CHAPTER - 3
Rule 42. Financial Year : Financial year of the Government shall commence on the 1st day of April of each year and end on the 31st day of March of the following year.
Rule 43. Presentation of
Budget to Parliament :
1) In
accordance with the provisions of Article 112 (1) of the Constitution, the
Finance Minister shall arrange to lay before both the Houses of Parliament, an
Annual Financial Statement also known as the ‘Budget’ showing the estimated
receipts and expenditure of the Central Government in respect of a financial
year, before the commencement of that year.
2) A
separate statement of estimated receipts and expenditure relating to the
Railways shall similarly be presented to the Parliament by the Ministry of
Railways in advance of the Annual Financial Statement. As the receipts and
expenditure of the Railways are the receipts and expenditure of the Government,
the figures relating to these are included in lump in the Annual Financial
Statement.
3) The
provisions for preparation, formulation and submission of budget to the
Parliament are contained in Articles 112 to 116 of the Constitution of India.
4) The
Ministry of Finance, Budget Division, shall issue guidelines for preparation of
budget estimates from time to time. All the Ministries/Departments shall comply
in full with these guidelines.
Rule 44. The budget shall
contain the following :-
i.
Estimates of all Revenue expected to be raised
during the financial year to which the budget relates.
ii.
Estimates of all Expenditure for each programme and
project in that financial year.
iii.
Estimates of all interest and debt servicing
charges and any repayments on loans in that financial year.
iv.
Any other information as may be prescribed.
Rule 45.
Receipt Estimates : The detailed estimates of receipts will be prepared by the
estimating authorities separately for each Major Head of Account in the
prescribed form. For each Major Head, the estimating authority will give the
break up of the Minor/Subhead wise estimate along with actuals of the past
three years. Where necessary, itemwise break up should also be furnished so as
to highlight individual items of significance. Any major variation in estimates
with reference to past actuals or/and Budget Estimates will be supported by
cogent reasons.
Rule 46. Expenditure
estimates :
1) The
expenditure estimates shall show separately the sums required to meet the
expenditure Charged on the Consolidated Fund under Article 112 (3) of the
Constitution and sums required to meet other expenditure for which a vote of
the Lok Sabha is required under Article 113(2) of the Constitution.
2) The
estimates shall also distinguish provisions for expenditure on revenue account
from that for other expenditure including expenditure on capital account, on
loans by the Government and for repayment of loans, treasury bills and ways and
means advances.
3) The
detailed estimates of expenditure will be prepared by the estimating
authorities for each unit of appropriation (Sub or Detailed or Object head)
under the prescribed Major and Minor Heads of Accounts separately for Plan and
Non-Plan expenditure. Estimates should include suitable provision for
liabilities of the previous years left unpaid during the relevant year.
4) The
estimates of Plan expenditure will be processed in consultation with the
Planning Commission in accordance with the instructions issued by them.
5) The
Revised Estimates of both Plan and Non-Plan expenditure and Budget Estimates
for Non-Plan expenditure after being scrutinized by the Financial Advisers and
approved by the Secretary of the Administrative Ministry or Department
concerned will be forwarded to the Budget Division in the Ministry of Finance
in such manner and forms as may be prescribed by them from time to time.
Rule 47. Demands for Grants
:
1.
The estimates for expenditure for which vote of Lok
Sabha is required shall be in the form of Demand for Grants.
2.
Generally, one Demand for Grant is presented in
respect of each Ministry or Department. However, in respect of large Ministries
or Departments, more than one Demand is presented. Each Demand normally
includes provisions required for a service, i.e. provisions on account of
revenue expenditure, capital expenditure, grants to the State and Union
Territory Governments and also Loans and Advances relating to the service.
3.
The Demand for Grants shall be presented to
Parliament at two levels. The main Demand for Grants are presented to
Parliament by the Ministry of Finance, Budget Division along with the Annual
Financial Statement while the Detailed Demands for Grants, after consideration
by the “Departmentally Related Standing Committee” (DRSC) of the Parliament,
are laid on the Table of the Lok Sabha by the concerned Ministries/ Departments,
a few days in advance of the discussion of the respective Ministry’s/
Departments’ Demands in that House.
Rule 48. Form of Annual
Financial Statement and Demands for Grants :
1)
The form of the Annual Financial Statement and
Demands for Grants shall be laid down by the Finance Ministry and no alteration
of arrangement or classification shall be made without the approval of that
Ministry.
2)
The sub-heads under which provision for expenditure
will be made in the Demands for Grants or Appropriation shall be prescribed by
the Finance Ministry in consultation with the Administrative Ministry or
Department. The authorised sub-heads for expenditure in a year shall be as
shown in the Detailed Demands for Grants passed by Parliament and no change
shall be made therein without the formal approval of the Finance Ministry.
NOTE : Detailed instructions
for preparation of the budget are available in Appendix 2, 3, 4, and 6.
Rule 49. Acceptance and
inclusion of estimates :
1)
The estimates of receipts and expenditure of each
Ministry/Department will be scrutinized in the Budget Division of the Ministry
of Finance. Finance Secretary or Secretary (Expenditure) may hold meetings with
Secretaries or Financial Advisers of Administrative Ministries or Departments
to discuss the totality of the requirements of funds for various programmes and
schemes, along with receipts of the Ministries or Departments.
2)
The estimates initially submitted by the
Departments may undergo some changes as a result of scrutiny in the Budget
Division, Ministry of Finance and deliberations in the pre-budget meetings
between the Finance Secretary or Secretary (expenditure) and the Secretary or
Financial Adviser of the Department concerned. The final estimates arrived at
on the basis of scrutiny and pre-budget meetings will be accepted by the Budget
Division, Ministry of Finance and incorporated in the Budget documents.
Rule 50. Vote on Account :
1)
The Budget is normally presented to the Parliament
on the last day in the month of February but the corresponding Appropriation
Bill seeking authorization of the Parliament to make expenditure in consonance
with the Budget proposal is introduced and passed much later i.e. after due
deliberation and approval by the Parliament.
2)
Pending the completion of the procedure prescribed
in Article 113 of the Constitution for the passing of the Budget, the Finance
Ministry may arrange to obtain a ‘Vote on Account’ to cover expenditure for one
month or such longer period as may be necessary in accordance with the
provisions of Article 116 of the Constitution. Funds made available under Vote
on Account are not to be utilized for expenditure on a ‘New Service’.
Rule 51.
Communication and distribution of grants and appropriations : After the
Appropriation Bill relating to Budget is passed, the Ministry of Finance shall
communicate Budget provisions to the Ministries/Departments which, in turn,
shall distribute the same to their subordinate formations. The distribution so
made shall also be communicated to the respective Pay and Accounts Officers who
shall exercise check against the allocation to each subordinate authority.
“CONTROL
OF EXPENDITURE AGAINST BUDGET”
Rule 52. Responsibility for
control of Expenditure :
1) Departments
of the Central Government shall be responsible for the control of expenditure
against the sanctioned grants and appropriations placed at
their disposal. The control shall be exercised through the Heads of Departments
and other Controlling Officers, if any, and Disbursing Officers subordinate to
them.
2) A Grant
or Appropriation can be utilised only to cover the charges (including
liabilities, if any, of the past year) which are to be paid during the
financial year of the Grant or Appropriation and adjusted in the account of the
year. No charges against a Grant or Appropriation can be authorized after the
expiry of the financial year.
3) No
expenditure shall be incurred which may have the effect of exceeding the total
grant or appropriation authorized by Parliament by law for a financial year,
except after obtaining a supplementary grant or appropriation or an advance
from the Contingency Fund. Since voted and charged portions as also the revenue
and capital sections of a Grant/Appropriation are distinct and reappropriation
inter se is not permissible, an excess in any one portion or section is treated
as an excess in the Grant/Appropriation.
4) To have
effective control over expenditure by the Departments, Controlling and
Disbursing Officers subordinate to them shall follow the procedure given below
:-
a. For
drawal of money the Drawing and Disbursing Officer shall :-
i.
Prepare and present bills for “charged” and “voted”
expenditure separately.
ii.
Enter on each bill the complete accounts
classifications from major head down to the object head of account. When a
single bill includes charges falling under two or more object heads, the
charges shall be distributed accurately over the respective heads.
iii.
Enter on each bill the progressive total of
expenditure up-to-date under the primary unit of appropriation to which the
bill relates, including the amount of the bill on which the entry is made.
b. (a) All
Disbursing Officers shall maintain a separate expenditure register in Form GFR
9, for allocation under each minor or sub-head of account with which they are
concerned.
a. On the third day of each month, a copy of
the entries made in this register during the preceding month shall be sent by
the officer maintaining it, to the Head of the Department or other designated
Controlling Officer. This statement shall also include adjustment of an inward
claim, etc., communicated by Pay and Accounts Officer directly to the DDO (and
not to his Grant Controlling Officer). If there are no entries in the register
in any month, a ‘nil’ statement shall be sent.
5) (a) The
Controlling Officer will maintain a broadsheet in Form GFR 10 to monitor the
receipt of the return prescribed in the foregoing sub-clause;
a. On
receipt of the returns from Disbursing Officers, the Controlling Officer shall
examine them and satisfy himself :-
i.
that the accounts classification has been properly
given;
ii.
that progressive expenditure has been properly
noted and the available balances worked out correctly;
iii.
that expenditure up-to-date is within the grant or
appropriation; and
iv.
that the returns have been signed by Disbursing
Officers
b. Where the
Controlling Officer finds defects in any of these respects, he shall take steps
to rectify the defect.
c.
When all the returns from the Disbursing Officers
for a particular month have been received and found to be in order, the
Controlling Officer shall compile a statement in Form GFR 11, in which he will
incorporate -
i.
the totals of the figures supplied by Disbursing
Officers;
ii.
the totals taken from his own registers in Form GFR
9;
iii.
the totals of such adjustments under the various
detailed heads as communicated to him by the Accounts Officer on account of
transfer entries and expenditure debited to the grant as a result of settlement
of inward account claims and not reckoned by his DDOs.
d. If any
adjustment communicated by the Accounts Officer affects the appropriation at
the disposal of a subordinate Disbursing Officer, the fact that the adjustment
has been made shall be communicated by the Controlling Officer to the
Disbursing Officer concerned.
e. On
receipt of all the necessary returns, the Head of the Department shall prepare
a consolidated account in Form GFR 12, showing the complete expenditure from
the grant or appropriation at his disposal upto the end of the preceding month.
6) The Head
of the Department and the Accounts Officer shall be jointly responsible for the
monthly reconciliation of the figures given in the accounts maintained by the
Head of the Department with those appearing in the Accounts Officer’s books.
The procedure for reconciliation shall be as follows :-
I.
DDOs shall maintain a Bill Register in Form TR
28-A, and note all bills presented for payment to the PAO in the register. As
soon as cheques for the bills presented for payment are received, these will be
noted in the appropriate column of the Bill Register and the DDOs will ensure
that the amounts of cheques tally with the net amount of the bills presented.
In case any retrenchment is made by the PAO, a note of such retrenchments
should be kept against the bill in the remarks column in TR 28-A.
II.
The PAOs shall furnish to each of the DDOs
including Cheque –drawing DDOs, an extract from the expenditure control
register or from the Compilation Sheet every month indicating the expenditure
relating to grants controlled by him classified under the various major-minor
detailed head of accounts. The statements for May to March should also contain
Progressive Figures.
III.
On receipt of these extracts from the PAOs, the
DDOs should tally the figures received, excluding book adjustments, with the
expenditure worked out for the month in the GFR 9 register. Discrepancies, if
any, between the two sets of figures should be promptly investigated by the DDO
in consultation with the PAO. He will also note in the GFR 9 register
particulars of book adjustments advised by the PAO through the monthly
statement. Thereafter, the DDO should furnish to the PAO a certificate of
agreement of the figures as per his books with those indicated by the PAOs by
the last day of the month following the month of accounts.
IV.
The Principal Accounts Officer (or PAO wherever
payments, relating to a grant are handled wholly by a PAO) of each Ministry,
should send a monthly statement showing the expenditure vis-Ã -vis the Budget
provision under the various heads of accounts, in the prescribed pro forma, to
the Heads of Departments responsible for overall control of expenditure against
grant of the Ministry as a whole. The figures so communicated by the Principal
Accounts Officer (or the PAO concerned) should be compared by the Heads of
Departments with those consolidated in Form GFR 12 and differences, if any,
should be taken up by the Heads of Departments with the Principal Accounts
Officers (or the PAO concerned) for reconciliation. The Head of the Department
should furnish a quarterly certificate to the Principal Accounts Officer
certifying the correctness of the figures for the quarter by the 15th of the
second following month after the end of quarters April-June, July-September,
October-December and January-March.
7) The
Departments of the Central Government should obtain from their Heads of
Departments and other offices under them the departmental figures of
expenditure in Form GFR 12 by the 15th of the month following the month to
which the returns relate. The figures relating to Plan and Non-Plan expenditure
should be separately shown in these returns. The information so obtained should
be posted in register(s) kept for watching the flow of expenditure against the
sanctioned grant or appropriation. Progressive totals of expenditure should be
worked out for the purpose. If the departmental figures obtained in Form GFR 12
and posted in the register(s), require correction in a subsequent month, Heads
of Departments or other offices should make such corrections by making plus or
minus entries in the progressive totals. In case the Accounts Office figures
which subsequently become available are found to be higher than departmental
figures, the former should be assumed to be the correct figures, as
appropriation accounts are prepared on the basis of the figures booked in the
accounts.
8) The
Departments of Central Government should also obtain from the Heads of
Departments and other authorities under them, statements showing the details of
the physical progress of the schemes for which they are responsible. This
statement should show the name of the scheme, the Budget provision for each
scheme, the progressive expenditure on each scheme, the progress of the scheme
in physical terms and the detailed reasons for any shortfalls or excess, both
against physical and financial targets.
9) A
Broadsheet in Form GFR 13 should be maintained by the Departments of Central
Government or each Head of Department and other authorities directly under
them, to watch the prompt receipt of the various returns mentioned above from
month to month and to take necessary measures for rectifying any defaults
noticed.
Rule 53.
Maintenance of Liability Register for effecting proper control over expenditure
: In order to maintain proper control over expenditure, a Controlling Officer
should obtain from the spending authorities liability statements in Form GFR
6-A every month, starting from the month of October in each financial year. The
Controlling Officer should also maintain a Liability Register in Form GFR 6.
Rule 54.
Personal attention of the Head of Department /Controlling Officer required to
estimate savings or excesses : A Head of Department or Controlling Officer
should be in a position to estimate the likelihood of savings or excesses every
month and to regularize them in accordance with the instructions laid down in
Rule 56.
Rule 55.
Control of expenditure against grant/appropriation and ultimate responsibility
of the authority administering it : The Accounts Officer should report to the
Head of the Department concerned immediately on the
first
appearance of any disproportionate expenditure, particularly in respect of
recurring items of expenditure under any grant or appropriation or a primary
unit of appropriation thereof. However, the authority administering a grant/
appropriation is ultimately responsible for the control of expenditure against
the grant/appropriation and not the Accounts Officer.
Rule 56. Surrender of savings
:
Ø Departments
of the Central Government shall surrender to the Finance Ministry, by the dates
prescribed by that Ministry before the close of the financial year, all the
anticipated savings noticed in the Grants or Appropriations controlled by them.
The Finance Ministry shall communicate the acceptance of such surrenders as are
accepted by them to the Accounts Officer, before the close of the year. The
funds provided during the financial year and not utilized before the close of
that financial year shall stand lapsed at the close of the financial year.
Ø The
savings as well as provisions that cannot be profitably utilised should be
surrendered to Government immediately they are foreseen without waiting till
the end of the year. No savings should be held in reserve for possible future
excesses.
Ø Rush of
expenditure, particularly in the closing months of the Financial year, shall be
regarded as a breach of financial propriety and shall be avoided.
Rule 57.
Expenditure on New Service : No expenditure shall be incurred during a
financial year on a “New Service” not contemplated in the Annual Budget for the
year except after obtaining a supplementary grant or appropriation or an
advance from the Contingency Fund during that year. The guidelines to determine
cases of “New Service”/”New Instrument of Service” are contained in Annexure-1
to Appendix -3.
Rule 58. Additional
Allotment for excess expenditure :
1)
A subordinate authority incurring the expenditure
will be responsible for seeing that the allotment placed at its disposal is not
exceeded. Where any excess over the allotment is apprehended, the subordinate
authority should obtain additional allotment before incurring the excess
expenditure. For this purpose, the authorities incurring expenditure should
maintain a ‘Liability Register’ in Form GFR 6.
2)
A Disbursing Officer may not, on his own authority,
authorize any payment in excess of the funds placed at his disposal. If the
Disbursing Officer is called upon to honour a claim, which is certain to produce
an excess over the allotment or appropriation at his disposal, he should take
the orders of the administrative authority to which he is subordinate before
authorizing payment of the claim in question. The administrative authority will
then arrange to provide funds either by reappropriation or by obtaining a
Supplementary Grant or Appropriation or an advance from the Contingency Fund.
Rule 59. Reappropriation of
Funds :
1)
Subject to the provisions of Rule 10 of the
Delegation of Financial Powers Rules, 1978, and also subject to such other
general or specific restrictions as may be imposed by the Finance Ministry in
this behalf, reappropriation of funds from one primary unit of appropriation to
another such unit within a grant or appropriation, may be sanctioned by a
competent authority at any time before the close of the financial year to which
such grant or appropriation relates.
2)
Reappropriation of funds shall be made only when it
is known or anticipated that the appropriation for the unit from which funds
are to be transferred will not be utilized in full or that savings can be
effected in the appropriation for the said unit.
3)
Funds shall not be reappropriated from a unit with
the intention of restoring the diverted appropriation to that unit when savings
become available under other units later in the year.
4)
An application for reappropriation of funds should
ordinarily be supported by a statement in Form GFR 4 or any other special form
authorized by departmental regulations showing how the excess is proposed to be
met. In all orders, sanctioning reappropriation, the reasons for saving and
excess of Rupees 1 lakh or over and the primary units (secondary units, wherever
necessary), affected should be invariably stated. The authority sanctioning the
reappropriation should endorse a copy of the order to the Accounts Officer.
Rule 60.
Supplementary Grants : If savings are not available within the Grant to which
the payment is required to be debited, or if the expenditure is on “New
Service” or “New Instrument of Service” not provided in the budget, necessary
Supplementary Grant or Appropriation in accordance with Article 115 (1) of the
Constitution should be obtained before payment is authorized.
Rule 61.
1)
Advance from Contingency Fund : When a need arises
to incur unforeseen expenditure in excess of the sanctioned grant or
appropriation or on a new service not provided in Budget and there is not
sufficient time for the voting of the Supplementary Demand and the passing of
the connected appropriation bill before close of the financial year, an advance
from the Contingency Fund set up under Article 267 (1) of the Constitution
shall be obtained before incurring the expenditure.
2)
An advance from the Contingency Fund shall also be
obtained to meet expenditure in excess of the provisions for the service
included in an Appropriation (Vote on Account) Act.
3)
The application for an advance from the Contingency
Fund should indicate inter alia the particulars of the additional expenditure
involved and the sanction to the advance has also to indicate the sub-head and
the primary unit of the Grant to which the expenditure appropriately relates.
In case, however, any difficulty is felt, the matter should be referred to the
Finance Ministry for clarification.
4)
The procedure for obtaining an advance from the
Contingency Fund and recoupment of the Fund shall be as laid down in the
Contingency Fund of India Rules, 1952, as amended from time to time. For ready
reference, rules have been placed at Appendix - 7 to this volume.
Rule 62. Inevitable Payments
:
1)
Subject to the provisions of Article 114 (3) of the
Constitution, money indisputably payable by Government shall not ordinarily be
left unpaid.
2)
Suitable provision for anticipated liabilities
should invariably be made in Demands for Grants to be placed before Parliament.
Rule 63. For easy reference an extract relating to
procedures followed in the Accounts Office for check against provision of funds
as a part of pre-check of bills has been placed at Appendix 14.
Rule 64. Duties and Responsibilities of the Chief
Accounting Authority :- The Secretary of a Ministry/Department who is the Chief
Accounting Authority of the Ministry/Department shall be responsible and
accountable for financial management of his Ministry or Department.
1. ensure
that the public funds appropriated to the Ministry or Department are used for
the purpose for which they were meant.
2. be
responsible for the effective, efficient, economical and transparent use of the
resources of the Ministry or Department in achieving the stated project
objectives of that Ministry or Department, whilst complying with performance
standards.
3. appear
before the Committee on Public Accounts and any other Parliamentary Committee
for examination.
4. review
and monitor regularly the performance of the programmes and projects assigned
to his Ministry to determine whether stated objectives are achieved.
5. be
responsible for preparation of expenditure and other statements relating to his
Ministry or Department as required by regulations, guidelines or directives
issued by Ministry of Finance.
6. shall
ensure that his Ministry or Department maintains full and proper records of
financial transactions and adopts systems and procedures that will at all times
afford internal controls.
7. shall
ensure that his Ministry or Department follows the Government procurement
procedure for execution of works, as well as for procurement of services and
supplies, and implements it in a fair, equitable, transparent, competitive and
cost-effective manner;
8. shall
take effective and appropriate steps to ensure his Ministry or Department : -
a. collects
all moneys due to the Government and
b. avoids
unauthorized, irregular and wasteful expenditure.
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