In 1985-86, the percentage of total salaries for Central

univerritles war around 50 per cent whereas it was 56 per cent

for Deemed OnIversitier and 59.4 per cent for State Universities.

t~nm OT alnrrln a r a t m lm-n u 1m-a w, *#l

( h r a t y r i __~~.~.~---------..---.-.--..--..--.~.-*.--.-----------.-~-.-..~-----.-.-----.--~-.-~-~~-*-~~~-~--~-~-~-~~.--- $1, l t n ot bpmoltwe Cntrrl I b ~ W l l t l U hYl&rtv Dmd Unlvwrllln Stalr Unfmsltlu Yo. U I l r n t l t ~ ~

1~15-n I=-a LOR)")I IBB-n I=-s 18n-76 ISM ...-...-.-.--.-..-.*.-............---.--.-------.------.-..--------------..-------...+----.-.-----------------

I. Srlatin. Tuclly Suit 30.2 12.4 26. I S.7 31.4 3 . 9 21.0

...-...--...-_----_-..~~~.~....~~.~-~~~.*~-~-~.~~---*-~--..-------.--------.-.-.-----------.*.-*------- Sum Ill lu Wty, h)N pnaW 11 lh h t l m l Cmr(lr o i Ualnrrlty Ulirlltnt8n. )a(lckq.

h y 1m.

In a way, this implies that Central Universities are

comparrtively better equipped with other facilities.

Since PO was established only in 1985-86 in the middle

of the year, a period of 5 years is allowed for stabilization and

the figures for 1990-91 are taken for comparing the pattern. The

percentage of 'Non-teaching staff salaries' for PU was less than

the percentage of 'Teaching staff salaries'. Peculiarly in State

Universities in 1985-86, the percentage of Non-teaching staff

salaries was higher.

If similar studies are carried out afresh, it would

enable to analyse and find out the UniversityJthe Department

which spend more on salaries or non-teaching staff or other

charges. Extreme expend~ture on any one of the factors would

affect the other componenrs and lead to wastage of funds of the

department. Such detailed studies are carried out in respect of

all departments of PU in chapter seven.

Need for Uniform Accounting

The annual accounts of Central Universities provide

information on sources of funds and application of funds under

various schemes and projects. An analysis of the annual accounts

Of some of the Central Universities reveals that there is no

uniformity in presenting the annual accounts. This makes it very

difficult to make inter-university comparison. Before suggesting

any reform under PM in Central Universities, it is the

Prerequirite to indicate significant heads and modes of

presenting annual accounts such tbat inter-university comparison

of performance within a broad framework is possible. Central

Universities, having been established with specific objectives,

it may not be possible to insist on rigid form of annual

accounts but still there is scope to fix the broad heads and the

items to be included under such heads. For example, under

academic fees there are various types of fees apart from tuition

fees which could be included or omitted depending upon the

decision of the Finance Officer of a particular University e.g.

admission fee, application fee, recognition fee, matriculation

fee. So also Examination fees may or may not include indirect

fees collected by the Controller of Examinations - Mark sheet

fees, condonation fees.

Normally Receipts and Payments Accounts are given for

the four major heads (i) Maintenance or Non-plan (ii) Plan or

development (iii) Earmarked Special Fund (ESP) and (iv) Debt,

Deposits and Advances (DDA) accounts.

Income and expenditure accounts are rendered for the

first tbree accounts by HU and the first two only by PU. With

this background the sources of funds for PU are analysed now.

4.2 GROlTB OF RECEIPTS AND PAYYENTS

Growth of 8ecriptr

An raalyris of the total receipts and payments reveals the

total financial trrneaction level of the PU.

TABLE 4.4

PU RECEIPTS FROM 1985-86 TO 1990-91

(Rupees in lams) .................................................................. S1. Details 1985-86 1986-87 1987-88 1988-89 1989-90 1990-93 NO. .................................................................. 1. Opening - 23.05 16.05 93.05 96.51 54.12

Balance (9.71) (2.42) (16.50) (17.37) (9.27)

2. Part I --- --- --- --- --- 312.57 Non-Plan (57.58)

3. Part I1 36.10 208.52 624.27 419.37 396.28 51.96 Plan (99.86) (87.88) (94.07) (74.38) (71.34) (9.573

4. Part I 1 1 --- 0.30 6.74 16.01 26.83 28.09 ESF (0.13) (1.02) (2.98) (4.83) (5.17;

5. Part I V 0.05 5.41 16.55 34.62 35.86 96.15 DDA (0.14) (2.28) (2.49) (6.14) (6.46) (17.71) .................................................... Total 36.15 237.28 663.61 563.80 555.48 542.89

(100) (100) (100) (100) (100) (100) .................................................................. Source: Computed from Annual Accounts of PU. Percentages are

given in brackets.

Since PU was established on 16th October 1985, during

:he Seventh plan perlod, there is no head under non-plan account

upto 1989-90. However the receipts from University and

maintenance grant part of the plan accounts constitute the fund

which is normally considered by its function as "non-plan

account". The growth of plan funds was at its peak in 1987-88

which was the middle year of the VII plan period. In 1990-91

since there was no commencement of the VIII plan, advance papment

from the proposed vIII plan fund was provided (Rs. 51.96 lakbs).

The steady growth of earmarked special fund and debts m d

deporits accounts could be clearly discerned. The growth of

total receipts WAS influenced by the contribution of plan funds

which was in it8 peak in 1987-88.

The growth trend of plan funds shows the efforts of the

University in making the best use of the plan (development)

funds. In fact, it achieved 96.7 per cent of utilisation under

seventh plan and PU was one the top Universities which made best

use of funds.

Growth of Payments

A similar growth trend is discernible from the

following table showing 'payments' over the period from 1985-86

to 1990-91.

TABLE 4.5

PU PAYMENTS PROY 1985-86 TO 1990-91

(Rupees in Lakhs) ................................................................. ~ . N O . Details 1985-86 86-87 87-88 88-89 89-90 90-91

1. Part I - - - - - 276.27 Non-Plan - - - - - (50.89)

2. Part I1 12.93 214.98 549.72 430.10 495.01 68.56 Plan (35.77) (90.60) (82.83) (76.29) (83.71)(12.63)

3. Part 111 - 0.30 6.28 11.71 24.14 27.65 ESP - (0.13) (0.95) (2.08) (4.35) (5.09)

4. Part IV 15.17 19.95 89.59 25.48 23.73 80.98 DDA (41.96) (8.41) (13.50) (4.52) (4.27)(14.92)

5. Closing 8.05 2.05 18.02 96.51 42.60 89.44 Balance (22.27) (0.86) (2.72) (17.11) (7.67)(16.47) ................................................. Total 36.15 237.28 663.61 c63.80 555.48 542.89

(100) (100) (100) (100) (100) (100) ............................................................. 6ourcr: Annual Accounts of PU.

The composition of receipts and payments is vividly

depicted as spectra in Figure 2. It is shown separately for

receipt8 and payments. The spectra for HU are also shown for

comprrison.

4.3 DEPELOWENT INCOME AND EXPENDITURE

Seventh Plan Funds

As far as Central Universities are concerned the major

source of income is UGC. The funds received from other agencies

far research projects as earmarked special funds were

comparatively less. Further, during VII Plan period, being the

first plan for PU, there ras no separate account as non-plan

account upto 31-3-1990. Since the University was started in the

middle of the farst year of the VII Plan period viz. October

1985, the University had only 4 112 years at its disposal under

Seventh plan. In vier of the fact that there was no non-plan

account and plan account was the major and significant source,

analysis of income and expenditure under plan funds as otherwise

called as developmental funds is made first here.

Table 4.6 provides the details of Seventh Plan receipts and

expenditure as on 31-3-1990.

The abstract of the Development Expenditure is given below.

Expenditure General YBA Total Per cent

Crpital 738.34 140.57 878.91 56.93

Revenue 637.59 27.10 664.69 43.07

Total 1375.93 167.67 1543.60 100.00

TABLE 4.6

SEVENTH P u n RECEIPTS AND EXPENDITURE OF DEVELOPMENT FURDS PO, 1985-86 to 1989-90

(Rs. in lakhs) ........................................................... S1. Details Amount Amount Amount No. sanctioned received spent ...........................................................

I. Sciences & Humanities Education (General)

A. Capital Expenditure

Library Building Administrative Complex Hostel Staff Quarters Road Works,Water supply Electricity.Civi1 works Compound Wall Equi pmen t Library Books

B. Revenue Expenditure

10. Scholarships 10.00 4.00 7.21 * 11. Maintenance Expenditure 590.59 556.00 630.38

Staff Salary and others ........................................................... Total I 1331.66 1282.95 1375.93 ........................................................... 11. Engineering and Technology Education (YBA)

A. Capital

12. School Building 57.16 57.09 55.48 13. Hostel 41.36 41.15 39.53 14. Quarters 35.04 34.93 34.93 15. Equipment including Bus 5.63 5.63 5.63

B . Revenue 16. Library Books 5.00 5.00 5.00 17. Staff Salary 24.10 22.50 24.10 18. Other$ 3.00 2.86 3.00 ...........................................................

Total 11 171.29 169.16 167.67 ........................................................... Source: PU, The First Five Years 1985-90

*Excess spent from University receipts.

During Sevrntb Plan, the UGC sanctioned Rs. 1673.04

lakhs which comprised of Rs. 1331.66 lakhs under Science and

Rumanities Education, Rs. 171.29 lakhs under Engineering and

Technology Education and Rs.170.09 lakhs under outside the plan

allocation. In addition, the Universi-ty received Rs. 132.40 lakhs

as receipt from source like fees. Against the sanctioned amount,

the University received Rs. 1596.38 lakhs including Rs. 144.27

lakhs outside plan and spent Rs. 1654.29 lakhs including Rs.

110.69 lakhs from outside plan funds as on 31-3-1990 (1 1

Development Expenditure

During the seventh plan period the expenditure on

capital items was Rs.878.91 lakhs (56.93 per cent) and 43 per

cent was necessarily spent on Revenue items. But, for a new

University, the requirement under capital development expenditure

for buildings, other infrastructure like furniture, equipment and

books is enormous.

The revenue expenditure was used among others, for

creation of 125 faculty positions appointed in 27 units of

Departments/Schools/Centres apart from two Directorates. The

details of yearwise break-up of Revenue expenditure are analysed

separately in the ensuing section. The pattern of development

expenditure clearly brings forth the following points.

(a) Adequate buildings for academic departments was not provided sitbin the funds available for buildings and

1. Pondicberry University, the first five years 1985-90, Report 1990, pp. 2-4.

other assets like equipment and books, since a chunk of allocation was used for administrative Complex, Library and campus development.

(b) The revenue expenditure takes away 45 per cent of the funds and hence neither development of buildings and infrastructure nor provision of other facilities was attended to.

In order to augment the plan allocation the University

also spent a major part of its internal resources (of Rs.132.40)

on capital expenditure as follows:

(Rs. in lakhs)

Academic Complex 55.00 Estate Office 5.00 Equipment 5.59 Books 4.65 --------

Total 70.24 -------- Normally when new Universities are established, additional

grants on one-time basis need to be provided to meet the initial

capital expenditure. Andhra University was given Rs. 27 lakhs 1

and Osmania University was given Rupees three crores. But PU

was not accorded any such starter-grant or foundation grant and

hence it is facing a lot of difficulties in its infant stage like

a child suffering from mal-nutrition.

4.4 GROWTH OF INCOME AND EXPENDITURE, SOURCEWISE ANALYSIS

The total income of the University is classified under two

broad categories - Revenue income to be spent on items of

kecurrine expenditure and Capital income to be spent on items of

Capital expenditure. It is also possible to classify income, as

current income and developmental income, which means funds

provided for both revenue and capital expenditure under plan

schemes as analysed in the previous section. Current income is

the fund available for maintenance of the existing departments

and administration whereas development income is available for

establishing new departments new posts and new capital

expenditure. Part I1 of Account, takes care of Developmental

income and expenditure aspects. It serves the purpose of

watching the progress of developmental expenditure. But, for all

practical computations of income and expenditure, the

classification of revenue and capital expenditure is necessary,

as current expenditure is giving a truncated mixed picture,

though it serves one of the purposes. Hence income and

expendlture are analysea as revenue and capital items.

Revenue and Capital Income

Table 4.7 provides the growth of total income. It also

analyses the income into two broad categories - Revenue and

Capital .

Revenue income was steadily increasing except in 1988-

89 which might be due to the fact that the income upto 1987-88,

was nearly three times that of the previous year and in 1987-88 1

there was a sum of Rs.93.05 lakhs remaining over expenditure

and naturally the UGC restricted its payment in 88-89.

1. Income and Expenditure statement of PU for 1987-88, p.11.

TABLE 4.7

TOTAL INCOME OF PU,1985-86 TO 1990-91

(Rs. in lakhs) .................................................................... S1. Details 1985-86 1986-87 1987-88 1988-89 1989-90 1990-91 NO. ---------------------------------------*----------------------------

1. Revenue Income 27.35 76.88 223.23 195.80 286.87 347.15 (75.76) (32.67) (34.13) (42.88) (67.10) (87.65)

2. Annual Growth - 181.09 190.36 -12.29 46.51 21.01 Rate(per cent)

3. Capital Income 8.75 155.00 427.25 259.27 137.65 47.23 (24.24) (65.87) (65.333 (56.78) (32.20) (11.93)

4 . Annual Growth - 1671.43 175.65 -39.32 -46.91 -65.69 Rate(per cent)

5. Endowments - 3.45 3.50 1.54 3.00 1.67 (1.46) (0.51j (0.34) (0.70) (0.42)

6. Annual Growth - - 1.45 -56.00 94.81 -44.33 Rate(per cent)

7. Total Income 36.10 235.33 653.98 456.61 427.52 396.05 (100, (100) (100) (100) (100) (100)

8. Annual Growth - 551.88 177.90 -30.18 -6.45 -5.02 Rate(per cent)

................................................................... Note: Figures in brackets indicate percentage to Total Income

in row seven

Source: Annual Accounts and Financial Estimates of PU.

The annual growth rate was negative for 1988-89. In

fact in 88-89, the University spent Rs.18.72 lakhs over the total

income including the balance of the previous year.

In thr.case of Capital income, after the peak year of

1987-88, the income war steadily decreasing indicating that the

Univerrity utilired optimally the funds provided for capital

expenditure. Hence the annual growth rates were negative after

1888-88. There war no discernible trend in respect of

end0~mentP.

Internal and External Sources

The Revenue income can be further classified into two

major categories - internal source and external source, Table 4.5 gives the break-up

TABLE 4.8

REVENUE INCOME OP PU, INTERNAL AND EXTERNAL SOURCES 1986-87 TO 1990-91

(Rs.in lakhs)

S 1 . Details 1985-86 1986-87 1987-88 1988-89 1989-90 1990-91 NO. ................................................................. 1. Academic 0.10 12.38 19.91 22.47 26.45 33.34

Income (0.37) (16.10) (8.92) (11.48) (9.22) (9.61)

2. Non- - 4.58 13.84 16.93 14.32 11.71 Academic - (5.96) (6.20) (8.64) (4.99) (3.37)

3. Total 0.10 16.96 33.75 39.40 40.77 45.05 Internal (0.37) (22.06) (15.12) (20.12) (14.40) (12.98)

4. External 27.25 59.92 181.46 156.40 246.10 302.10 (99.63) (77.94) (84.88) (79.88) (85.79) (87.02)

5. Total 27.35 76.88 223.23 195.80 286.87 347.15 Income (loo) (100) (100) (100) (100) (100 .................................................................

Note: Pigures in brackets show the percentage to the total Source: Computed from Annual Accounts of PU 1985-86 to 1990-91.

Both incomes - internal as well as external are increasing

over the pertod but the percentage of internal income to the

total revenue income is ranging from 12.98 to 22.06 per cent

leaving the initial unsettled year of 1985-86. Academic income

was higher than non-academic income as revealed by percentages of

Academic income and non-academic income.

Academic and Non-Academic Income

The components of academic and non-academic income can

be further analysed as follows. Table 4.9 gives the break-up of

qcademic fees.

TABLE 4.9

COMPONENTS OF ACADEMIC INCOME,PU 1986-87 TO 1990-91

(Rs. in lakhs) .................................................................. S1. Detalls 1985-86 1986-87 1987-88 1988-89 1989-90 1990-91 NO.

1. Tuition 0.10 0.46 2.40 2.87 3.33 3.24 fees (100) (3.72) (12.05) (12.77) (12.59) (9.72)

2. Examination - 3.49 9.11 13.61 15.54 19.40 fees - (28.19) (45.76) (60.57) (58.75) (58.19)

3. Affiliation - 3.79 0.75 5.99 0.13 0.03 fees - (30.61) (3.77) (26.66) (0.49) (0.09)

4. Other - 4.64 7.65 - - 10.67 fees - (37.48) (38.42) - - (32.00)

5. Total 0.10 12.38 19.91 22.47 26.45 33.34 (100) (100) (100) (100) (100) (100) ..................................................................

Source: Annexures to Income and Expenditure Statements.

Slow and steady increase in tuition fees was in

Consonance with the steady increase in intake of students in

the University by increasing the departments and courses over the

Period. The increase in examination fees was also indicative of

thir whereas its growth trend and absolute values are higher than

the tuition fees. Another point to be noted here is that a major

portion of examination fees were collected from students in

affiliated institutions. An analysis of the affiliation fees

shore that it was highest in the beginning and dwindled to

Rs.0.03 lakhs in 90-91, because, as a new University most of the

existing institutions were affiliated in 1988-89 itself.

Fee Income

Tuition and examination fees are a potential source

of augmenting internal resources. A national level study of the

deficiency of the fees may help to develop a consensus.

Tuition fees could be increased progressively from lower levels

where freshers may not resist much.

The expenditure on examination is increasing more than

~ t s Income as revealed by the UGC's theme paper of vice-

chancellors (1992):

CENTRAL UNIVERSITIES EXAY.FEE INCOME AND EXPEKDITURE

University

AM U

BHU

DU

HU

JNU

REHU

VB

In rerpoct of PU also,

Exam. fee income Expenditure (Rs. in lakhs)

9.00 48.00

11.00 39.00

134.00 167.00

1.00 5.00

0.13 6.24

18.00 22.00

0.70 6.18

the expenditure was increasing over years.

Examination Expenditure (Be. in lakhe)

Year Pees received Expenditure

Non-Academic Income

There are various sources of collecting non-academic

income, the major sources being rent on staff quarters and

hostels, income from land and usufructs, sale of books and other

forms. Interest is also a major source and by planning optimally

for investment much income by ray of interest could be gained.

Table 4.10 gives the components of non-academic income.

TABLE 4.10

NON-ACADEMIC INCOME, PO, 1985-86 TO 1990-91

(Rs. in lakhs)

S1. Details 1986-87 1987-88 1988-89 1989-90 1990-91 No.

1. Interest on 4.13 11.50 8.46 7.49 1.45 investments (90.17) (83.09) (49.97) (52.30) (12.38)

2. Staff quarters - - - - 0.58 (4.95)

3. Hostels - 0.23 0.63 0.77 1.13 - (1.66) (3.72) (5.38) (9.65) 4. Publication & 0.33 0.26 0.68 0.56 1.03

sale of forms (7.21) (1.88) (4.02) (3.91) (8.80) 5. Leare of land and - 0.27 0.90 0.56 3.67

rale of usufructs - (1.95) (5.32) (3.91) (31.34) 6. Others 0.12 1.58 6.26 4.94 3.85

(2.62) (11.42) (36.98) (34.50) (32.88) ............................................................... Total. 4.58 13.84 16.93 14.32 11.71

(100) (100) (100) (100) (100) ............................................................... Note: Figurer in brackets indicate percentage to the total.

1985-86:Ril 8ouroe : Annexures of Annual Accounts. *

. I

100

There is ample

a11 minor heads. Interest on investment was highest on the last

gear of VII Plan period. Once the funds were spent, the interest

earned came down to Rs.1.45 lakhs. 3' ; f s1IPb 9 5 4 Staff Quarters and Hostels

N AT

Staff quarters was completed only by 1990-91 and in all

other years the income vas nil. By investing plan funds on

adequate number of quarters, teachers and staff could have the

housing facility with in the campus which is conducive for

Research Work apart from augmenting rental income. This is alsc,

the case with hostels. Such constructions have double

advantages. Further to fulfil the objectives of Central

Universities, hostels and quarters are essential.

Publication

By increasing the potential for publications much

income could be gained. Efforts should be taken to bring out

Research publications and other popular publications of the

University if necessary by serting up a modern University press.

Measures to improve income from land

The University is establishedina sprawling,fertile land

of 780 acres and vast portion of the land remains unexplored and

unused. BY planting, trees, which could yield fruits and other

Cash benefits, the income could be increased in the long run.

The existing trees should be properly maintained to give better

pieldr. viable projects could be planned with the aid of

commercial Banks and implemented to reap more income. ~f

necessary co-operative farming may also be attempted if the state

co-operative department could come forward with subsidies and

aids. This is one of the fertile areas of increasing resources

for the University, provided all prsrautions are taken while

chalking out the projects. Even otherwise courses which could

make use of the land may also be formulated and introduced so

that student population could be involved in making the land a

source of income.

Regular camps by NSS Volunteers for planting trees may

fetch better rewards in the long run. Orchards, flower garden

and other gainful scheme could be implemented taking care to

employ labourers on purely contract basis with adequate

incentives based on production.

Percentage Analysis of Revenue Income

Now an analysis of the percentage of various components

which go into the making of the Revenue income of the University

is made in Table 4.11 which indicates the relative importance

of the individual factors.

It is inferred from the table that the major source of

Revenue income was the maintenance grant provided by the UGC

77.94 to 99.63 per cent. Next comes, the income from academic

rctivitieu which could be increase only when the rates of fees

are raised. When rtaff quarters and hostels are constructed to

rccommodate more staff md rtudents, a full-fledged Publication

TABLE 4.11

STRUCTURE OF REVENUE INCOME OF PU, 1985-86 t o 1990-91

(Rs. i n l akhs ) ...................................................................... ~ . N O . De ta i l s 1985-86 1986-87 1987-88 1988-89 1989-90 1990-91 ......................................................................

2. Others - 0.30 3.78 10.78 18.35 15.36 - - (1.69) (5.50) (6 .40) (4.42)

3. Tota l ex t e rna l 27.25 59.92 189.48 156.40 246.10 302.10 (99.63) (77.94) (84.88) (89.87) (85.79) (87.02)

4. Tui t ion f ee s - 0.46 2.40 2.87 3.33 3.24 - (0.60) (1.08) (1.47) (1.16) (0.93)

5 . Exam. f ee s - 3.49 9.11 13.61 15.54 19.40 (4.54) (4.08) (6.95) (5.42) (5.59)

6. Other f e e s 0.10 8.43 8.40 5.99 7.58 10.70 (0 .27) (10.96) (3 .76) (3.06) (2.64) (3.08)

7 . I n t e r e s t 4.13 11.50 8.46 7.49 1.45 (5 .37) (5 .15) (4.32) (2 .61) (0.42)

8 . Staff qua r t e r s - - - - 0.58 - - - - (0.17)

9 . Hostel r en t - 0.23 0.63 0.77 1.13 - (0.10) (0.32) (0.27) (0.33)

1 0 . Land and 0.27 0.90 0.56 3.67 Usufructs - - (0 .12) (0.46) (0 .20) (1.06)

11. Publ ica t ions - 0.33 0.26 0.68 0.56 1.03 - (0 .43) (0.12) (0.35) (0.20) (0.30)

1 2 . Others - 0.12 1.44 6.26 4.94 3.85 - (0 .16) (0.65) (3.20) (1.72) (3.37)

. . --------___________--------------------~---------------------------- Source: Annual r e p o r t s , Annual Accounts and Financia l Estimate6

of PU.

unit is established to bring out the outcomes of research, and

sale of publications is boosted, the non-academic income may

increase. The interest was fluctuating very much over years

because it depended on two factors (1) availability of funds (2)

management of funds in better investment modes and periods.

Internal Income

The mean fees and other income of Central Universities

was less (8.9 per cent) than that of PU. Further, the amounts of

the internal income are computed for HU from its annual accounts

and are compared from 1987-88 to 1990-91:

INTERNAL INCOME OF PU AND HU

Year Rs . In Lakhs Per cent PU BU PU KU

Both in absolute value and percentage terms PO'S

internal income is higher than that of EU. PU is a new

university established 11 years after BU. Hence, the hypothesis

A 3b: the percentage of internal income is less in the case of a

new university, is rejected.

Income composition of Universisties in USA

The income compoeition of Universities varies between

public and private institutions. The percentage composition of

various rources of current fund income are given in Table 4.12.

TABLE 4.12

PERCENTAGE COYPOSITIOU OF CURRENT FUND INCOME UNIVERSITIES OF USA. 1985-86

(Per cent) ........................................................... Sl. Source Public Private No. Institution Institution .............................. ................................. 1. Tuition fees 14 38 2. Federal Government 11 17 3. States 8 local Government 48 3 4. Private Sources 4 15 5. Sales and other seminars 20 23 6. Other Sources 3 4 .................................................................

Total 100 100

Source: S.P. Gupta, American Higher Education System' University News, March, 25, AIU, New Delhi 1991.

The tuition fees cover 38 per cent of the income in

respect of private Universities. In both private and public

Universities, sales and other seminars contribute a substantial

per cent nearly one-fifth to one fourth . Indian Universities

may also endeavour to improve the income through the source by

bringing out quality publications as well as organising need

based seminarsJsymposia.

Revenue Expenditure

Maintenance expenditure is the life force of the

University in keeping it active and alive whereas the

development expenditure is mostly of capital nature except for

the recurring expenditure on staff and other additional inputs

for new departments on expansion schemes.

An in-depth analysis of various revenue expenditure

itear of a University is carried out periodically it would reveal

where it i s heavy and what managerial decisions can be taken to

improve efficiency by reducing wastage in education expenditure.

The Growth Pattern of revenue expenditure of PU is

given in table 4.13.

TABLE 4.13

CROlTR PATTERN OF REVENUE EXPENDITURE PU, 1985-86 to 1990-91

(Rs. in lakhs) ................................................................. Sl. Details 1986-87 1987-88 1988-89 1989-90 1990-91 No. .................................................................

2. Academic 5.83 52.40 93.74 123.79 142.25 Departments (12.61) (34.78) (45.68) (46.66) (42.33)

3. Examination 2.41 11.13 20.10 28.43 31.36 (5.21) (7.39) (6.67) (10.72) (9.33)

4. Library 0.65 1.91 4.51 5.80 22.41 (1.47) (1.27) (2.17) (2.19) (6.67)

5. Hostel - - 1.47 1.20 4.73 - - (0.71) (0.45) (1.41)

6. Fellowships - 4.38 7.14 15.97 16.57 - (2.97) (3.43) (5.94) (4.93)

7. Publications - - - - 0.66 - - - - (0.20)

8. Services Bus - - - 2.09 6.95 Dispensary - - - (0.78) (2.07)

9. Other Divisions 0.92 4.00 8.70 11.38 22.16 (1.99) (2.66) (4.18) (4.29) (6.60)

10. Provident Fund - 0.80 - 1.48 0.40 - (0.53) - (0.56) (0.12)

11. Mi8cellaneous - - 17.21 13.72 - - - (8.28) (5.17) - ................................................................. 12. Total 46.24 150.63 207.94 265.29 335.98

(100) (100) (100) (100) (100) ................................................................. Note: In 1985-86, Rs.1.38 lakhs,spent entirely on Administration

Figurer in brackets indicate the percentage to the total. S0urce:Annu.l Accounts and Financial Estimates 1985-86 to 1990-91.

The composition of revenue income and expenditure of PU

for 1990-81 is illustrated in Figure 3.

The major heads of maintenance expenditure are:

Administration consisting of the Vice-Chancellor's office,

Registrar's office and Finance Depar+mentls office. Apart from

salary and allowances to these staff, the overhead expenses like

TA and DA, electricity charges, rater charges, printing,

stationery, rent, audit fee, legal expenses rates and taxes,

repairs, maintenance of staff cars and vehicles, hospitality

expenditure are all booked under this head.

The other major expenditure is on Academic

departments. Salary to faculty members, non-teaching staff,

Laboratory expense, field work, teachers participation in

seminars, teaching aids, rent for the departmental building etc.

are booked under this bead.

Examination expenditure covers all expenses connected

with conduct of examination, remuneration to faculty and others,

stationery, printing of question paper, answer paper,

confidential envelopes, forms and registers. Other Divisions

include the horticulture department, estate maintenance and

engineering wing.

A percentage analysis indicates that the

administrative expenditure in PU in 1990-91 was 26.34 per cent

and that on academic departments was 42.33 per cent nearly. It

is a welcome feature. A detailed analysis of departmentwise

academic expenditure is made in Chapter VII.

1 In a study on Karnataka University, by D.Y

Nanjundrppa, it was found that the expenditure pattern was

varying over years 1949-50 to 1972-73. The expenditure on

administration varied from 12.7 per cent to 47.6 per cent.

Whereas for PU this was 26.34 per cent in 1990-91. The academic

expenditure for Karnataka University ranged from 15.6 to

33.0 per cent and it was 42.33 per cent for 1990-91 for PU. The

expenditure on examination was from 19.8 per cent to 27.4 per

cent whereas it was only 9.33 per cent in 1990-91 for PU. The

expenditure on Library was from 4.1 to 5.6 per cent, for

Karnataka University and it was 6.67 per cent in 1990-91 for PU.

The expenditure on publications needs special

consideration because it is a potential source of input which

could in the long run help to augment income. The expense on

other services like BUS and dispensary was very low. There was

need to provide better health care because expenditure on health

is an investment which could reduce waste of man-days of faculty

and staff working in the University apart from increasing their

work-efficiency.

The percentage of expenditure on fellowship in

Karnataka University was 1.2 in 1972-73 whereas it was nearly

4.93 per cent in 1990-91 for PO. This may be because the PU paid

scholarship from its own funds in the initial stages but later it

1. D.Y. Nanjundappa 'University Finances - A case study of Karnataka University', University and College Finances, AIU, 1981, p.85.

was stopped as UGC did not recommend scholarship from the

University funds as Junior Research Fellowship was introduced

through a national test.

Hostel Expenditure

Hostel facility is one of the auxiliary services

rendered to belp the students from other states to reside and

concentrate on education. As discussed in the second Chapter,

one of the major objectives of Central Universities is to attract

students from all over India for pursuing education in various

courses. Thus for Central Universities Hostel is an essential

service which would be required more and more when the University

grows with increased student strength. It would be better from

the point of financial administration, if the hostel service is

self supporting.

The income and expenditure as recorded in the accounts

of PU are furnished in the table given below:

TABLE 4.14

HOSTEL INCONE AND EXPENDITURE, PU 1988-89 to 1990-91

(Rs. in lakhs) ................................................................. S1. Details 1988-89 1989-90 1990-91 No. ................................................................. 1. Income 0.63 0.77 1.71

2. Expenditure 1.47 1.20 2.15*

3 . Deficit . 0.84 0.43 0.44 ................................................................. Source: Tablm4.10 and 4.11 * The expenditure on furniture is deducted as it is a capital

expenditure (Rs.4.73 - 1.58) = Rs.2.15

It is seen from the above table that there was deficit

in the finances of the Rostels in all years under study. The

source of income was fees collected from students as per the

following rates.

UG courses Rs.500 per annum; P.C. courses Rs.700 per annum

JRP and FIP Scholars Rs.1200 per annum.

The UG and PC students were staying for 10 months and

J R F and FIP Scholars were staying throughout the year - 12

months. The University hostels in the campus were ready only in

1990-91 until then the students were accommodated in rented

buildings. The students paid the subs~dised rent as detailed

above but since the buildings were in the Pondicherry town where

the rental charges were high, there was deficit. Further after

establishing the hostels in the year 1990-91 certain basic

facilities, consumer durables like Table Tennis, indoor play

materials, TV, etc. had to be provided. Even in 1990-91, all

students could not be provided accommodation in University

hostels in the campus. Certain Buildings in the town taken on

rent functioned as Hostel.

When all students requiring hostel facilities are

accommodated in University hostels, (under VIII Plan,Rostels for

240 students are to to constructed), the fees collected from

students should break-even the expenditure for the particular

year, if the expenditure on hostels is not to become a burden on

r080UrC08.

4.5 PURPOSEIISE CLASSIFICATION

The income and expenditure can also be classified

purposewise into three broad categories:

(a) Educational and Ceneral incoae/Expenditure

(h) Auxiliary income/expenditure relating to press Hostels, Staff quarters, Cooperative stores etc.

(c) Student - Aid-incomefexpenditure relating to scholar- ship, fellowship, medals, prizes and awards.

The revenue income and expenditure are nor studied

under purposewise classification.

TABLE 4.15

PURPOSEIISE CLASSIFICATION OF INCOME, PI) 1985-86 to 1990-91

(As. in lakhs) --------------------------------------------------------------------- Sl. Details 1985-86 1986-87 1987-88 1988-89 1989-90 1990-91 NO. ..................................................................... 1. Educational 27.35 76.88 222.77 191.38 279.58 332.07

and Ceneral (100) (100) (99.80) (97.74) (97.46) (95.66)

3 . Student-Aid - - 0.23 3.79 6.52 13.37 - - (0.10) (1.94) (2.27) (3.85)

..................................................................... 4. Total 27.35 76.88 223.23 195.80 287.87 347.15

(100) (100) (100) (100) (100) (100) ..................................................................... Source: Computed from Financial Estimates and Annual Accounts

of PU Note : Figures in brackets indicate percentage to the total.

It is seen from the above table, that the major income

was for educational and general purpose. The income from

students hostel and staff quarters, classified as auxiliary

income was negligible. The student-aid income was increasing

over period as the UGC and other agencies had provided fellowship

and scholarship.

Expenditure

The purposewise classification of expenditure is given

in Table 4.16.

TABLE 4.16 PURPOSEVISE CLASSIFICATION OF EXPENDITURE, PO,

1985-86 to 1990-91

(Rs. in lakhs) -------------------------------------------------------------------- S1. Details 1985-86 1986-87 1987-88 1988-89 1989-90 1990-91 NO.

1. Educational 1.38 46.24 146.15 199.33 248.12 314.68 and General (100) (100) (97.03) (95.86) (93.53) (93.66)

2. Auxiliary - - - 1.47 1.20 4.73* - - (0.71) (0.45) (1.41)

3. Student Aid - - 4.48 2.14 15.97 16.57 - (2.97) (3.43) (6.02) (4.93) ........................................................

4. Total 1.38 46.24 150.63 207.94 265.29 335.98 (100) (100) (100) (100) (100) (100) ....................................................................

Rote: * Furniture for hostel at a cost of Rs.1.58 lakhs had also been included.

The Table vi7ldly shows that the major expenditure was

for educational and general purpose. The expenditure on

auxiliary services was negligible. The expenditure on student-

aid was increasing and when, it is compared to the student aid-

income, the expenditure was more than income in respect of each

Year. This Wa6 also the case with income and expenditure of

auxiliary services.

Imbalancer

An analysis of sources of revenue income in Table 4.11

clearly indicates the imbalance between internal and external

sources. External source varies from 77.94 per cent to 99.63 per

cent whereas internal source varies from 0.37 per cent to 22.06

per cent. There are variations among the subheads also. Table

4.1 also indicates the imbalances in sources of funds.

Table 4.13 shows the vast variation in uses of funds

for administration, academic departments, examination, hostels

and others. This is also the fact in the case of expenditure of

Central Universities as analysed in Table 4.3.

The purposewise classification of income and

expenditure in Tables 4.15 and 4.16 also reveals the imbalances

among various heads. Thus the hypothesis H 3a: there are

imbalances among the sources and uses of funds under various

heads is established.

Summary and Conclusion

The major source of income for Central Universities was

UCC grants: 89.5 per cent in 1985-86. For PU it was 83.8 per

cent in 1990-91. The next source was fees - 10.6 per cent (85-

86) for a11 central Universities. It was 11.5 per cent (1990-91)

for PU. The percentages of expenditure on salaries and other

charges were as follows: Central Universities 50.3 and 49.7

(85.88), PU: 49.0 and 51.0 (90.91).

Under Plan Accounts, the percentages of amount spent on

capital and revenue expenditure,were 56.93 and 83.07. Thus, the

amount could not be utilised only for capital items. As a new

University, it required more funds for providing infrastructural

facilities. Hence there is need to provide one-time foundation

grant.

In 1990-91 sourcewise classification of revenue income

showed 87.02 per cent was from external sources and only 12.98

per cent was from internal sources. The percentage of total

academic income was 9.60 and non-academic was 3.37. The

percentage of examination fees was 5.59 and that of tuition fees

was only 0.93 per cent. Among the internal sources fees need

special artention in augmenting the sources of income. In

United Stares Tuition fees alone contributed 14 per cent in

public institutions and 38 per cent in private institutions.

In 1990-91, the percentages of revenue expenditure were

as follows: Administration 26.34, Academic Departments 42.33,

Examination 9.33, Library 6.67, Hostels 1.41, Fellowship 4.93,

other divisions 6.60. There is need to take measures to make

examination and hostel income reach break-even level instead of

subsidising them.

The educational and general expenditure absorbed major

portion of the total expenditure (over 94 per cent). There is

raple scope to augment income through auxiliary services like

hostel, quarters, publication. The percentage of income through

auxiliary sources was varying between 0.10 per cent to 0.40 per

cent and the expenditure was varying from 0.45 per cent to 1.41

per cent. It was also the case with student-aid income and

expenditure.

The study of the sources and uses of funds has clearly

brought forth the fact that the Central Universities are nor

mainly depending upon the finances provided by UGC/Government and

the percentage of internal sources is low implying the need for

taking concerted efforts to improve this source. The Central

Universities would substantially attempt when the Justice Punniat

Committee provides incentives to the Universities by not

deducting the internal income from the UGC's share of maintenance

grant. Purther the analyses from different angles have shown the

imbalances among the sources and uses of funds under various

heads which need standardisation to certain extent. The

difference between income and expenditure in respect of

examination and hostels is also a pointer for taking immediate

steps atleast to break-even the expenditure by increasing fees.