Role of Central Government:
Since independence the Central Government has started spending increasing amount of money on education. The Central Govt. gives grant-in-aid to states, universities and special institutions in order to help those to discharge their educational obligations. It gives special grants to back-ward states in order to equalize them with other states. It finances the centrally administered areas and gives scholarships and stipends under the various scholarship schemes.
The contributions of the Central Government and State Governments have increased from time to time.
Following are the important reasons for this increase:
1. The Central Government must assist the bank-ward states for providing better educational opportunities.
2. The Central Government must assist the state in realizing the constitutional provisions for providing compulsory primary education in the age group 6 to 14 years.
3. The Central Government has large resources for collecting finances.
4. Central funds must be utilized for providing equality of opportunity.
The Central Government assists the states for educational development in three ways:
1. Central Government performs educational functions through NCERT, UGC, Central Universities, Central Schools organizations etc.
2. Central Government sponsors schemes fully financed by it but implemented by the States.
3. Central Government partially finances some programmes, planned and implemented by the State Governments.
Role of State Governments in Educational Financing:
Education in India is a state responsibility and the bulk of educational expenditure.
The Finance Commission transfers adequate resources at the end of each Plan to each State under:
(a) Share in Income-tax,
(b) Share in excise, and
(c) Lumb-sum grant-in-aid.
The state recognizes schools and other institutions run by private bodies in accordance with set rules and regulations. It also provides them with suitable aids and grants to run efficiently and effectively. Financial aid is also given to Universities, functioning in the state.
Role of Local Bodies in Educational Financing:
Local Bodies like Municipalities, Boards, District bodies, Zilla Parisads and Panchayats run schools in their respective area. They appoint staff, provide equipment and finance to the these schools through local taxes and grants from the State Government. Such educational institutions are directly under the control of these Local Bodies.
For meeting the expenditure, the school committees should receive:
(1) A certain proportion of the income of the local village panchayat and
(2) A grant-in-aid fixed on the basis of equalisation.
State grants to local bodies on account of primary education should be based on a combination of the proportional grants, a special grant for backward areas and specific purpose grants. It would be in the interest of education to make it obligatory on municipalities to earmark a specified proportion of their net revenue for primary education. All funds thus earmarked for Primary Education should be entitled to receive grant-in-aid according to rules.
A cess on land revenue should be universally levied in all areas and that the legislation on the subject should provide for the minimum and maximum rates of such levy. In the village panchayats, as in the municipalities, a portion of the total revenue should be earmarked for Primary Education.