REPORT OF THE TASK FORCE

General Financial
Rules, 2005

Government of India
Ministry of Finance
Department of Expenditure
 TABLE OF CONTENTS

Chapter Name of the Chapter Page No.

No.
1 Introduction 1

2 General System of Financial Management 4

I. General Principles relating to expenditure and
payment of money
II. Defalcation and losses
III. Submission of records & information

3 Budget formulation and implementation. 13

4 Government Accounts 23

5 Works 39

6 Procurement of Goods and Services 42

I. Procurement of Goods
II. Procurement of Services
7 Inventory Management 56

8 Contract Management 62

9 Grants-in-aid and Loans 67

10 Budgeting and Accounting for Externally Aided 89

Projects

11 Government Guarantees 94

12 Miscellaneous Subjects 98
I. Establishment
II. Refund of revenue
III. Debt and misc. obligations of Govt.
IV. Security deposits
V. Transfer of land and buildings
VI. Charitable endowments and other trusts
VII. Local bodies
VIII. Destruction of records connected with Accounts
IX. Contingent and Miscellaneous Expenditure.

APPENDICES
APPENDIX Subject Page No.
NO.
1 Instructions for regulating the Enforcement of 109
Responsibility for losses, etc.,
2 Procedure for the preparation of Detailed Estimates 111
of Receipts
3 Instructions for the preparation of Detailed Estimates 113
of expenditure from the Consolidated Fund
4 Procedure for compilation of Detailed Demands for 124
Grants
5 Procedure for consolidation of the Estimates and 128
Demands for Grants
6 Procedure to be followed in connection with the 129
Demands for Supplementary Grants
7 The Contingency Fund of India Rules 131

8 Rules for the Supply of Articles required to be Deleted

purchased for Public Services.
9 Rules regulating the Purchase of Stationery Stores Deleted
for the Public Service
10 Subsidiary Instructions in regard to the terms of Deleted
occupation of Government residences
11 Transfer of Land and Buildings between the Union 136
and State Governments
12 Charitable Endowments and other Trusts 139

13 Destruction of Office Records connected with 154

Accounts.
14 Check against provision of funds 166

15 Formula for Price Variation Clause 167

16 Rates of Guarantee Fee prevalent in July, 2004 168

FORMS

Form Description Page No.

Serial No.
GFR 1 Model Form of Warranty Clause Deleted

GFR 2 ---- Deleted

GFR 3 Statement of new Major Works under Civil Works - Deleted

 Central ……
GFR 4 Application for an Additional Appropriation 169

GFR 5 Revenue Receipts 170

GFR 5 - A Estimates of foreign grants 171

GFR 5 - B Estimates of Interest receipts and loan repayments 172

GFR 6 Liability Register 173

GFR 6 - A Liability Statement 175

GFR 7 Statement of accepted estimates of expenditure 178

GFR 7 - A Revised Estimates - Current year 179

GFR 7 - B Budget Estimates - Ensuing year 180

GFR 8 ------ Deleted

GFR 9 Register showing expenses by Heads of Account 181

GFR 10 Broadsheet for watching receipt of account from 182

Disbursing Officers
GFR 11 Compilation Sheet 183

GFR 12 Consolidated Accounts 184

GFR 13 Broadsheet for watching Receipt of the Returns from 185

the Heads of Departments under a Department of
the Central Government

GFR 14 Intimation regarding payments made by DGS&D Deleted

GFR 15 ------ Deleted

GFR 16 ------- Deleted

GFR 17 Report of Surplus, Obsolete and Unserviceable 186

Stores for Disposal
GFR 18 Sale Account 187

GFR 19 Assets acquired from Grants Deleted

GFR 19 - A Form of Utilization Certificate 188

GFR 19 - B Form of Utilization Certificate 189

GFR 20 Statement of aggregate balance of loan(s) 190

outstanding as on 31st March 20, and details of
defaults
GFR 21 Form of Surety Bond. Deleted

GFR 22 Form of agreement for advance for purchase of Deleted

Motor Vehicle etc.
GFR 22 - A ------- Deleted

GFR 22 - B ------- Deleted

GFR 23 Form of agreement for advance for purchase of Deleted

Motor Vehicle etc.
GFR 23 - A Form of Agreement to be executed between a
Department of the Central Government, etc., and an Deleted
Undertaking, etc., owned or controlled by the Central
Government or a State Government at the time of
sanctioning an advance for the purchase of a vehicle
to an employee of the undertaking, etc., during his
deputation with the Central Government (Rule 192-
A)
GFR 24 Form of Mortgage Bond for Motor Vehicle / Personal Deleted
Computer - Initial Advance
GFR 25 Form of Mortgage Bond for Motor Vehicle - Further Deleted
Advance
GFR 25 - A Form of Mortgage Bond for Motor Vehicle purchased Deleted
with sale proceeds of an old one (Rule 205)
GFR 26 ------- Deleted

GFR 27 Application form for an Advance for the Purchase of Deleted

a Motor Car/ Motor Cycle / Personal Computer
GFR 27 - A Application Form for an advance for the Purchase of Deleted
Table Fan
GFR 28 Surety Bond Deleted

GFR 29 Form of Agreement for adjustment of refund of Deleted

advance of T.A. given to non-official members of
Committees and Commissions appointed by
Government

GFR 30 Form of Cash Security Bond 192

GFR 31 Form of Security Bond (Fidelity Bond Deposited as 195

 Security)
GFR 32 Form of Written Undertaking to be executed by an 197
Undertaking / Corporation wholly owned by the
Central Government at the time of sanctioning of a
loan.
GFR 33 Certificate of transfer of charge 199

GFR 33 - A Joining Report 200

GFR 34 Fidelity Guarantee Policy 200

GFR 35 Accession Register 204

GFR 36 Notice to borrower about the due date for repayment 205
of loan and interest thereon
GFR 37 Form of application for grant of flood advance Deleted

GFR 38 Register of Policy Holder 207

GFR 39 Register of Grants to be maintained by the 208

sanctioning Authority.
GFR 40 Register of Fixed Assets 209

GFR 41 Stock Register of consumables such as Stationery, 210

Chemicals, Spare parts etc.
GFR 42 Register of Assets of Historical / Artistic value. 211

GFR 43 Government Guarantees. 212

GFR 44 Furnishing of data regarding Guarantees to Ministry 213

of Finance.
 PREFACE

The General Financial Rules 1963 which were issued as a compendium of

instructions for guidance of government officers dealing with matters of
a financial nature, have been in force for over four decades. These rules
and orders were to be observed by all authorities and departments under
the Government of India except where specific exemptions were
indicated. Over the past four decades the General Financial Rules 1963
have been further amplified and supplemented by various Government of
India Decisions incorporated along with the rules. A large number of the
original rules have fallen into disuse due to changes in the environment in
which government departments operate or are required to operate. Rapid
growth of alternative service delivery systems, developments in
information technology and the expectations of public that Government
should render timely, efficient and quality service, has necessitated a
comprehensive review of the government financial management systems,
so as to ensure transparency, accountability and effectiveness. The
General Financial Rules 2004 incorporate instructions for guidance of
officers dealing with new areas of governance such as Externally Aided
Projects, Government Guarantees, Engagement of Consultants,
Outsourcing of Services, etc which were not included in the General
Financial Rules 1963. The system of procurement, accountal and disposal
of goods has been liberalised, bringing it in line with accepted
international practices. The rules have been simplified and put in a logical
sequence for easy comprehension. The appendices and forms included in
General Financial Rules 1963 have been reviewed and redundant
appendices and forms deleted while updating those retained. Some new
appendices and forms have been added. However, the existing form
numbers have been retained for convenience and to avoid confusion. The
table of appendices and forms added to General Financial Rules, 2004 at
the beginning indicates the status of the appendices and forms. It is
expected that General Financial Rules, 2004 will fully serve the purpose
of providing greater flexibility to officers transacting government
business while ensuring accountability commensurate with responsibility at
different levels of Government.

D. N. Padhi
New Delhi, Chairman of the Task Force
July 29, 2004
 CHAPTER - 1
INTRODUCTION

Preamble
The executive powers of the Union of India, vested in the President of India
vide Article 53 of the Constitution of India, are exercised either directly or through
officers subordinate to him. Departments of the Government of India are assigned
different subjects and responsibilities in accordance with the following rules.
(i) The Government of India (Allocation of Business) Rules, 1961 -
Issued by the President of India.
• These rules allocate the business of the Government among its
different Departments.
(ii) The Government of India (Transaction of Business) Rules, 1961 -
Issued by the President of India.
• These rules define the authority, responsibility and obligations of
each Department in the matter of disposal of business allotted to
it.
2. In accordance with the Government of India (Allocation of Business) Rules,
1961, financial powers of the Government are vested in the Departments of the
Ministry of Finance. The Department of Expenditure in the Ministry of Finance has
the authority to delegate financial powers to various subordinate authorities of the
Government. Financial powers of the Government, which are not delegated to any
subordinate authority, remain with the Ministry of Finance. The Department of
Expenditure in the Ministry of Finance has the authority to prescribe financial rules
and regulations necessary to run the affairs of the Government

Rule 1. Short title and commencement : (1) These rules may be called General
Financial Rules, 2004.

Rule 1. (2) They shall come into force at once.

Rule 2. Definitions : In these rules, unless the context otherwise requires -

(i) "Accounts Officer" means the Head of an Office of Accounts or the
Head of a Pay and Accounts Office set up under the scheme of
departmentalization of accounts;
(ii) "Administrator" means Administrator of a Union Territory;
(iii) "Appropriation" means the assignment, to meet specified
expenditure, of funds included in a primary unit of appropriation;
(iv) "Audit Officer" means the Head of an Office of Audit;
(v) "Competent Authority" means, in respect of the power to be
exercised under any of these rules, the President or such other
authority to which the power is delegated by or under these rules,
Delegation of Financial Power Rules, 1978 or any other general or
special orders issued by the Government of India;
(vi) "Comptroller and Auditor-General" means the Comptroller and
Auditor-General of India;

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(vii) "Consolidated Fund" means the Consolidated Fund of India
referred to in Article 266 (1) of the Constitution;
(viii) "the Constitution" means the Constitution of India;
(ix) "Contingency Fund" means the Contingency Fund of India
established under the Contingency Fund of India Act, 1950, in terms
of Article 267 (1) of the Constitution;
(x) "Controlling Officer" means an officer entrusted by a Department
of the Central Government with the responsibility of controlling the
incurring of expenditure and/or the collection of revenue. The term
shall include a Head of Department and also an Administrator;
(xi) "Department of the Central Government" means a Ministry or a
Department of the Central Government as notified from time to time
and includes the Planning Commission, the Department of
Parliamentary Affairs, the President's Secretariat, the Vice-
President's Secretariat, the Cabinet Secretariat and the Prime
Minister's Secretariat;
(xii) "Disbursing Officer" means a Head of Office and also any other
Gazetted Officer so designated by a Department of the Central
Government, a Head of Department or an Administrator, to draw bills
and make payments on behalf of the Central Government. The term
shall also include a Head of Department or an Administrator where
he himself discharges such function;
(xiii) "Finance Ministry" means the Finance Ministry of the Central
Government;
(xiv) "Financial year" means the year beginning on the 1st of April and
ending on the 31st of March following;
(xv) "Government" means the Central Government;
(xvi) "Head of a Department" in relation to an office or offices under its
administrative control means (a) an authority specified in Schedule I
of the Delegation of Financial Powers Rules, 1978, and (b) any
other authority declared as such under any general or special orders
of the competent authority;
(xvii) "Head of Office" means (a) a Gazetted Officer declared as such
under Rule 14 of the Delegation of Financial Powers Rules, 1978,
and (b) any other authority declared as such under any general or
special orders of the competent authority;
(xviii) "Local Body" means an authority legally entitled or specially
empowered by Government to administer a local fund;
(xix) "Local Fund" means a local fund as defined in Rule 652 of the
Treasury Rules;
(xx) "non-recurring expenditure" means expenditure other than
recurring expenditure;
(xxi) "President" means the President of India;
(xxii) "Primary unit of appropriation" means a primary unit of
appropriation referred to in Rule 8 of the Delegation of Financial
Powers Rules, 1978;
(xxiii) "Public Account" means the Public Account of India referred to in
Article 266 (2) of the Constitution;

2
 (xxiv) "Public Works" means civil works and irrigation, navigation,
embankment and drainage works;
(xxv) "reappropriation" means the transfer of funds from one primary unit
of appropriation to another such unit;
(xxvi) "recurring expenditure" means the expenditure which is incurred at
periodic intervals;
(xxvii) "Reserve Bank" means the Reserve Bank of India or any office or
agency of the Reserve Bank of India and includes any Bank acting
as the agent of the Reserve Bank of India in accordance with the
provisions of the Reserve Bank of India Act, 1934 (Act II of 1934);
(xxviii) "Subordinate authority" means a Department of the Central
Government or any authority subordinate to the President; and
(xxix) "Treasury Rules" means the Treasury Rules of the Central
Government.

Rule 3. Interdepartmental Consultations : When the subject of a case concerns

more than one department, no order should be issued until all such departments
have concurred, or, failing such concurrence, a decision has been taken by or
under the authority of the Cabinet. In this regard it is clarified that every case in
which a decision, if taken in one Department, is likely to affect the transaction of
business allotted to another department, shall be deemed to be a case the subject
of which concerns more than one department.

Rule 4. Departmental Regulations of financial character : All Departmental

regulations, in so far as they embody orders or instructions of a financial character
or have important financial bearing, shall be made by, or with the approval of the
Finance Ministry.

Rule 5. Removal of doubts : Where a doubt arises as to the interpretation of any

of the provisions of the General Financial Rules, the matter shall be referred to the
Finance Ministry for decision.

Rule 6. Modifications : (1) The systems and procedures established by these

rules are subject to general or special instructions / orders, which the Ministry of
Finance may issue from time to time.

Rule 6. (2) The systems and procedures established by these rules may be
modified by any other authority only with the express approval of the Ministry of
Finance.

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 CHAPTER - 2

General System of Financial Management

Rule 7. General Principles : All moneys received by or on behalf of Government

either as dues of Government or for deposit, remittance or otherwise, shall be
brought into Government Account without delay, in accordance with such general
or special rules as may be issued under Articles 150 and 283 (1) of the
Constitution.

Rule 8. (1)
(i) Under Article 284 of the Constitution all moneys received by or deposited
with any officer, employed in connection with the affairs of the Union in his
capacity as such, other than revenues or public money raised or received
by Government, shall be paid into the Public Account.

(ii) All moneys received by or deposited with the Supreme Court of India or
with any other Court, other than a High Court, within a Union Territory, shall
also be dealt with in accordance with Clause (i) of sub-rule (1).

Rule 8. (2) The Head of Account to which such moneys shall be credited and the
withdrawal of moneys therefrom shall be governed by the relevant provisions of
Government Accounting Rules 1990 and the Central Government Account
(Receipts and Payments) Rules, 1983 or such other general or special orders as
may be issued in this behalf.

Rule 9. It is the duty of the Department of the Central Government concerned to

ensure that the receipts and dues of the Government are correctly and promptly
assessed, collected and duly credited to the Consolidated Fund or Public Account
as the case may be.

Rule 10. The Controlling Officer shall arrange to obtain from his subordinate
officers monthly accounts and returns in suitable form claiming credit for the
amounts paid into the treasury or bank as the case may be, or otherwise
accounted for, and compare them with the statements of credits furnished by the
Accounts Officer to see that the amounts reported as collected have been duly
credited. For this each Accounts Officer will send an extract from his accounts
showing the amounts brought to credit in the accounts in each month to the
Controlling Officer concerned.

Rule 11. (1) Detailed rules and procedure regarding assessment, collection,
allocation, remission and abandonment of revenue and other receipts shall be laid
down in the regulations of the department responsible for the same.

Rule 11. (2) In departments in which officers are required to receive moneys on
behalf of Government and issue receipts therefor in Form GAR-6 the departmental
regulations should provide for the maintenance of a proper account of the receipt
4
and issue of the receipt books, the number of receipt books to be issued at a time
to each officer and a check with the officer's accounts of the used books when
returned.

Rule 12. Amounts due to Government shall not be left outstanding without
sufficient reasons. Where such amounts appear to be irrecoverable, the orders of
the competent authority shall be obtained for their adjustment.

Rule 13. Unless specially authorized by any rule or order made by competent
authority, no sums shall be credited as revenue by debit to a suspense head. The
credit must follow and not precede actual realization.

Rule 14. Subject to any general or special orders issued by a Department of the
Central Government, an Administrator or a Head of a Department responsible for
the collection of revenue shall keep the Finance Ministry fully informed of the
progress of collection of revenue under his control and of all important variations in
such collections as compared with the Budget Estimates.

Rule 15. Rents of buildings and lands : (1) When the maintenance of any
rentable building is entrusted to a civil department, other than the Central Public
Works Department, the Administrator or the Head of the Department concerned
shall be responsible for the due recovery of the rent thereof.

Rule 15. (2) The procedure for the assessment and recovery of rent of any
building hired out will be regulated generally by the rules applicable to residences
under the direct charge of the Central Public Works Department.

Rule 15. (3) The detailed rules and procedure, regarding the demand and
recovery of rent of Government buildings and lands, are contained in the
departmental regulations of the departments in charge of those buildings.

Rule 16. Fines : (1) Every authority having the power to impose and/ or realize a
fine shall ensure that the money is realized, duly checked and deposited into a
treasury or bank as the case may be.

Rule 16. (2) Every authority having the power to refund fines shall ensure that the
refunds are checked and no double refunds of amounts of fines collected or
refunds of fines not actually paid into a treasury or bank as the case may be, are
made.

Rule 17. Miscellaneous Demands : The Accounts Officer shall watch the
realization of miscellaneous demands of Government, not falling under the
ordinary revenue administration, such as contributions from State Governments,
Local Funds, contractors and others towards establishment charges.

Rule 18. Remission of Revenue : A claim to revenue shall not be remitted or

abandoned save with the sanction of the competent authority.

5
Rule 19. (1) Subject to any general or special orders issued by the Government
Departments of the Central Government, Administrators and Heads of
Departments, other than those in the Department of Posts, shall submit annually
on the 1st of June to the Audit Officer and the Accounts Officer concerned,
statements showing the remissions of revenue and abandonment of claims to
revenue sanctioned during the preceding year by competent authorities in exercise
of the discretionary powers vested in them otherwise than by law or rule having
the force of law, provided that individual remissions below Rs. 100 need not be
included in the statements.

Rule 19. (2) For inclusion in the statements referred to in Rule 19 (1) above,
remissions and abandonment's should be classified broadly with reference to the
grounds on which they were sanctioned and a total figure should be given for each
class. A brief explanation of the circumstances leading to the remission should be
added in the case of each class.

Rule 20. Departments of the Central Government and Administrators may make
rules defining remissions and abandonments of revenue for the purpose of Rule
19 above.

I. GENERAL PRINCIPLES RELATING TO

EXPENDITURE AND PAYMENT OF MONEY

Rule 21. Standards of financial propriety : Every officer incur ring or authorizing
expenditure from public moneys should be guided by high standards of financial
propriety. Every officer should also enforce financial order and strict economy and
see that all relevant financial rules and regulations are observed, by his own office
and by subordinate disbursing officers. Among the principles on which emphasis is
generally laid are the following :-
(i) Every officer is expected to exercise the same vigilance in respect of
expenditure incurred from public moneys as a person of ordinary
prudence would exercise in respect of expenditure of his own money.
(ii) The expenditure should not be prima facie more than the occasion
demands.
(iii) No authority should exercise its powers of sanctioning expenditure to
pass an order which will be directly or indirectly to its own advantage.
(iv) Expenditure from public moneys should not be incurred for the benefit of
a particular person or a section of the people, unless -
(a) a claim for the amount could be enforced in a Court of Law, or
(b) the expenditure is in pursuance of a recognized policy or
custom.
(v) The amount of allowances granted to meet expenditure of a particular
type should be so regulated that the allowances are not on the whole a
source of profit to the recipients.

Rule 22. Expenditure from public funds : No authority may incur any
expenditure or enter into any liability involving expenditure or transfer of moneys

6
for investment or deposit from Government account unless the same has been
sanctioned by an authority competent to do so.

Rule 23. Delegation of Financial Powers : The financial powers of the

Government have been delegated to various subordinate authorities vide
Delegation of Financial Powers Rules, 1978 as amended from time to time. The
financial powers of the Government, which have not been delegated to a
subordinate authority, shall vest in the Finance Ministry.

Rule 24. Consultation with Financial Advisers : All draft memoranda for EFC /
PIB and CCEA / cabinet shall be circulated by the Ministry / Department
concerned after consultation with the Financial Adviser assigned to the Ministry /
Department. A confirmation to this effect shall be included in the draft
memorandum at the circulation stage.

Rule 25. Provision of funds for sanction : (1) All sanctions to expenditure shall
indicate the details of the provisions in the relevant grant or appropriation
wherefrom expenditure is to be met.

Rule 25. (2) All proposals for sanction to expenditure, shall indicate whether such
expenditure can be met by valid appropriation or re-appropriation.

Rule 25. (3) In cases where it become necessary to issue a sanction to

expenditure before funds are communicated, the sanction should specify that such
expenditure is subject to funds being communicated in the Budget of the year.

Rule 26. Responsibility of Controlling Officer in respect of Budget allocation:

The duties and responsibilities of a controlling officer in respect of funds placed at
his disposal are to ensure :
(i) that the expenditure doesn't exceed the budget allocation.
(ii) that the expenditure is incurred for the purpose for which funds have
been provided.
(iii) that the expenditure is incurred in public interest.
(iv) that adequate control mechanism is functioning in his department for
prevention, detection of errors and irregularities in the financial
proceedings of his subordinate offices and guard against waste and
loss of public money, and
(v) to ensure that mechanism / checks contemplated at (iv) above are
effectively applied.

Rule 27. (1) Date of effect of sanction : Subject to fulfillment of the provisions of
Rule 6 of the Delegation of Financial Powers Rules, 1978, all rules, sanctions or
orders shall come into force from the date of issue unless any other date from
which they shall come into force is specified therein.

Rule 27. (2) Date of creation to be indicated in sanctions for temporary

posts: Orders sanctioning the creation of a temporary post should, in addition to
the sanctioned duration, invariably specify the date from which it is created,
whether it be the date of entertainment or otherwise.
7
Rule 28. Powers in regard to certain special matters : Except in pursuance of
the general delegation made by, or with the approval of the President, a
subordinate authority shall not, without the previous consent of the Finance
Ministry, issue an order which -
(i) involves any grant of land, or assignment of revenue, or concession,
grant, lease or licence of mineral or forest rights, or rights to water
power or any easement or privilege of such concessions, or
(ii) involves relinquishment of revenue in any way.

Rule 29. Procedure for communication of sanctions : All financial sanctions

and orders issued by a competent authority shall be communicated to the Audit
Officer and the Accounts Officer. The procedure to be followed for communication
of financial sanctions and orders will be as under :-
(i) All financial sanctions issued by a Department of the Central Government
which relate to a matter concerning the Department proper and on the
basis of which payment is to be made or authorized by the Accounts
Officer, should be addressed to him.
(ii) All other sanctions should be accorded in the form of an Order, which
need not be addressed to any authority, but a copy thereof should be
endorsed to the Accounts Officer concerned.
(iii) In the case of non-recurring contingent and miscellaneous expenditure,
the sanctioning authority may, where required, accord sanction by signing
or countersigning the bill or voucher, whether before or after the money is
drawn, instead of by a separate sanction.
(iv) All financial sanctions and orders issued by a Department of the Central
Government with the concurrence of the Internal Finance Wing or Ministry
of Finance, as applicable, should be communicated to the Accounts
Officer in accordance with the procedure laid down in Rule 25 of the
Delegation of Financial Powers Rules, 1978, and orders issued
thereunder from time to time.
(v) All financial sanctions and orders issued by a department with the
concurrence of the Ministry of Home Affairs / Comptroller and Auditor
General of India / Department of Personnel should include a sentence that
the sanction /orders are issued with the concurrence of that Department
along with the number and date of relevant communication of that
Department wherein the concurrence was conveyed.
(vi) All orders conveying sanctions to expenditure of a definite amount or up to
a specific limit should express the amount of expenditure sanctioned both
in words and figures.
(vii) Sanctions accorded by a Head of Department may be communicated to
the Accounts Officer by an authorized Gazetted Officer of his Office duly
signed by him for the Head of Department or conveyed in the name of the
Head of the Department.
(viii) All orders conveying sanctions to the grant of additions to pay such as
Special Allowance, Personal Pay, etc., should contain a brief summary of
the reasons for the grant of such additions to pay so as to enable the
Accounts Officer to see that it is correctly termed as Special Allowance,
Personal Pay, etc., as the case may be.
8
 (ix) Orders issued by a Department of a Union Territory Government where
Audit and Accounts (a) have not been separated (b) have been separated,
shall be communicated direct to the Audit authority in case of (a) and for
(b) copies shall be endorsed to the Audit authorities.

In case of sanctions in respect of matters, where reference was

made to the Central Government under the Rules of Business framed
under Section 46 of the Government of Union Territory Act, 1963, the
following clause shall be added in the sanction endorsed to Audit:-

" A reference had been made in this case to the Central Government and
the above order/letter conforms to the decision of the Central Government
vide Government of India, Ministry / Department of ……..Letter
No…………dated…………..".

(x) Copies of all General Financial Orders issued by a Department of the

Central Government with the concurrence of the Comptroller and Auditor
General of India shall be supplied to the Comptroller and Auditor General
of India.
(xi) Copies of all sanctions / orders other than of the following types should be
endorsed to the Audit Officer:-
(a) Sanctions relating to grant to advances to Central Government
employees.
(b) Sanctions relating to appointment / promotion / transfer of Gazetted
and non-Gazetted Officers.
(c) All sanctions relating to creation / continuation / abolition of posts.
(d) Sanctions for handing over charge and taking over charge, etc.
(e) Sanctions relating to payment / withdrawal of General Provident
Fund advances to Government servants.
(f) Sanctions of contingent expenditure incurred under the powers of
Head of Offices.
(g) Other sanctions of routine nature issued by Heads of Subordinate
Officers (other than those issued by Ministries / Departments proper
and under powers of a Head of Department).
(xii) Sanctions accorded by competent authority to grants of land and
alienation of land revenue, other than those in which assignments of land
revenue are treated as cash payment, shall be communicated to the Audit
and/ or the Accounts Officer, as the case may be, in a consolidated
monthly return giving the necessary details .

Rule 30. Lapse of sanctions : A sanction for any fresh charge shall, unless it is
specifically renewed, lapse if no payment in whole or in part has been made during
a period of twelve months from the date of issue of the sanction.
Provided that -
(i) when the period of currency of the sanction is prescribed in the
departmental regulations or is specified in the sanction itself, it shall
lapse on the expiry of such periods; or

9
 (ii) when there is a specific provision in a sanction that the expenditure
would be met from the Budget provision of a specified financial year, it
shall lapse at the close of that financial year; or
(iii) in the case of purchase of stores, a sanction shall not lapse, if tenders
have been accepted (in the case of local or direct purchase of stores)
or the indent has been placed (in the case of Central Purchases) on the
Central Purchase Organization within the period of one year of the date
of issue of that sanction, even if the actual payment in whole or in part
has not been made during the said period.

Rule 31. Notwithstanding anything contained in Rule 30, a sanction in respect of

an addition to a permanent establishment, made from year to year under a general
scheme by a competent authority, or in respect of an allowance sanctioned for a
post or for a class of Government servants, but not drawn by the officer(s)
concerned, shall not lapse.

Rule 32. Remission of disallowance's by Audit and writing off of

overpayment made to Government servants : The remission of disallowance's
by Audit and writing off of overpayments made to Government servants by
competent authorities shall be in accordance with the provisions of the Delegation
of Financial Powers Rules, 1978, and instructions issued thereunder.

II. DEFALCATION AND LOSSES

Rule 33. Report of Losses : (1) Any loss or shortage of public moneys,
departmental revenue or receipts, stamps, opium, stores or other property
irrespective of the cause of loss and manner of detection, shall be immediately
reported by the subordinate authority concerned to the next higher authority as
well as to the Statutory Audit Officer and to the concerned Principal Accounts
Officer, even when such loss has been made good by the party responsible for it.
However the following losses need not be reported:

(i) Cases invo lving losses of revenue due to :-

(a) mistakes in assessments which are discovered too late to
permit of a supplementary claim being made,
(b) under assessments which are due to interpretation of the law
by the local authority being overruled by higher authority after
the expiry of the time-limit prescribed under the law, and
(c) refunds allowed on the ground that the claims were time-
barred:
(ii) Petty losses of value not exceeding Rs. 2000/-

Rule 33. (2) Cases involving serious irregularities shall be brought to the notice of
Financial Adviser / Chief Accounting Authority of the Ministry / Department
concerned and the Controller-General of Accounts, Ministry of Finance.

Rule 33. (3) Report of loss contemplated in sub-rule (1) & (2) shall be made at
two stages.
10
 (i) An initial report should be made as soon as a suspicion arises that a
loss has taken place.
(ii) The final report should be sent to authorities indicated in sub rule (1)
& (2) after investigation indicating nature and extent of loss, errors or
neglect of rules by which the loss has been caused and the
prospects of recovery.

Rule 33. (4) The complete report contemplated in sub-rule 3, shall reach through
proper channels to the Head of the Department, who shall finally dispose of the
same under the powers delegated to him under the Delegation of Financial Power
Rules, 1978. The reports, which he cannot finally dispose off under the delegated
powers, shall be submitted to the Government.

Rule 33. (5) An amount lost through misappropriation, defalcation, embezzlement,

etc., may be redrawn on a simple receipt pending investigation, recovery or write-
off with the approval of the authority competent to write-off the loss in question.

Rule 33. (6) In cases of loss to government on account of culpability of

government servants, the loss should be borne by the Central Government
Department or State Government concerned with the transaction. Similarly, if any
recoveries are made from the erring government officials in cash, the receipt will
be credited to the Central Government Department or State Government who
sustained the loss.

Rule 33. (7) All cases involving loss of Government money arising from erroneous
or irregular issue of cheques or irregular accounting of receipts will be reported to
the Controller-General of Accounts alongwith the circumstances leading to the
loss, so that he can take steps to remedy defects in rules or procedures, if any,
connected therewith.

Rule 34. Loss of Government property due to fire, theft, fraud : Departmental
Officers shall, in addition to taking action as prescribed in Rule 33, follow the
provisions indicated below in cases involving material loss or destruction of
Government property as a result of fire, theft, fraud, etc. -
(i) All losses above the value of Rs. 10,000/- due to suspected fire, theft,
fraud, etc., shall be invariably reported to the Police for investigation as
early as possible.
(ii) Once the matter is reported to the Police Authorities, all concerned
should assist the Police in their investigation. A formal investigation
report should be obtained from the Police Authorities in all cases, which
are referred to them.

Rule 35. Loss of immovable property by fire, flood, etc. : All loss of immovable
property exceeding Rs. 50,000/-, such as buildings, communications, or other
works, caused by fire, flood, cyclone, earthquake or any other natural cause, shall
be reported at once by the subordinate authority concerned to Government
through the usual channel. All other losses should be immediately brought to the
notice of the next higher authority.

11
Rule 36. Report to Audit and Accounts Officers : After a full enquiry as to the
cause and the extent of the loss has been made, the detailed report should be
sent by the subordinate authority concerned to Government through the proper
channel; a copy of the report or an abstract thereof being simultaneously
forwarded to the Audit / Accounts Officer.

Rule 37. Responsibility for Losses : An officer shall be held personally

responsible for any loss sustained by Government through fraud or negligence on
his part. He will also be held personally responsible for any loss arising from fraud
or negligence of any other officer to the extent to which it may be shown that he
contributed to the loss by his own action or negligence.

The departmental proceedings for assessment of responsibility for the loss

shall be conducted according to the instructions contained in Appendix 1 and
those issued by the Ministry of Personnel from time to time.

Rule 38. Prompt disposal of cases of loss : Action at each stage of detection,
reporting, write off, final disposal, in cases of losses including action against
delinquents and remedial measures should be completed promptly with special
attention to action against delinquents and remedial measures, taken to
strengthe n the control system.

III. SUBMISSION OF RECORDS AND INFORMATION.

Rule 39. Demand for information by Audit / Accounts Officer : A subordinate

authority shall afford all reasonable facilities to the Audit Officer / Accounts Officer
for the discharge of his functions, and furnish fullest possible information required
by him for the preparation of any official account or report.

Rule 40. A subordinate authority shall not withhold any information, books or other
documents required by the Audit Officer / Accounts Officer.

Rule 41. If the contents of any file are categorized as 'Secret' or 'Top Secret' the
file maybe sent personally to the Head of the Audit Office specifying this fact, who
will then deal with it in accordance with the standing instructions for the handling
and custody of such classified documents.

12
 CHAPTER - 3

BUDGET FORMULATION
AND
IMPLEMENTATION
Rule 42. Financial Year : Financial year of the Government shall commence on
the 1 st day of April of each year and end on the following 31st day of March.

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 estimated receipts and expenditure of the Central
Government in respect of a financial year, before the commencement of that year.

Rule 43. (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.

Rule 43. (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.

Rule 43. (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 / Sub head 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.
13
Rule 46. Expenditure estimates : (1) The expenditure estimates shall show
separately the sums required to meet 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.

Rule 46. (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 Government and for repayment of loans, treasury bills and
ways and means advances.

Rule 46. (3) The detailed estimates of expenditure will be prepared by the
estimating authorities for each unit of appropriation (Sub / Detailed/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.

Rule 46. (4) The estimates of Plan expenditure will be processed in consultation
with the Planning Commission in accordance with the instructions issued by them.

Rule 46. (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 /
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.

Rule 47. (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 State and Union Territory Governments and also Loans and
Advances relating to the service.

Rule 47. (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

14
down by the Finance Ministry and no alteration of arrangement or classification
shall be made without the approval of that Ministry.

Rule 48. (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/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 / Secretary (Expenditure)
may hold meetings with Secretaries / Financial Advisers of Administrative
Ministries/Departments to discuss the totality of the requirements of funds for
various programmes and schemes, along with receipts of the Ministries /
Departments.

Rule 49. (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 /
Secretary (expenditure) and the Secretary / 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.

Rule 50. (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.

15
 "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.

Rule 52. (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.

Rule 52. (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.

Rule 52. (4) To have effective control over expenditure by the Departments,
Controlling and Disbursing Officers subordinate to them shall follow the procedure
given below :-

(i) For drawal of money the Drawing and Disbursing Officer shall :-
(a) Prepare and present bills for "charged" and "voted" expenditure
separately.
(b) 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.
(c) 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.

(ii) (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.
(b) 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
invariably be sent.

16
(iii) (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.

(b) On receipt of the returns from Disbursing Officers, the Controlling

Officer shall examine them and satisfy himself :-
(aa) that the accounts classification has been properly given;
(bb) that progressive expenditure has been properly noted and the
available balances worked out correctly;
(cc) that expenditure up -to-date is within the grant or
appropriation; and
(dd) that the returns have been signed by Disbursing Officers

Where the Controlling Officer finds defects in any of these respects, he

shall take steps to rectify the defect.

(iv) 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 :-
(a) the totals of the figures supplied by Disbursing Officers;
(b) the totals taken from his own registers in Form GFR 9;
(c) 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.

(v) 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.

(vi) 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.

Rule 52. (5) 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.

17
 (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-à-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.

Rule 52. (6) 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.

Rule 52. (7) The Departments of Central Government should also obtain from the
Heads of Departments and other authorities under them, statements showing the
18
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.

Rule 52. (8) 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 59.

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 : (1) 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.

Rule 56. (2) 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.

19
Rule 56. (3) 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 Appendix - 14.

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
apprehe nded, 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.

Rule 58. (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 hono ur 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 fina ncial year to which such grant or
appropriation relates.

Rule 59. (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.

Rule 59. (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.

Rule 59. (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 Rs. 1
lakh or over and the primary units (secondary units, wherever necessary), affected

20
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.

Rule 61. (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.

Rule 61. (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.

Rule 61. (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 : (i) Subject to the provisions of Article 114 (3) of
the Constitution, money indisputably payable by Government shall not ordinarily
be left unpaid.
(ii) 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
(i) be responsible and accountable for financial management of his
Ministry / Department.

21
(ii) ensure that the public funds appropriated to the Ministry /
Department are used for the purpose for which they were meant.
(iii) be responsible for the effective, efficient, economical and transparent
use of the resources of the Ministry / Department in achieving the
stated project objectives of that Ministry or Department, whilst
complying with performance standards.
(iv) appear before the Committee on Public Accounts and any other
Parliamentary Committee for examination.
(v) review and monitor regularly the performance of the programmes
and projects assigned to his Ministry to determine whether stated
objectives are achieved.
(vi) be responsible for preparation of expenditure and other statements
relating to his Ministry / Department as required by regulations,
guidelines or directives issued by Ministry of Finance.
(vii) shall ensure that his Ministry / Department maintains full and proper
records of financial transactions and adopts systems and procedures
that will at all times afford internal controls.
(viii) shall ensure that his Ministry / 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;
(ix) shall take effective and appropriate steps to ensure his Ministry /
Department : -
(a) collects all moneys due to the Government and
(b) avoids unauthorized, irregular and wasteful expenditure

22
 CHAPTER - 4
GOVERNMENT ACCOUNTS
Rule 65. Preparation and presentation of Accounts : Accounts of the Union
Government shall be prepared every year showing the receipts and disbursements
for the year, surplus / deficit generated during the year and changes in
Government liabilities and assets. The accounts so prepared shall be got certified
by the Comptroller and Auditor General of India. The report of the Comptroller and
Auditor-General of India relating to these accounts shall be submitted to the
President of India, who shall cause them to be laid before each House of
Parliament.

Rule 66. Form of Accounts : By virtue of the provisions of Article 150 of the
Constitution, the Accounts of the Union Government shall be kept in such form as
the President may, on the advice of the Comptroller and Auditor General of India,
prescribe.

The Controller General of Accounts in the Ministry of Finance (Department

of Expenditure) is responsible for prescribing the form of accounts of the Union
and States, and to frame, or revise, rules and manuals relating thereto on behalf of
the President of India in terms of Article 150 of the Constitution of India, on the
advice of the Comptroller and Auditor General of India.

Rule 67. Principles of Accounting : The main principles according to which

Government accounts shall be maintained are contained in Government
Accounting Rules, 1990; Accounting Rules for Treasuries; and Account Code
Volume-III. Detailed rules and instructions relating to the forms of the initial and
subsidiary accounts to be kept and rendered by officers of the Department of
Posts and other technical departments are laid down in the respective Accounts
Manuals or in the departmental regulations relating to the department concerned.

Rule 68. Cash based Accounting : Government accounts shall be prepared on

cash basis. With the exception of suc h book adjustments as may be authorised by
Government Accounting Rules, 1990 or by any general or special orders issued by
the Central Government on the advice of the Comptroller and Auditor General of
India, the transactions in Government accounts shall represent the actual cash
receipt and disbursements during a financial year as distinguished from amounts
due to or by Government during the same period.

Rule 69. Period of Accounts : The annual accounts of the Central Government
shall record transactions which take place during a financial year running from 1st
April to 31st March.

Rule 70. Currency in which Accounts are kept : The accounts of Government
shall be maintained in Indian rupees. All foreign currency transactions and foreign
aid shall be broug ht into account after conversion into Indian rupees.

Rule 71. Main Divisions and structure of Accounts : The accounts of

Government shall be kept in three parts viz. Consolidated Fund (Part-I),
Contingency Fund (Part-II) and Public Account (Part-III).
23
 Part-I, -Consolidated Fund is divided into two Divisions, viz., 'Revenue' and
'Capital' divisions. The Revenue Division comprises of the sections 'Receipt Heads
(Revenue Account)' dealing with the proceeds of taxation and other receipts
classed as revenue and the section ‘Expenditure Heads (Revenue Account)'
dealing with the expenditure met therefrom. The Capital Division comprises of
three sections, viz., 'Receipt Heads (Capital Account)', 'Expenditure Heads
(Capital Account)' and 'Public Debt, Loans and Advances, etc.'. These sections
are in turn divided into sectors such as 'General Services', 'Social and Community
Services', 'Economic Services', etc., under which specific functions or services are
grouped corresponding to the sectors of Plan classification and which are
represented by Major Heads (comprising Sub-Major Heads wherever necessary).

In Part-II,-Contingency Fund, shall be recorded transactions connected with

the Contingency Fund set up by the Government of India under Article 267 of the
Constitution/Section 48 of Government of Union Territories Act, 1963. There shall
be a single Major Head to record the transactions in this regard. Each Major Head
in the Consolidated Fund (Revenue Expenditure, Capital Expenditure, Public Debt,
Loans and Advances and Inter-State settlement) as deemed necessary will appear
as a minor head below this Major Head.

In Part-III,-Public Account, transactions relating to debt (other than those

included in Part-I), reserve funds, deposits, advances, suspense, remittances and
cash balances shall be recorded.

Rule 72. Classification of transactions in Government Accounts : As a

general rule, classification of transactions in Government Accounts, shall have
closer reference to functions, programmes and activities of the Government and
the object of revenue or expenditure, rather than the department in which the
revenue or expenditure occurs.

Major Heads (comprising Sub-Major Heads wherever necessary) are

divided into Minor Heads, each of which has a number of subordinate heads,
generally known as Sub Heads. The Sub Heads are further divided into Detailed
Heads followed by Object Heads.

The Major Heads of account, falling within the sectors for expenditure
heads, generally correspond to functions of Government, while the Minor Heads,
subordinate to them, identify the programmes undertaken to achieve the
objectives of the functions represented by the Major Head. The Sub Head
represents schemes, the Detailed Head denotes sub scheme and Object Head
represent the primary unit of appropriation showing the economic nature of
expenditure such as salaries and wages, office expenses, travel expenses,
professional services, grants-in-aid, etc. The above six tiers are represented by a
unique 15 digit numeric code.

Rule 73. Authority to open a new Head of Account : The List of Major and
Minor Heads of Accounts of Union and States is maintained by the Ministry of
Finance (Department of Expenditure – Controller General of Accounts) which is
authorised to open a new head of account on the advice of the Comptroller and
Auditor General of India under the powers flowing from Article 150 of the
24
Constitution. It contains General Directions for opening Heads of Accounts and a
complete list of the Sectors, Major, Sub-Major and Minor Heads of Accounts (and
also some Sub / Detailed Heads under some of them authorised to be so opened).

Ministries/ Departments may open Sub-Heads and Detailed Heads as

required by them in consultation with the Budget Division of the Ministry of
Finance. Their Principal Accounts Offices may open Sub/Detailed Heads required
under the Minor Heads falling within the Public Account of India subject to the
above stipulations.

The Object Heads have been prescribed under Government of India’s

Orders below Rule 8 of Delegation of Financial Power Rules. The power to amend
/ modify these object heads and to open new Object Heads rest with Department
of Expenditure of Ministry of Finance on the advice of the Comptroller and Auditor
General of India.

Rule 74. Conformity of budget heads with rules of classification : Budget

Heads exhibited in estimates of receipts and expenditure framed by the
Government or in any order of appropriation shall conform to the prescribed rules
of classification.

Rule 75. Responsibility of Departmental officers : Every officer responsible for

the collection of Government dues or expenditure of Government money shall see
that proper accounts of the receipts and expenditure, as the case may be, are
maintained in such form as may have been prescribed for the financial
transactions of Government with which he is concerned and tender accurately and
promptly all such accounts and returns relating to them as may be required by
Government, Controlling Officer or Accounts Officer, as the case may be.

Rule 76. Classification should be recorded in all the bills and challans by
Drawing Officers : Suitable classification shall be recorded by Drawing Officers
on all bills drawn by them. Similarly, classification on challans crediting
Government money into the Bank shall be indicated or recorded by Departmental
Officers responsible for the collection of Government dues, etc. In cases of doubt
regarding the Head under which a transaction should be accounted, however, the
matter shall be referred to the Principal Accounts Officer of the
Ministry/Department concerned for clarification of the Ministry of Finance and the
Controller General of Accounts, wherever necessary.

Rule 77. Charged / Voted Expenditure : The expenditure covered under Article
112 (3) of the Constitution of India is Charged on the Consolidated Fund of India
and is not subject to vote by legislature. All other expenditure met out of
Consolidated Fund of India is treated as Voted expenditure. Charged / Voted
Expenditure shall be shown separately in the accounts as well as in the Budget
documents.

Rule 78. Plan / Non plan Expenditure : Plan expenditure representing

expenditure on Plan outlays approved for each scheme / organisation by the
Planning Commission and indicating the extent to which such outlays are met out

25
of budgetary provisions shall be shown distinctly from the other (Non-Plan)
expenditure in the accounts as well as in the Budget documents.

Rule 79. Capital / Revenue Expenditure : Significant expenditure incurred with

the object of acquiring tangible assets of a permanent nature (for use in the
organisation and not for sale in the ordinary course of business) or enhancing the
utility of existing assets, shall broadly be defined as Capital expenditure.
Subsequent, charges on maintenance, repair, upkeep and working expenses,
which are required to maintain the assets in a running order as also all other
expenses incurred for the day to day running of the organisation, including
establishment and administrative expenses shall be classified as Revenue
expenditure. Capital and Revenue expenditure shall be shown separately in the
Accounts.

Rule 80. Banking Arrangements : The Reserve Bank of India (RBI) shall be the
banker to the Government. It shall maintain Government’s cash balance and
provide banking facilities to the Ministries and subordinate/attached offices either
directly through its own offices or through its agent banks. For this purpose RBI
shall, in consultation with the Controller General of Accounts, nominate a bank to
function as Accredited Bank of a Ministry / Department. Pay & Accounts offices
and Cheque Drawing and Disbursing Officer shall have assignment accounts with
the identified branches of the accredited bank of the ministry. All payments shall
be made through these identified bank branc hes. These branches shall also
collect departmental and other receipts. Tax revenues of the Government shall be
collected by the RBI through its own offices or through the nominated branches of
its agent banks.

Note: Detailed procedure to be followed for remittance of Government receipts

into Government cash balance and reimbursement of payments made on behalf of
Government by the banks are laid down in the Memoranda of Instructions issued
by the Reserve Bank of India.

ANNUAL ACCOUNTS

Rule 81. Appropriation Accounts : Appropriation Accounts of Central Ministries

(other than Ministry of Railways) and of Central Civil Departments (excluding
Department of Posts and Defence Services) shall be prepared by the Principal
Accounts Officers of the respective Ministries and Departments (under the
guidance and supervision of the Controller General of Accounts) and signed by
their respective Chief Accounting Authorities i.e. the Secretaries in the concerned
Ministries / Departments. Union Government Appropriation Accounts (Civil)
required to be submitted to Parliament, shall be prepared annually by the
Controller General of Accounts by condensing and consolidating the aforesaid
Appropriation Accounts.

Appropriation Accounts pertaining to Departments of Posts and Defence

Services shall be prepared and signed by the Secretaries to the Government of

26
India in the Department of Posts and Ministry of Defence respectively and that of
Ministry of Railways by the Chairman, Railway Board.

Rule 82. Finance Accounts : Annual accounts of the Government of India

(including transactions of Department of Posts and Ministries of Defence and
Railways and transactions under Public Account of India of Union Territory
Governments), showing under the respective Heads the annual receipts and
disbursements for the purpose of the Union, called Finance Accounts, shall be
prepared by the Controller-General of Accounts.

Rule 83. Presentation of Annual accounts : The Appropriation and Finance

accounts mentioned above, shall be prepared by the respective authorities on the
dates mutually agreed upon with the Comptroller and Auditor-General of India, in
the forms prescribed by the President on the advice of the Comptroller and
Auditor-General of India and sent to the latter for recording his certificate. The
certified annual accounts and the Reports relating to the accounts shall be
submitted by the Comptroller and Auditor-General of India to the President in
accordance with the provisions of Section 11 of the Comptroller and Auditor-
General's (Duties, Powers and Conditions of Service) Act, 1971 and Clause (1) of
Article 151 of the Constitution of India.

PRO FORMA ACOUNTS

Rule 84. Subsidiary Accounts of Government Departments undertaking
commercial activities : The operations of certain government departments
working on a commercial or quasi-commercial basis, e.g. an industrial factory or a
store cannot be suitably brought within the cash based Government accounting
system. In such cases, the Head of the units shall be required to maintain such
subsidiary pro forma accounts in commercial form as may be agreed between
Government and Comptroller and Auditor-General. This includes the maintenance
of suitable Manufacturing, Trading, Profit & Loss Accounts and Balance Sheet.

Rule 85. Methods and principles on which subsidiary accounts in

commercial form are to be kept : The methods and principles in accordance
with which subsidiary and pro forma accounts in commercial form are to be kept
shall be regulated by orders and instructions issued by Government in each
case.
Note 1. Pro forma accounts of regular Government Workshops and Factories
shall be kept in accordance with the detailed rules and procedure prescribed in
the departmental regulations. Pro forma accounts relating to Public Works shall
be prepared by the Accounts Officers in accordance with the instructions
contained in Account Code for Accountants General.
Note 2. The Heads of Account (which should, as far as possible, be common to
the Government accounts and the General Ledger maintained by a Commercial
Undertaking) shall be selected with due regard to the principles of Governmental
and Commercial accounting so that the monthly classified account of income and
expenditure of the undertaking may be prepared readily from the General Ledger
maintained by it.

27
Rule 86. Adequate regulations to be framed to ensure cost deduced is
accurate and true : Where commercial accounts are maintained for the purpose
of assessment of the cost of an article or service, the Head of the unit shall
ensure that adequate regulations are framed with the approval of Government in
order to ensure that the cost deduced from the accounts is accurate and true.

Rule 87. Maintenance and submission of subsidiary accounts and

statements by department units : The Head of the unit shall arrange to obtain
the orders of Government regarding the nature and form of subsidiary accounts
and statements, if any. Such accounts and statements shall be submitted to the
Accounts Officer on such date as may be required by him. The same shall be
appended to the Appropriation Accounts of each year.

PERSONAL DEPOSIT ACCOUNT

Rule 88. Personal Deposit Account : Personal Deposit Account is a device
intended to facilitate the Designated Officer thereof to credit receipts into and
effect withdrawals directly from the account subject to an overall check being
exercised by the bank in which the account is authorised to be opened. The
Designated Officer shall ensure (with the help of a personal ledger account to be
maintained by the bank for the purpose) that no withdrawal will result in a minus
balance therein. The Designated Officers thereof shall be only Government
officers acting in their official or any other capacity.

Rule 89. Authority to open Personal Deposit Account : (1) The Personal
Deposit Account shall be authorised to be opened by a special order by the
concerned Ministry or Department in consultation with the Controller General of
Accounts. Such special order or permission shall be issued or granted by the
Ministry or Department concerned after satisfying itself that the initial accounts of
the moneys to be held in a personal deposit account and disbursed, shall be
arranged to be maintained properly and shall be subject to audit. Every Personal
deposit account so authorised to be opened shall form part of the Government
Account and be located in the Public Account thereof. The provisions relating to
“Personal Deposit Account” are contained in para 16.7 of Civil Accounts Manual
and Rule 191 to 194 of Central Government Account (Receipts and Payments)
Rules.

(2) Personal Deposit accounts shall generally be authorised to be opened in

the following types of cases:

(a) In favour of an Designated Officer appointed for the purpose of

administering monies tendered by or on behalf of ward and attached
estates under Government management. It shall also be ensured that
proper arrangements are made for the maintenance and audit of connected
initial accounts.

(b) In relation to Civil and Criminal Courts’ deposits, in favour of the Chief
Judicial authority concerned.
28
 (c) Where, under certain regulatory activities of the Government, receipts are
realised and credited to a Fund or Account under the provisions of an Act to
be utilised towards expenditure there under and no outgo from the
Consolidated Fund is involved.

(d) Where a personal deposit account is required to be created by a law or

rules having the force of law and certain liabilities devolve on the
Government out of the special enactments.

(e) Officers commanding units and others concerned in the administration of

public funds in the Defence Departments can be authorised to open
personal deposit accounts for such funds.

CAPITAL AND REVENUE ACCOUNTS

Rule 90. Capital Expenditure : Significant expenditure incurred with the object of
acquiring tangible assets of a permanent nature (for use in the organisation and
not for sale in the ordinary course of business) or enhancing the utility of existing
assets, shall broadly be defined as Capital expenditure. Subsequent, charges on
maintenance, repair, upkeep and working expenses, which are required to
maintain the assets in a running order as also all other expenses incurred for the
day to day running of the organisation, including establishment and administrative
expenses, shall be classified as Revenue expenditure. Capital and Revenue
expenditure shall be shown separately in the Accounts.

Expenditure on a temporary asset or on grants-in-aid cannot ordinarily be

considered as a capital expenditure and shall not, except in cases specifically
authorised by the President on the advice of the Comptroller and Auditor-General
of India, be debited to a Capital Head.

Capital expenditure is generally met from receipts of capital nature, as

distinguished from ordinary revenues derived from taxes, duties, fees, fines and
similar items of current income including extraordinary receipts. It is open to the
Government to meet capital expenditure from ordinary revenues, provided there
are sufficient revenue resources to cover this liability.

Expenditure of a capital nature, as defined above, shall not be classed as

Capital expenditure in the Government Accounts unless the classification has
been expressly authorised by general or special orders of Government.

Expenditure of a Capital nature shall be distinguished from Revenue

expenditure both in the B udget estimates and in Government Accounts.

Rule 91. Principles for allocation of expenditure between Capital and

Revenue : The following are the main principles governing the allocation of
expenditure between Revenue and Capital:-
(a) Capital shall bear all charges for the first construction and equipment of a
project as well as charges for intermediate maintenance of the work while
not yet opened for service. It shall also bear charges for such further
29
 additions and improvements, which enhance the useful life of the asset, as
may be sanctioned under rules made by competent authority.
(b) Subject to Clause (c) below, revenue shall bear subsequent charges for
maintenance and all working expenses. These embrace all expenditure on
the working and upkeep of the project and also on renewals and
replacements and additions, improvements or extensions that are revenue
in nature as per rules made by Government.
(c) In the case of works of renewal and replacement, which partake
expenditure both of a capital and revenue nature, the allocation of
expenditure shall be regulated by the broad principle that Revenue should
pay or provide a fund for the adequate re- placement of all wastage or
depreciation of property originally provided out of capital grants. Only the
cost of genuine improvements, which enhance the useful life of the asset
whether determined by prescribed rules or formulae, or under special
orders of Government, may be debited to Capital. Where under special
orders of Government, a Depreciation or Renewals Reserve Fund is
established for renewing assets of any commercial department or
undertaking, the distribution of expenditure on renewals and replacements
between Capital and the Fund shall be so regulated as to guard against
overcapitalisation on the one hand and excessive withdrawals from the
Fund on the other.
(d) Expenditure on account of reparation of damage caused by extraordinary
calamities such as flood, fire, earthquake, enemy action, etc., shall be
charged to Capital, or to Revenue, or divided between them, depending
upon whether such expenditure results in creation/acquisition of new assets
or whether it is only for restoring the condition of the existing assets, as may
be determined by Government according to the circumstance of each case.

Rule 92. Allocation between capital and revenue expenditure : The allocation
between capital and revenue expenditure on a Capital Scheme for which separate
Capital and Revenue Accounts are to be kept, shall be determined in accordance
with such general or special orders as may be prescribed by the Government after
consultation with the Comptroller and Auditor-General

Rule 93. Capital receipts during construction mainly to be utilised in

reduction of capital expenditure : Capital receipts in so far they relate to
expenditure previously debited to Capital accruing during the process of
construction of a project, shall be utilised in reduction of capital expenditure.
Thereafter their treatment in the accounts will depend on circumstances, but
except under special rule or order of Government, they shall not be credited to the
revenue account of the department or undertaking.

Rule 94. Receipts and recoveries representing recoveries of expenditure

previously debited to Capital Major Head : Receipts and recoveries on Capital
Account in so far as they represent recoveries of expenditure previously debited to
a Capital Major Head shall be taken in reduction of expenditure under the Major

30
Head concerned except where, under the rules of allocation applicable to a
particular department, such receipts have to be taken to Revenue.

Rule 95. Capital cost of non-productive work to be met from ordinary

revenues : As a general rule, capital cost of works which are non productive in
nature is met from ordinary revenues. Borrowed moneys and other resources
outside the Revenue Account shall not ordinarily be spent for non productive
purposes unless the following conditions are fulfilled:-
(a) The objects for which the money is wanted are so urgent and vital that the
expenditure can neither be avoided, postponed or distributed over a series
of years; and
(b) The amount is too large to be met from current revenues.

Rule 96. Conversion of outstanding loans into equity investments or

grants-in-aid : Government takes from time to time, suitable measures to
strengthen/restructure the Capital base of public sector enterprises so that these
enterprises can improve their performance and productivity. As a part of the
package scheme, financial relief in the form of conversion of outstanding loans into
equity investments or grants-in-aid are also agreed to.

Where loans outstanding against Public Sector Undertakings are proposed to

be converted into equity investments in or as grants-in-aid to the Public Sector
Undertakings, the approval of the Parliament to such proposals, shall be obtained
by including a token provision in the relevant Demands for Grants or
Supplementary Demands for Grants as may be found expedient. The details of
such conversion of loans may be explained in the relevant Budget/S upplementary
Demand documents. After obtaining the approval of the Parliament, the balances
under loans and the progressive expenditure of the Capital Heads of Accounts
shall be corrected pro forma through “Prior Period Adjustment Account" in the
relevant Finance Accounts of the Union Government without affecting the current
transactions of the year, under the Loan/Capital Major Heads concerned.

INTEREST ON CAPITAL
Rule 97. Interest rate : Except in special cases regulated by special orders of
Government, interest at such rates as may be specified from time to time shall be
charged in the accounts of all Commercial departments or units for which separate
capital and revenue accounts are maintained within the Government accounts.

Rule 98. Charging of interest on capital outlay met out of specific loans
raised by Government : (1) For capital outlay met out of specific loans raised by
Government, the interest shall be charged at such rate as may be prescribed by
Government, having regard to the rate of interest actually paid on such loans and
the incidental charges incurred in raising and managing them.

By specific loans are meant loans that are raised in the open market for one
specific purpose which is clearly specified in the prospectus and in regard to which
definite information is given at the time of raising of the loans.

(2) For capital outlay provided otherwise, interest shall be charged at the
31
average rate of interest to be determined each year by the Department of
Economic Affairs, Ministry of Finance.

(3) In the case of Capital Outlay of the Railways, dividend is payable to the
general revenues on the capital-at-charge at the rate prescribed in the Railway
Convention Resolution from time to time.

Rule 99. Method of calculation of interest : The interest shall be calculated on

the direct capital outlay at the end of the previous year plus half the outlay of the
year itself, irrespective of whether such outlay has been met from current
revenues or from other sources.

Rule 100. How interest charged to capital is to be written back : When under
any special orders of Government, charges for interest during the process of
construction of a project are temporarily met from capital, the writing back of
capitalised interest shall form the first charge on any capital receipts or surplus
revenue derived from the project when opened for working.

ADJUSTMENTS WITH OTHER GOVERNMENTS'DEPARTMENTS, ETC.

Rule 101. Adjustments with State Governments : Subject to the relevant

provision of the Constitution or of law made by Parliament or any orders issued
thereunder, adjustments in respect of financial transactions with State
Governments shall, unless otherwise provided for, be made in such manner, and
to such extent as may be mutually agreed upon between the Central Government
and the State Government concerned. However, adjustments with State
Government in respect of the matters mentioned below shall be regulated by the
rules contained in Appendix-5 to the Government Accounting Rules, 1990. The
rules are based on reciprocal arrangements made with the State Governments
and are, therefore, binding on all of them:-
(i) Pay and Allowances, other than Leave Salaries.
(ii) Leave Salaries.
(iii) Pensions.
(iv) Expenditure involved in Audit and Keeping Accounts.
(v) Cost of Police functions on Railways including the cost of protecting
Railway Bridges.
(vi) Cost of (a) Forest Surveys carried out by the Survey of India, and (b) Forest
maps prepared by that Department.
(vii) Leave Salary and Pension Contributions recovered in respect of
Government servants lent on Foreign Service.

Rule 102. Reaudit : As a convention, a period of three years has been accepted
by the Central and State Governments for the reaudit of past transactions
involving errors in classification.

Rule 103. When adjustment necessary : Adjustment shall always be made

unless otherwise agreed upon-
(a) If a commercial department or undertaking or a regularly organised store
department or store section of a department is concerned, or
32
 (b) If under the operation of any rule or order, an adjustment would have
been made if the particular transaction with State Government were a
transaction between two departments of the Central Government.

Rule 104. Petty and isolated claims for services rendered not to be preferred:
The Central Government (which includes Union Territories) and the State
Governments have agreed under reciprocal arrangements not to prefer petty and
isolated claims for an amount not exceeding Rs. 2,500 against one another.

Rule 105. Criteria in determining whether a particular claim is covered by the

reciprocal arrangement : The significant criterion in determining whether a
particular claim is covered by the reciprocal arrangement mentioned above, will be
that the claim shall be both petty and of an occasional character and shall cover
services rendered and not supplies made unless the latter forms part of service.
The term "service rendered" will be taken to mean an individual act of service, like
providing police escort to a high dignitary and will not apply to supply of stores etc.
Claims relating to Commercial undertakings under the Government of India or the
State Governments such as those of the Railways, the Department of Post, the
Electrical undertakings, etc., shall fall outside the purview of the proposed
reciprocal arrangements and shall continue to be settled as hitherto.

If a doubt arises as to whether a particular claim would fall within or outside

the purview of the proposed arrangement, it shall be decided by mutual
consultation. The above arrangements will remain in force without any time limit in
respect of all State Governments.

Rule 106. Projects jointly executed by several State Governments : 1n the

case of Projects, jointly executed by several Governments, where the expenditure
is to be shared by the participating Governments in agreed proportions, but the
expenditure is ab-initio incurred by one Government and shares of other
participating Governments recovered subsequently; such recoveries from other
Governments shall be exhibited as abatement of charges under the relevant
expenditure Head of Account in the books of the Governments incurring the
expenditure initially.

Rule 107. Claims of State Governments, on account of the extra cost of

agency functions : Claims of State Governments, on account of the extra cost of
agency functions entrusted to them under Article 258 of the Constitution shall be
dealt with and settled in accordance with such directions as may be issued by the
President in this regard from time to time.

Rule 108. Principles to be observed in dealing with State Government

claims : The following principles shall be generally observed in dealing with claims
preferred by State Governments under Clause (3) of Article 258 of the
Constitution:-
(a) If the agency work involves the employment of a State Commercial
Department, it would be open to that department to charge its normal
commercial costs.

33
(b) Public Works Department agency costs shall be represented by such
percentage charges on the cost of Central Works executed by the State as
may be agreed between the Central and the State Government concerned,
works outlay being treated as an amount placed at the disposal of the State
Government for actual expenditure on the execution of the work.
(c) The cost of regular joint establishment shall be shared as far as practicable on
the basis of fixed annual sums settled in agreement with the State
Government concerned.
(d) In other cases, the following procedure shall be adopted unless there are
special orders to the contrary:-
(i) Details of claims preferred by State Governments shall be ascertained.
(ii) If the work has been performed by the State Government in the past, the
charges shall be compared with those charged in the past but it is not
necessary to be meticulous in the matter.
(iii) If the charges are found to be reasonable and do not exceed Rs. 20,000/-
per annum for any individual item (or connected group of items), a five
years' contract shall be offered to the State Government during which the
Central Government would pay the fixed sum per annum for the work. The
amount will be subjected to review at the end of each period of five years.
(iv) If the amount agreed upon exceeds Rs. 20,000/-, it shall be necessary to
have an annual statement of proposed charges from the State
Government at the time of preparation of the Budget. However, if in any
individual case, the charges are obviously static, then the contract system
may be adopted in these cases also.
(e) In exceptional cases in which arbitration has to be resorted to, the Finance
Ministry will make the requisite arrangement in the matter.
(f) The Finance Ministry shall be consulted on all matters arising under Article 258
(3) of the Constitution.

Rule 109. Principles governing transactions in connection with the agency

functions entrusted to State Government : The following procedure shall be
followed in regard to transactions arising in connection with the agency functions
entrusted to the State Governments under Article 258 of the Constitution:
(a) The expenditure on extra staff or contingencies which the State Government
have to incur.-The extra cost to the State Government arising mainly in respect of
the additional staff employed or contingent and other expenditure, as in the case
of work devolving on the State Governments in connection with the administration
of the Census Act, is reimbursable under Article 258 (3) of the Constitution.
Expenditure in this regard shall be provided in the State Budget in the first
instance and adjusted in the accounts of the State Governments under the normal
Heads of Accounts. These will be reimbursed in lump to the State Governments,
necessary provision being made under a distinct sub -head" Amounts paid to other
Governments, Departments, etc.", under the concerned Demand of the Mi nistry
administratively concerned with the subject. In computing the extra cost, the
element of leave and pensionary charges can also be included, provided the
relevant service and financial rules of the State Governments provide for this.

(b) The expenditure on work entrusted to the State Government, such as

expenditure on construction and maintenance of National Highways, expenditure
34
on Defence Works, Aviation Works, etc. -The expenditure directly connected with
the execution of the scheme or work entrus ted to the State Government such as
expenditure on the construction or maintenance of National Highways, etc., will be
adjusted direct in the accounts of the Central Government under the relevant Head
of Account. The question of including the estimates in this regard in the Budget of
the State Governments and subjecting them to the vote of the State Legislature
will not arise. The expenditure will be adjusted under the Head “8658 – Suspense
Accounts –PAO Suspense" in the Remittance Section of the State Accounts in the
first instance pending their eventual clearance in accordance with the prescribed
procedure.

Note: In the converse case relating to the entrustment of a State function to the
Central Government under Article 258-A of the Constitution, a procedure similar to
that indicated in the Rule 109 above shall be followed. The extra cost on staff and
other contingent expenditure, etc., will accordingly have to be provided in the
Budget of the Central Government in the usual manner and recovery made in
lump from the State Government concerned. The other expenditure on execution
of the work proper should be debited to the State Government concerned direct
and the question of obtaining a vote of the Parliament for the same will not arise.

Rule 110. Crucial date for closure of inter-Government adjustments : Inter-

Governmental adjustments can be carried out upto the 15th of April on which date
the books of the Reserve Bank are closed for the month of March. Every
endeavour must, therefore, be made to settle as far as possible all transactions
with State Governments before the close of the year.

Rule 111. Adjustments with foreign Governments, outside bodies, etc. :

Unless exempted by Government by general or special orders, services shall not
be rendered to any foreign Government or non-Government body or institution or
to a separate fund constituted as such except on payment.

Rule 112. Recoveries of expenditure for services rendered to non-

Government parties : Recoveries of expenditure for services rendered or
supplies made to non-Government parties or other Governments (including local
funds and Governments outside India), shall in all cases be classified as receipts
of the Government rendering such services.

Rule 113. Recoveries of expenditure for services rendered as an agent :

When a Government undertakes a service merely as an agent of a private body,
the entire cost of the service shall be recovered from that body so that the net cost
to Government is nil. The recoveries shall be taken as reduction of expenditure.
Explanation: The term ‘recovery’ is used in these rules to denote repayment of/or
payment by non-Government parties or other Governments towards charges
initially incurred and classified by a Central Government Department in the
account, as fi nal expenditure by debit to a Revenue or Capital Head of Account.
Recoveries towards establishment charges, tools and plants, fees for procurement
of inspection of stores or both etc., effected at percentage rates or otherwise, are
some examples.

35
Rule 114. Payments to outside body or fund to be through grant-in-aid : Any
relief in respect of payment for services rendered or supplies made to any outside
body or fund shall ordinarily be given through a grant-in-aid rather than by
remission of dues.

Rule 115. Charges relating to the maintenance and demarcations and

disputes over boundaries : The incidence of charges relating to the maintenance
and demarcations and disputes over boundaries between India and a foreign
country is regulated by the following pri nciples;-
(a) Maintenance – Half the maintenance charges will be borne by the Central
Government, the other half being recovered, as far as practicable, from the
foreign country, failing which the foreign country’s share will also be borne
by the Central Government. However, Nepal will be subject to special
arrangements, which will be worked out in consultation with the Nepal
Government.
(b) Demarcation and Disputes – Charges relating to demarcation of boundaries
and boundary disputes will be borne by the Central Government under
Entry 10 of the Union List, subject to such recovery as shall be made from
the Foreign Country.
(c) Where streams or other watercourses form the boundaries and where the
ordinary principle of median line applies, the Government concerned (i.e.,
Foreign Country or India) will bear the cost of maintenance of the boundary
line on its side. Where a separate set of survey marks is maintained by
each of the two Governments on its side, the cost of maintenance of the
survey marks shall be borne by the Government concerned.

Exception: The share of the Bhutan Government for maintenance and

demarcation of and disputes over boundaries will be borne by the Central
Government for the present.

INTER-DEPARTMENTAL ADJUSTMENTS
Rule 116. Inter-Departmental Adjustments : Save as expressly provided by
any general or special orders, a Service Department shall not charge other
departments for services rendered or supplies made which falls within the class
of duties for which the former department is constituted. However, a commercial
department or undertaking shall ordinarily charge and be charged for any
supplies made and services rendered to, or by, other departments of
Government.

Rule 117. Principles for division of Departments for purposes of inter-

departmental payments : For purposes of inter-departmental payments, the
departments of a Government shall be divided into service departments and
commercial departments according to the following principles:-

36
 (a) Service Departments. -These are constituted for the discharge of those
functions which either-
(i) Are inseparable from and form part of the idea of Government e.g.
Departments of Administration of Justice, Jails, Police, Education,
Medical, Public Health, Forest, Defence; or
(ii) Are necessary to and form part of, the general conduct of the
business of Government e.g. Departments of Survey, Government
Printing, Stationery, Public Works (Building and Roads Branch),
Central Purchase Organisation (Director-General of Supplies and
Disposals, New Delhi).
(b) Commercial Departments or Undertakings.-These are established mainly
for the purposes of rendering services or providing supplies, of certain
special kinds, on payment for the services rendered or for the articles
supplied. They perform functions, which are not necessarily governmental
functions. They are required to work to a financial result determined
through accounts maintained on commercial principles.

Rule 118. Period for preferment of claims : All claims shall ordinarily be
preferred between Departments, both commercial and non-commercial of the
Central Government, within the same financial year and not beyond three years
from the date of transaction. This limitation, however, may be waived in specific
cases by mutual agreement between the departments concerned.

Rule 119. Procedure for settlement of inter-departmental adjustments : The

settlement of inter-departmental adjustments shall be regulated by the directions
contained in Chapter 4 of Government Accounting Rules, 1990.

Rule 120. Inter-departmental and other adjustments to be made in the

account year : Under the directions contained in the Account Code for
Accountants General, inter-departmental and other adjustments are not to be
made in the accounts of the past year, if they could not have been reasonably
anticipated in time for funds being obtained from the proper authority. In all cases,
where the adjustment could have reasonably been anticipated as, for example,
recurring payments to another Government or department and payments which,
though not of fixed amount, are of a fixed character, etc., the Accounts Officer will
automatically make the adjustment in the accounts before they are finally closed.
The onus of proving that the adjustments could not have been reasonably
anticipated should lie with the Controlling Officer.

As between different Departments of the same Government, the recoveries

effected for services rendered shall be classified as deductions from the gross
expenditure. However, recoveries made by a Commercial Department, e.g.,
Railways, Posts or a departmental commercial undertaking in respect of services
rendered in pursuance of the functions for which the Commercial Department is
constituted shall be treated as receipts of the Department but where it acts as an

37
agent for the discharge of functions not germane to the essential purpose of the
Department, the recoveries shall be taken as reduction of expenditure.
Exception.-Recoveries of fees for purchase, inspection, etc., effected by the
Central Purchase Organizations of Government of India, are treated as receipts
of the Department concerned.
NOTE I.-The term 'recovery' is used in this rule to denote repayment of / or
payment by one Department of the same Government towards charges initially
incurred and classified by another Department in its accounts as final expenditure
by debit to a Revenue or Capital Head of Account. Recoveries towards
establishment charges, tools and plants, fees for procurement or inspection of
stores or both, etc., effected at percentage rates or otherwise, are some examples.
NOTE 2.-Recoveries effected from another Department of the same
Government which are to be classified as deduction from the gross expenditure,
shall be shown in the relevant Demand for Grant as "below the line" recovery
under the appropriate major, etc., Head of Account. Recovery actually effected,
irrespective of the year to which it relates shall be adjusted in accounts in the
schedule of recovery to be attached to the Appropriation Account of the year in
which the recovery is effected.

Rule 121. Adjustment of Pensionary Charges of certain Commercial

Departments : Except as otherwise provided, the pensionary liability of
commercial departments and undertakings, for which pro forma commercial
accounts are maintained, shall be assessed on a contribution basis at such rates
as may be fixed by Government from time to time. In the case of departments and
undertakings, for which no regular commercial accounts are maintained either
within or outside the regular Government accounts but which are allowed to
charge for their products or services rendered, the pensionary liability shall be
taken into account in the estimate of overhead charges and manufacturing costs
for the purpose of calculating the issue price of goods manufactured or fees for
services rendered. The calculation shall be made at rates prescribed for the
purpose by Government.
NOTE: The Railways, Posts and Defence Departments are regarded as separate
Governments for the purpose of adjustment of pensionary charges.

Rule 122. Pensionary liability in the case of Government

Departments/Undertakings declared as commercial : In the case of
Government Departments and Undertakings declared as commercial, adjustment
of Pensionary liability shall be made in the regular accounts by charging the
average of the percentage for 15th year of service stipulated in Appendix-ll-A to
the P & T Compilation of Fundamental and Supplementary Rules, Volume-II, duly
rounded to the nearest whole number. The average of the rates for Groups 'A' to
'D' employees prescribed in O.M. No. F. 8 (9)-E. 111/81, dated the 29th July,
1982, issued by the Ministry of Finance (Department of Expenditure), works out
to 12 %.

38
 CHAPTER - 5
WORKS
Rule 123. Original works means all new constructions, additions and alternations
to existing works, special repairs to newly purchased or previously
abandoned building /structures, including remodeling or replacement
which genuinely increase the value of the property.

Repair works means works undertaken to maintain building and works in

a usable condition.

Rule 124. Administrative control of works includes:

(i) Assumption of full responsibility for construction, maintenance and
upkeep.
(ii) Proper utilization of buildings and allied works.
(iii) Provision of funds for execution of these functions.

Rule 125. Powers to sanction works : The powers delegated to various

subordinate authorities to accord administrative approval, sanction expenditure
and re-appropriate funds for works are regulated by the Delegation of Financial
Powers Rules, 1978, and other orders contained in the respective departmental
regulations.

Rule 126. (1) A Ministry / Department at its discretion may directly execute repair
works estimated to cost upto Rs. 10 Lakh after following due procedure indicated
in Rule 132.

Rule 126. (2) A Ministry / Department may, at its discretion, assign repair works
estimated to cost above Rs. 10 Lakh and upto Rs. 30 Lakh to any Public Works
Organisation, which includes State Public Works Divisions, other Central
Government organisations authorised to carry out civil or electrical works such as
Central Public Works Department (CPWD), Military Engineering Service (MES),
Border Roads Organisation etc. or Public Sector Undertakings set up by the
Central or State Government to carryout civil or electrical works.

Rule 126. (3) All original works costing upto Rs. 10 Lakh may be assigned by the
Ministry / Department concerned to a Public Works Organisations as defined in
Rule 126(2).

Rule 126. (4) All original works estimated to cost above Rs. 10 Lakh and repair
works estimated to cost above Rs. 30 Lakh may be got executed through a Public
Works Organisations as defined in Rule 126(2) after consultation with the Ministry
of Urban Development.

Rule 127. Work under the administrative control of the Public Works
Departments : Works not specifically allotted to any Ministry / Department shall
be included in the Grants for Civil Works to be administered by Central Public
Works Department. No such work may be financed partly from funds provided in

39
departmental budget and partly from the budget for Civil works as mentioned
above.

Rule 128. General Rules : Subject to the observance of these general rules, the
initiation, authorization and execution of works allotted to a particular Ministry /
Department shall be regula ted by detailed rules and orders contained in the
respective departmental regulations and by other special orders applicable to
them.

Rule 129. (1) No works shall be commenced or liability incurred in connection with
it until -
(i) administrative approval has been obtained from the appropriate
authority in each case;
(ii) sanction to incur expenditure has been obtained from the competent
authority.
(iii) a properly detailed design has been sanctioned;
(iv) estimates containing the detailed specifications and quantities of
various items have been prepared on the basis of the Schedule of
Rates maintained by CPWD / other Public Works Organisations and
sanctioned.
(v) funds to cover the charge during the year have been provided by
competent authority.
(vi) tenders invited and processed in accordance with rules.
(vii) a Work order issued.

Rule 129. (2) Should it become necessary to carry out a work or incur a liability in
infringement of sub-rule (1), on grounds of urgency or otherwise, the concerned
executive officer may do so on his own judgement and responsibility.
Simultaneously he should initiate action to obtain approval from the competent
authority and also to intimate the concerned Accounts Officer.

Rule 129. (3) Any development of a project thought necessary while a work is in
progress, which is not fairly contingent on the proper execution of work as first
sanctioned, shall have to be covered by a supplementary estimate.

Rule 130. For purpose of approval and sanctions, a group of works which forms
one project, shall be considered as one work. The necessity for obtaining approval
or sanction of higher authority to a project which consists of such a group of work
should not be avoided by the fact that the cost of each particular work in the
project is within the powers of such approval or sanction of a lower authority. This
provision, however, shall not apply in case of works of similar nature which are
independent of each other.

Rule 131. Any anticipated or actual savings from a sanctioned estimate for a
definite project, shall not, witho ut special authority, be applied to carry out
additional work not contemplated in the original project.

40
Rule 132. Procedure for Execution of Works : The broad procedure to be
followed by a Ministry / Department for execution of works under its own
arrangements shall be as under :-
(i) The detailed procedure relating to expenditure on such works shall
be prescribed by departmental regulations framed in consultation
with the Accounts Officer, generally based on the procedures and
the principles underlying the fi nancial and accounting rules
prescribed for similar works carried out by the Central Public Works
Department (CPWD).
(ii) Preparation of detailed design and estimates shall precede any
sanction for works.
(iii) No work shall be undertaken before Issue of Administrati ve Approval
and Expenditure Sanction by the competent Authority on the basis of
estimates framed.
(iv) Open tenders will be called for works costing Rs. 5 lakh to Rs. 10
lakh.
(v) Limited tenders will be called for works costing less than Rs. 5 lakh.
(vi) Execution of Contract Agreement / Award of Work should be done
before commencement of the work.
(vii) Final payment for work shall be made only on the personal certificate
of the Officer in charge of execution of the work in the format given
below:

I …………………..………Executing Officer of (Name of the Work),

am personally satisfied that the work has been executed as per the
specifications laid down in the Contract Agreement and the
workmanship is upto the standards followed in the Industry.

Rule 133. For original works and repair works entrusted to a 'Public Works
Organisation' as defined in Rule 126(2), the administrative approval and
expenditure sanction shall be accorded and funds allotted by the concerned
authority under these rules and in accordance with the Delegation of Financial
Power Rules 1978. The Public Works Organisation shall then execute the work
entrusted to it in accordance with the rules and procedures prescribed in that
organisation.

Rule 134. Review of Projects : After a project costing Rs. 10 Crores or above is
approved, the Administrative Ministry / Department will set up a Review
Committee consisting of a representative each from the Administrative Ministry,
Finance (Internal Finance Wing) and the Executing Agency to review the progress
of the work. The Review Committee shall have the powers to accept variation
within 10% of the approved estimates. For works costing less that Rs. 10 crores, it
will be at the discretion of the Administrative Ministry / Department to set up a
Review Committee on the above lines.

41
 CHAPTER - 6

PROCUREMENT OF GOODS AND SERVICES

I. PROCUREMENT OF GOODS

Rule 135. This chapter contains the general rules applicable to all
Ministries/Departments, regarding procurement of goods required for use in the
public service. Detailed instructions relating to procurement of goods may be
issued by the procuring departments broadly in conformity with the general rules
contained in this Chapter.

Rule 136. Definition of Goods : The term 'goods' used in this chapter applies
generally to all articles, material, commodities, livestock, furniture, fixtures, raw
material, spares, instruments, machinery, equipment, industrial plant etc.
purchased or otherwise acquired for the use of Government but excluding books,
publications, periodicals, etc. for a library.

Rule 137. Fundamental principles of public buying : Every authority delegated

the financial powers to procure goods in public interest has total and indivisible
responsibility and accountability for bringing efficiency, economy, transparency,
fair and equitable treatment of suppliers and promotion of competition in public
procurement.

The procedure to be followed in making public procurement must conform

to the following yardsticks :-
(i) The specifications in terms of quality, type etc., as also quantity of goods
to be procured, should be clearly spelt out keeping in view the specific
needs of the procuring organisations. The specifications so worked out
should meet the basic needs of the organisation without including
superfluous and non-essential features, which may result in unwarranted
expenditure. Care should also be taken to avoid purchasing quantities in
excess of requirement to avoid inventory carrying costs.
(ii) Offers should be invited following a fair, transparent and reasonable
procedure.
(iii) The procuring authority should be satisfied that the selected offer
adequately meets the requirement in all respects.
(iv) The procuring authority should satisfy itself that the price of the selected
offer is reasonable and consistent with the quality required.
(v) At each stage of procurement the concerned procuring authority must
place on record, in precise terms, the considerations which weighed with it
while taking the procurement decision.

Rule 138. Authorities competent to purchase stores : An authority which is

competent to incur contingent expenditure may sanction the purchase of goods
required for use in public service in accordance with Schedule V of the Delegation
42
of Financial Powers Rules, 1978, following the general procedure contained in the
following rules.

Rule 139. Procurement of goods required on mobilisation : Procurement of

goods required on mobilisation and/or during the continuance of Military
operations shall be regulated by special rules and orders issued by the
Government on this behalf from time to time.

Rule 140. Powers for procurement of goods : The Ministries / Departments

have been delegated full powers to make their own arrangements for procurement
of goods. In case however, a Ministry / Department does not have the required
expertise, it may project its indent to the Central Purchase Organisation (e.g.
DGS&D) with the approval of competent authority. The indent form to be utilised
for this purpose will be as per the standard form evolved by the Central Purchase
Organisation.

Rule 141. Rate Contract : The Central Purchase Organisation (e.g. DGS&D) will
conclude rate contracts with the registered suppliers, for goods and items of
standards types which are identified as common user items and are needed on
recurring basis by various Central Government Ministries / Departments. Definition
etc. of Registered suppliers is given in Rule 142 below. The Central Purchase
Organisation will furnish and update all the relevant details of the rate contracts in
its web site. The Ministries / Departments may operate those rate contracts to the
maximum extent possible.

Rule 142. Registration of Suppliers :

(i) With a view to establishing reliable sources for procurement of goods
commonly required for Government use, the Central Purchase
Organisation (e.g. DGS&D) will prepare and maintain item-wise lists of
eligible and capable suppliers. Such approved suppliers will be known as
"Registered Suppliers". All Ministries / Departments may utilise these lists
as and when necessary. Such registered suppliers are prima facie eligible
for consideration for procurement of goods through Limited Tender
Enquiry. They are also ordinarily exempted from furnishing bid security
along with their bids. A Head of Department may also register suppliers of
goods which are specifically required by that Department/Office.
(ii) Credentials, manufacturing capability, quality control systems, past
performance (for the goods in question), after-sales service, financial
background etc. of the supplier(s) should be carefully verified before
registration.
(iii) The supplier(s) will be registered for a fixed period (between 1 to 3 years)
depending on the nature of the goods. At the end of this period, the
registered supplier(s) willing to continue with registration are to apply
afresh for renewal of registration. New supplier(s) may also be considered
for registration at any time, provided they fulfil all the required conditions.
(iv) Performance and conduct of every registered supplier is to be watched by
the concerned Ministry / Department. The registered supplier(s) are liable
to be removed from the list of approved suppliers if they fail to abide by
the terms and conditions of the registration or fail to supply the goods on
43
 time or supply substandard goods or make any false declaration to any
Government agency or for any ground which, in the opinion of the
Government, is not in public interest.

Rule 143. Enlistment of Indian Agents : As per the Compulsory Enlistment

Scheme of the Department of Expenditure, Ministry of Finance, it is compulsory for
Indian agents, who desire to quote directly on behalf of their foreign principals, to
get themselves enlisted with the Central Purchase Organisation (eg. DGS&D).
However, such enlistment is not equivalent to registration of suppliers as
mentioned under Rule 142 above.

Rule 144. Reserved Items : The Central Government, through administrative

instructions, has reserved all items of handspun and handwoven textiles (khadi
goods) for exclusive purchase from Khadi Village Industries Commission (KVIC). It
has also reserved all items of handloom textiles required by Central Government
departments for exclusive purchase from KVIC and/or the notified handloom units
of ACASH (Association of Corporations and Apex Societies of Handlooms). The
Central Government has also reserved some items for purchase from registered
Small Scale Industrial Units. The Central Departments / Ministries are to make
their purchases for such reserved goods and items from such units as per the
instructions issued by the Central Government in this regard.

Rule 145. Purchase of goods without quotation : Purchase of goods upto a

value upto Rs. 15,000/- (Rs. Fifteen Thousand only) on each occasion may be
made without inviting quotations / bids on the basis of a certificate to be recorded
by the competent authority in the following format.
"I, ___________________ am personally satisfied that these goods
purchased are of the requisite quality and specification and have been purchased
from a reliable supplier at a reasonable price."

Rule 146. Purchase of goods by purchase committee : Purchase of goods

costing above Rs. 15,000/- (Rs. Fifteen Thousand only) and upto Rs. 1,00,000/-
(Rs. One lakh only) on each occasion may be made on the recommendations of a
duly constituted Local Purchase Committee consisting of three members of an
appropriate level as decided by the Head of the Department. The committee will
survey the market to ascertain the reasonableness of rate, quality and
specifications and identify the appropriate supplier. Before recommending
placement of the purchase order the members of the committee will jointly record
a certificate as under.
"Certified that we _____________________, members of the purchase
committee are jointly and individually satisfied that the goods recommended for
purchase are of the requisite specification and quality, priced at the prevailing
market rate and the supplier recommended is reliable and competent to supply the
goods in question. "

Rule 147. Purchase of goods directly under rate contract : (1) In case a
Ministry / Department directly procures Central Purchase Organisation (e.g.
DGS&D) rate contracted goods from suppliers, the prices to be paid for such
goods shall not exceed those stipulated in the rate contract and the other salient
44
terms and conditions of the purchase should be in line with those specified in the
rate contract. The Ministry / Department shall make its own arrangement for
inspection and testing of such goods where required.

Rule 147. (2) The Central Purchase Organisation (e.g. DGS&D) should host the
specifications, prices and other salient details of different rate contracted items,
appropriately updated, on the web site for use by the procuring Ministry /
Department.

Rule 148. A demand for goods should not be divided into small quantities to make
piece meal purchases to avoid the necessity of obtaining the sanction of higher
authority required with reference to the estimated value of the total demand.

Rule 149. Purchase of goods by obtaining bids / tenders : Ministries /

Departments shall procure goods under the powers referred to in Rule 140 above
by following the standard method of obtaining bids / tender as follows, except in
cases covered under Rule 145, 146 and 147(1).
(i) Advertised Tender Enquiry
(ii) Limited Tender Enquiry
(iii) Single Tender Enquiry

Rule 150. Advertised Tender Enquiry.

(i) Subject to exceptions incorporated under Rules 151 and 153, invitation
to tenders by advertisement should be used for procurement of goods of
estimated value Rs. 25 lakh (Rs. Twenty Five Lakh only) and above.
Advertisement in such case should be given in the Indian Trade Journal
(ITJ), published by the Director General of Commercial Intelligence and
Statistics, Kolkata and at least in one national daily having wide
circulation.
(ii) An organisation having its own web site should also publish all its
advertised tender enquiries on the web site and provide a link with NIC
web site. It should also give its web site address in the advertisements in
ITJ and newspapers.
(iii) The organisation should also post the complete bidding document in its
web site and permit prospective bidders to make use of the document
downloaded from the web site. If such a downloaded bidding document is
priced, there should be clear instructions for the bidder to pay the amount
by demand draft etc. along with the bid.
(iv) Where the Ministry / Department feels that the goods of the required
quality, specifications etc., may not be available in the country and it is
necessary to also look for suitable competitive offers from abroad, the
Ministry / Department may send copies of the tender notice to the Indian
embassies abroad as well as to the foreign embassies in India. The
selection of the embassies will depend on the possibility of availability of
the required goods in such countries.
(v) Ordinarily, the minimum time to be allowed for submission of bids should
be three weeks from the date of publication of the tender notice or
availability of the bidding document for sale, whichever is later. Where
the department also contemplates obtaining bids from abroad, the
45
 minimum period should be kept as four weeks for both domestic and
foreign bidders.

Rule 151. Limited Tender Enquiry.

(i) This method may be adopted when estimated value of the goods to be
procured is up to Rs. 25 Lakh. Copies of the bidding document should be
sent directly by speed post/registered post/courier/e-mail to firms which
are borne on the list of registered suppliers for the goods in question as
referred under Rule 142 above. The number of supplier firms in Limited
Tender Enquiry should be more than three. Further, web based publicity
should be given for limited tenders. Efforts should be made to identify a
higher number of approved suppliers to obtain more responsive bids on
competitive basis.
(ii) Purchase through Limited Tender Enquiry may be adopted even where
the estimated value of the procurement is more than Rs. 25 Lakh, in the
following circumstances.
(a) The competent authority in the Ministry / Department certifies that
the demand is urgent and any additional expenditure involved by
not procuring through advertised tender enquiry is justified in view
of urgency. The Ministry / Department should also put on record
the nature of the urgency and reasons why the procurement could
not be anticipated.
(b) There are sufficient reasons, to be recorded in writing by the
competent authority, indicating that it will not be in public interest to
procure the goods through advertised tender enquiry.
(c) The sources of supply are definitely known and possibility of fresh
source(s) beyond those being tapped, is remote.

(iii) Sufficient time should be allowed for submission of bids in Limited

Tender Enquiry cases.

Rule 152. Two bid system : For purchasing high value plant, machinery etc. of a
complex and technical nature, bids may be obtained in two parts as under :-
(a) Technical bid consisting of all technical details alongwith commercial
terms and conditions ; and
(b) Financial bid indicating item-wise price for the items mentioned in the
technical bid.

The technical bid and the financial bid should be sealed by the bidder in
separate covers duly superscribed and both these sealed covers are to be put in a
bigger cover which should also be sealed and duly superscribed. The technical
bids are to be opened by the purchasing Ministry / Department at the first instance
and evaluated by a competent committee / authority. At the second stage financial
bids of only the technically acceptable offers should be opened for further
evaluation and ranking before awarding the contract.

Rule 153. Late Bids : In the case of advertised tender enquiry or limited tender
enquiry, late bids (i.e. bids received after the specified date and time for receipt of
bids) should not be considered.
46
Rule 154. Single Tender Enquiry.
Procurement from a single source may be resorted to in the following
circumstances :
(i) It is in the knowledge of the user department that only a particular firm is
the manufacturer of the required goods.
(ii) In a case of emergency, the required goods are necessarily to be
purchased from a particular source and the reason for such decision is to
be recorded and approval of competent authority obtained.
(iii) For standardisation of machinery or spare parts to be compatible to the
existing sets of equipment (on the advice of a competent technical expert
and approved by the competent authority), the required item is to be
purchased only from a selected firm.

Note : Proprietary Article Certificate in the following form is to be provided by the

Ministry / Department before procuring the goods from a single source under the
provision of sub Rule 154 (i) and 154 (iii) as applicable.
'(i) The indented goods are manufactured by M/s……..………………..
(ii) No other make or model is acceptable for the following reasons :
……………………….
……………………….
……………………….
(iii) Concurrence of finance wing to the proposal vide : ………………..
(iv) Approval of the competent authority vide :………………………

________________________
________________________
(Signature with date and designation
of the procuring officer)'

Rule 155. Contents of Bidding Document : All the terms, conditions, stipulations
and information to be incorporated in the bidding document are to be shown in the
appropriate chapters as below :-
Chapter – 1 : Instructions to Bidders.
Chapter – 2 : Conditions of Contract.
Chapter – 3 : Schedule of Requirements.
Chapter – 4 : Specifications and allied Technical Details.
Chapter – 5 : Price Schedule(to be utilised by the bidders for quoting their
prices).
Chapter – 6 : Contract Form.
Chapter – 7 : Other Standard Forms, if any, to be utilised by the purchaser
and the bidders.

Rule 156. Maintenance Contract : Depending on the cost and nature of the
goods to be purchased, it may also be necessary to enter into maintenance
contract(s) of suitable period either with the supplier of the goods or with any other
competent firm, not necessarily the supplier of the subject goods. Such
maintenance contracts are especially needed for sophisticated and costly
equipment and machinery. It may however be kept in mind that the equipment /
47
machinery is maintained free of charge by the supplier during its warranty period
or such other extended periods as the contract terms may provide and the paid
maintenance should commence only thereafter.

Rule 157. Bid Security :

(i) To safeguard against a bidder’s withdrawing / altering its bid during the
bid validity period in the case of advertised or limited tender enquiry, Bid
Security (also known as Earnest Money) is to be obtained from the
bidders except those who are registered with the Central Purchase
Organisation, National Small Industries Corporation (NSIC) or the
concerned Ministry / Department. The bidders should be asked to furnish
bid security along with their bids. Amount of bid security should ordinarily
range between 2% to 5% of the estimated value of the goods to be
procured. The exact amount of bid security, should be determined
accordingly by the Ministry / Department and indicated in the bidding
documents. The bid security may be accepted in the form of Account
Payee Demand Draft, Fixed Deposit Receipt, Banker's Cheque or Bank
Guarantee from any of the commercial banks in an acceptable form,
safeguarding the purchaser's interest in all respects. The bid security is
normally to remain valid for a period of 45 days beyond the final bid
validity period.
(ii) Bid securities of the unsuccessful bidders should be returned to them at
the earliest after expiry of the final bid validity but not later than 30 days
after the award of the contract.

Rule 158. Performance Security :

(i) To ensure due performance of the contract, Performance Security is
to be obtained from the successful bidder awarded the contract.
Performance Security is to be obtained from every successful bidder
irrespective of its registration status etc. Performance Security
should be for an amount of 5 to 10% of the value of the contract.
Performance Security may be furnished in the form of an Account
payee Demand Draft, Fixed Deposit Receipt from a Commercial
bank, Bank Guarantee from a Commercial bank in an acceptable
form safeguarding the purchasers interest in all respects.
(ii) Performance Security should remain valid for a period of 60 days
beyond the date of completion of all contractual obligations of the
supplier including warranty obligations.
(iii) Bid security should be refunded to the successful bidder on receipt of
Performance Security.

Rule 159. (1) Advance payment to supplier : Ordinarily, payments for services
rendered or supplies made should be released only after the services have been
rendered or supplies made. However, it may become necessary to make advance
payments in the following types of cases :-
(i) Advance payment demanded by firms holding maintenance
contracts for servicing of Air-conditioners, computers, other costly
equipment, etc.
48
 (ii) Advance payment demanded by firms against fabrication contracts,
turn-key contracts etc.

Such advance payments should not exceed the following limits :

(i) 30% of the contract value to private firms.
(ii) 40% of the contract value to a State / Central Government agency or
a Public Sector Undertaking.
(iii) In case of maintenance contract, the amount should not exceed the
amount payable for six months under the contract.

Ministries/Departments of the Central Government may relax, in

consultation with their Financial Advisers concerned, the ceilings (including
percentage laid down for advance payment for private firms) mentioned above.
While making any advance payment as above, adequate safeguards in the form of
bank guarantee etc. should be obtained from the firm.

Rule 159. (2) Part payment to suppliers : Depending on the terms of delivery
incorporated in a contract, part payment to the supplier may be released after it
despatches the goods from its premises in terms of the contract.

Rule 160. Transparency, competition, fairness and elimination of

arbitrariness in the procurement process : All government purchases should be
made in a transparent, competitive and fair manner, to secure best value for
money. This will also enable the prospective bidders to formulate and send their
competitive bids with confidence. Some of the measures for ensuring the above
are as fo llows :-
(i) The text of the bidding document should be self-contained and
comprehensive without any ambiguities. All essential information, which
a bidder needs for sending responsive bid, should be clearly spelt out in
the bidding document in simple language. The bidding document should
contain, inter alia
(a) The criteria for eligibility and qualifications to be met by the
bidders such as minimum level of experience, past
performance, technical capability, manufacturing facilities and
financial position etc.
(b) Eligibility criteria for goods indicating any legal restrictions /
conditions about the origin of goods etc which may need to be
met by the successful bidder.
(c) The procedure as well as date, time and place for sending the
bids.
(d) Date, time and place of opening of the bid.
(e) Terms of delivery.
(f) Any special terms affecting performance.

(ii) Suitable provision should be kept in the bidding document to enable a

bidder to question the bidding conditions, bidding process and/ or
rejection of its bid.
(iii) Suitable provision for settlement of disputes, if any, emanating from the
resultant contract, should be kept in the bidding document.
49
(iv) The bidding document should indicate clearly that the resultant contract
will be interpreted under Indian Laws.
(v) The bidders should be given sufficient time to send their bids.
(vi) The bids should be opened in public and authorised representatives of
the bidders should be permitted to attend the bid opening.
(vii) The specifications of the required goods should be clearly stated without
any ambiguity, so that the prospective bidders can send meaningful bids.
In order to attract sufficient number of bidders, the specification should
be broad based to the extent feasible. Efforts should also be made to use
standard specifications which are widely known to the industry.
(viii) Pre-bid conference : In case of turn-key contract(s) or contract(s) of
special nature for procurement of sophisticated and costly equipment, a
suitable provision is to be kept in the bidding documents for a pre-bid
conference for clarifying issues and clearing doubts, if any, about the
specifications and other allied technical details of the plant, equipment
and machinery projected in the bidding document. The date, time and
place of pre-bid conference should be indicated in the bidding document.
This date should be sufficiently ahead of bid opening date.
(ix) Criteria for determining responsiveness of bids, criteria as well as factors
to be taken into account for evaluating the bids on a common platform
and the criteria for awarding the contract to the responsive lowest bidder
should be clearly indicated in the bidding documents.
(x) Bids received should be evaluated in terms of the conditions already
incorporated in the bidding documents: no new condition, which was not
incorporated in the bidding documents should be brought in for
evaluation of the bids. Determination of a bid's responsiveness should be
based on the contents of the bid itself without recourse to extrinsic
evidence.
(xi) Bidders should not be permitted to alter and modify their bids after expiry
of the deadline for receipt of bids.
(xii) Negotiation with bidders after bid opening must be severely discouraged.
However, in exceptional circumstances where price negotiation against
an ad-hoc procurement is necessary due to some unavoidable
circumstances, the same may be resorted to only with the lowest
evaluated responsive bidder.
(xiii) In the rate contract system, where a number of firms are brought on rate
contract for the same item, negotiation as well as counter offering of
rates are permitted with the bidders in view and for this purpose special
permission has been given to the Directorate General of Supplies and
Disposals (DGS&D).
(xiv) Contract should ordinarily be awarded to the lowest evaluated bidder
whose bid has been found to be responsive and who is eligible and
qualified to perform the contract satisfactorily as per the terms and
conditions incorporated in the corresponding bidding document.
However, where the lowest acceptable bidder against ad hoc
requirement is not in a position to supply the full qua ntity required, the
remaining quantity, as far as possible, be ordered from the next higher
responsive bidder at the rates offered by the lowest responsive bidder.

50
 (xv) The name of the successful bidder awarded the contract should be
mentioned in the Ministries / Departments notice board / bulletin / web
site

Rule 161. Efficiency, Economy and Accountability in Public Procurement

System : Public procurement procedure is also to ensure efficiency, economy and
accountability in the system. To achieve the same, fo llowing keys areas should be
addressed ..
(i) To reduce delay, appropriate time frame for each stage of procurement
should be prescribed by the Ministry / Department. Such a time frame will
also make the concerned purchase officials more alert.
(ii) To minimise the time needed for decision making and placement of
contract, every Ministry / Department, with the approval of the competent
authority, may delegate, wherever necessary, appropriate purchasing
powers to the lower functionaries.
(iii) The Ministries / Departments should ensure placement of contract within
the original validity of the bids. Extension of bid validity must be
discouraged and resorted to only in exceptional circumstances.
(iv) The Central Purchase Organisation (e.g. DGS&D) should bring into the
rate contract system more and more common user items which are
frequently needed in bulk by various Central Government departments.
The Central Purchase Organisation (e.g. DGS&D) should also ensure that
the rate contracts remain available without any break.

Rule 162. Buy-Back Offer : When it is decided with the approval of the competent
authority to replace an existing old item(s) with a new and better version, the
department may trade the existing old item while purchasing the new one. For this
purpose, a suitable clause is to be incorporated in the bidding document so that
the prospective and interested bidders formulate their bids accordingly. Depending
on the value and condition of the old item to be traded, the time as well as the
mode of handing over the old item to the successful bidder should be decided and
relevant details in this regard suitably incorporated in the bidding document.
Further, suitable provision should also be kept in the bidding document to enable
the purchaser either to trade or not to trade the item while purchasing the new
one.

II. PROCUREMENT OF SERVICES

Rule 163. The Ministries/Departments may hire external professionals,

consultancy firms/consultants (referred to as consultant hereinafter) for a specific
job, which is well defined in terms of content and time frame for its completion or
outsource certain services.

Rule 164. This chapter contains the fundamental principles applicable to all
Ministries / Departments regarding engagement of consultant(s) and outsourcing
51
of services. Detailed instructions to this effect may be issued by the concerned
Ministries / Departments. However, the Ministries / Departments shall ensure that
they do not contravene the basic rules contained in this chapter.

Rule 165. Identification of Work / Services required to be performed by

Consultants : Engagement of consultants may be resorted to in situations
requiring high quality services for which the concerned Ministries / Department
does not have requisite expertise. Approval of the competent authority should be
obtained before engaging consultant(s).

Rule 166. Preparation of scope of the required work / service : The Ministries /
Departments should prepare in simple and concise language the requirement,
objectives and the scope of the assignment. The eligibility and pre-qualification
criteria to be met by the consultants should also be clearly identified at this stage.

Rule 167. Estimating reasonable expenditure : Ministry / Department proposing

to engage consultant(s) should estimate reasonable expenditure for the same by
ascertaining the prevalent market conditions and consulting other organisations
engaged in similar activities.

Rule 168. Identification of likely sources :

(i) Where the estimated cost of the work / service is upto Rs. 25 lakh,
preparation of a long list of potential consultants may be done on the
basis of formal / informal enquiries from other
Ministries/Departments/Organisations involved in similar activities,
Chambers of Commerce & Industry, Association of consultancy firms
etc.
(ii) Where the estimated cost of the work / service is above Rs. 25 lakh, in
addition to (i) above, an enquiry for seeking ‘Expression of Interest’ from
consultants should be published in at least one national daily and the
Ministry's web site. The web site address should also be given in the
advertisements. Enquiry for seeking Expression of Interest should
include in brief, the broad scope of work / service, inputs to be provided
by the Ministry / Department, eligibility and the pre-qualification criteria
to be met by the consultant(s) and consultant’s past experience in
similar work / service. The consultants may also be asked to send their
comments on the objectives and scope of the work / service projected in
the enquiry. Adequate time should be allowed for getting responses
from interested consultants

Rule 169. Short listing of consultants : On the basis of responses received from
the interested parties as per Rule 168 above, consultants meeting the
requirements should be short listed for further consideration. The number of short
listed consultants should not be less than three.

Rule 170. Preparation of Terms of Reference (TOR) : The TOR should include
(i) Precise statement of objectives;
(ii) Outline of the tasks to be carried out;
52
 (iii) Schedule for completion of tasks;
(iv) The support / inputs to be provided by the Ministry / Department to
facilitate the consultancy.
(v) The final outputs that will be required of the Consultant;

Rule 171. Preparation and Issue of Request for Proposal (RFP) : RFP is the
document to be used by the Ministry / Department for obtaining offers from the
consultants for the required work / service. The RFP should be issued to the
shortlisted consultants to seek their technical and financial proposals. The RFP
should contain :
(i) A letter of Invitation
(ii) Information to Consultants regarding the procedure for submission of
proposal .
(iii) Terms of Reference (TOR).
(iv) Eligibility and pre-qualification criteria incase the same has not been
ascertain through Enquiry for Expression of Interest.
(v) List of key position whose CV and experience would be evaluated.
(vi) Bid evaluation criteria and selection procedure.
(vii) Standard formats for technical and financial proposal.
(viii) Proposed contract terms.
(ix) Procedure proposed to be followed for midterm review of the
progress of the work and review of the final draft report.

Rule 172. Receipt and opening of proposals : Proposals should ordinarily be

asked for from consultants in ‘Two-bid’ system with technical and financial bids
sealed separately. The bidder should put these two sealed envelops in a bigger
envelop duly sealed and submit the same to the Ministry / Department by the
specified date and time at the specified place. On receipt, the technical proposals
should be opened first by the Ministry / Department at the specified date, time and
place.

Rule 173. Late Bids : Late bids i.e. bids received after the specified date and time
of receipt, should not be considered.

Rule 174. Evaluation of Technical Bids : Technical bids should be analysed and
evaluated by a Consultancy Evaluation Committee (CEC) constituted by the
Ministry / Department. The CEC shall record in detail the reasons for acceptance /
rejection of the technical proposals analysed and evaluated by it.

Rule 175. Evaluation of Financial Bids of the technically qualified bidders :

The Ministry / Department shall open the financial bids of only those bidders who
have been declared technically qualified by the Consultancy Evaluation Committee
as per Rule 174 above for further analysis / evaluation and ranking and selecting
the successful bidder for placement of the consultancy contract.

Rule 176. Consultancy by nomination : Under some special circumstances, it

may become necessary to select a particular consultant where adequate
justification is available for such single -source selection in the context of the
overall interest of the Ministry / Department. Full justification for single source
53
selection should be recorded in the file and approval of the competent authority
obtained before resorting to such single -source selection.

Rule 177. Monitoring the Contract : The Ministry / Department should be

involved throughout in the conduct of consultancy, preferably by taking a task
force approach and continuously monitoring the performance of the consultant(s)
so that the output of the consultancy is in line with the Ministry /Department’s
objectives.

OUTSOURCING OF SERVICES

Rule 178. Outsourcing of Services : A Ministry / Department may outsource

certain services in the interest of economy and efficiency and it may prescribe
detailed instructions and procedures for this purpose without, however,
contravening the following basic guidelines.

Rule 179. Identification of likely contractors : The Ministry / Department should

prepare a list of likely and potential contractors on the basis of formal / informal
enquIries from other Ministries / Departments and Organisations involved in similar
activities, scrutiny of ‘Yellow pages’, and trade journals, if available, web site etc.

Rule 180. Preparation of Tender enquiry : Ministry / Department should prepare

a tender enquiry containing, inter alia :
(i) The details of the work / service to be performed by the contractor;
(ii) The facilities and the inputs which will be provided to the contractor by the
Ministry / Department;
(iii) Eligibility and qualification criteria to be met by the contractor for performing
the required work / service; and
(iv) The statutory and contractual obligations to be complied with by the
contractor.

Rule 181. Invitation of Bids :

(a) For estimated value of the work / service upto Rs. 10 lakh or less :
The Ministry / Department should scrutinise the preliminary list of
likely contractors as identified as per Rule 179 above, decide the
prima facie eligible and capable contractors and issue limited tender
enquiry to them asking for their offers by a specified date and time
etc. as per standard practice. The number of the contractors so
identified for issuing limited tender enquiry should not be less than
six.
(b) For estimated value of the work / service above Rs. 10 lakh : The
Ministry / Department should issue advertised tender enquiry asking
for the offers by a specified date and time etc. in at least one
popular largely circulated national newspaper and web site of the
Ministry / Department.

Rule 182. Late Bids : Late bids i.e. bids received after the specified date and time
of receipt, should not be considered.

54
Rule 183. Evaluation of Bids Received : The Ministry / Department should
evaluate, segregate, rank the responsive bids and select the successful bidder for
placement of the contract.

Rule 184. Outsourcing by Choice : Should it become necessary, in an

exceptional situation to outsource a job to a specifically chosen contractor, the
Secretary of a Ministry / Department may do so in consultation with the Financial
Adviser. In such cases the detailed justification, the circumstances leading to the
outsourcing by choice and the special interest / purpose it shall serve shall form an
integral part of the proposal.

Rule 185. Monitoring the Contract : The Ministry / Department should be

involved throughout in the conduct of the contract and continuously monitor the
performance of the contractor.

55
 CHAPTER - 7
INVENTORY MANAGEMENT

Rule 186. This chapter contains the basic rules applicable to all Ministries /
Departments regarding inventory management. Detailed instructions and
procedures relating to inventory management may be prescribed by various
Ministries / Departments broadly in conformity with the basic rules contained in this
chapter.

Rule 187. Receipt of goods and materials from private suppliers : (1) While
receiving goods and materials from a supplier, the officer–in-charge of stores
should refer to the relevant contract terms and follow the prescribed procedure for
receiving the materials.

Rule 187. (2) All materials shall be counted, measured or weighed and subjected
to visual inspection at the time of receipt to ensure that the quantities are correct,
the quality is according to the required specifications and there is no damage or
deficiency in the materials. Technical inspection where required should be carried
out at this stage by Technical Inspector / Agency approved for the purpose. An
appropriate receipt, in terms of the relevant contract provisions may also be given
to the supplier on receiving the materials.

Rule 187. (3) Details of the material so received should thereafter be entered in
the appropriate stock register. The officer-in-charge of stores should certify that he
has actually received the material and recorded it in the appropriate stock
registers.

Rule 188. Receipt / issue of goods and materials from internal divisions of
the same organisation : (1) The indenting officer requiring goods and materials
from internal division(s) of the same organisation should project an indent in the
prescribed form for this purpose. While receiving the supply against the indent, the
indenting officer shall examine, count, measure or weigh the materials as the case
may be, to ensure that the quantities are correct, the quality is in line with the
required specifications and there is no damage or deficiency in the materials. An
appropriate receipt shall also be given to this effect by the indenting officer to the
division sending the materials.

Rule 188. (2) In the case of issue of materials from stock for departmental use,
manufacture, sale, etc., the Officer-in-charge of the stores shall see that an
appropriate indent, in the prescribed form has been projected by the indenting
officer. A written acknowledgement of receipt of material issued shall be obtained
from the indenting officer or his authorised representative at the time of issue of
materials.

Rule 188. (3) In case of materials issued to a contractor, the cost of which is
recoverable from the contractor, all relevant particulars, including the recovery

56
rates and the total value chargeable to the contractor should be got acknowledged
from the contractor duly signed and dated.

Rule 188. (4) If the Officer-in-charge of the stores is unable to comply with the
indent in full, he should make the supply to the extent available and make suitable
entry to this effect in the indentor’s copy of the indent. In case alternative materials
are available in lieu of the indented materials, a suitable indication to this effect
may be made in the document.

Rule 189. Custody of goods and materials : The officer-in-charge of stores

having custody of goods and materials, especially valuable and / or combustible
articles, shall take appropriate steps for arranging their safe custody, proper
storage accommodation, including arrangements for maintaining required
temperature, dust free environment etc.

Rule 190. Lists and Accounts : (1) The Officer-in-charge of stores shall maintain
suitable item-wise lists and accounts and prepare accurate returns in respect of
the goods and materials in his charge making it possible at any point of time to
check the actual balances with the book balances.

The form of the stock accounts mentioned above shall be determined with
reference to the nature of the goods and materials, the frequency of the
transactions and the special requirements of the concerned Ministries /
Departments.

Rule 190. (2) Separate accounts shall be kept for

(i) Fixed Assets such as plant, machinery, equipment, furniture, fixtures
etc. in the Form GFR - 40.
(ii) Consumables such as office stationery, chemicals, maintenance
spare parts etc. in the Form GFR - 41.
(iii) Library books in the Form GFR 35
(iv) Assets of historical / artistic value held by museum / government
departments in the Form GFR - 42.
Note : These forms can be supplemented with additional details by
Ministries / Departments as required.

Rule 191. Hiring out of Fixed Assets : When a fixed asset is hired to local
bodies, contractors or others, proper record should be kept of the assets and the
hire and other charges as determined under rules prescribed by the competent
authority, should be recovered regularly. Calculation of the charges to be
recovered from the local bodies, contractors and others as above should be based
on the historical cost.

Rule 192. (1) Physical verification of Fixed Assets : The inventory for fixed
assets shall ordinarily be maintained at site. Fixed assets should be verified at
least once in a year and the outcome of the verification recorded in the
corresponding register. Discrepancies, if any, shall be promptly investigated and
brought to account.

57
Rule 192. (2) Verification of Consumables : A physical verification of all the
consumable goods and materials should be undertaken at least once in a year and
discrepancies, if any, should be recorded in the stock register for appropriate
action by the competent authority.

Rule 192. (3) Procedure for verification :

(i) Verification shall always be made in the presence of the officer,
responsible for the custody of the inventory being verified.
(ii) A certificate of verification alongwith the findings shall be recorded in
the stock register.
(iii) Discrepancies, including shortages, damages and unserviceable
goods, if any, identified during verification, shall immediately be
brought to the notice of the competent authority for taking
appropriate action in accordance with provision given in Rule 33 to
38.

Rule 193. Buffer Stock : Depending on the frequency of requirement and quantity
thereof as well as the pattern of supply of a consumable material, optimum buffer
stock should be determined by the competent authority.

Note : As the inventory carrying cost is an expenditure that does not add value to
the material being stocked, a material remaining in stock for over a year shall
generally be considered surplus, unless adequate reasons to treat it otherwise
exist.

Rule 194. Physical verification of Library books :

(i) Complete physical verification of books should be done every year in
case of libraries having not more than 20,000 volumes. For libraries
having more than 20,000 volumes and upto 50,000 volumes, such
verification should be done at least once in three years. Sample
physical verification at intervals of not more than three years should
be done in case of libraries having more than 50,000 volumes. In
case such a verification reveals unusual or unreasonable shortages,
complete verification shall be done.

(ii) Loss of five volumes per one thousand volumes of books issued /
consulted in a year may be taken as reasonable provided such
losses are not attributable to dishonesty or negligence. However,
loss of a book of a value exceeding Rs. 1,000/- (One thousand only)
and rare books irrespective of value shall invariably be investigated
and appropriate action taken.

Rule 195. Transfer of charge of goods, materials etc. : In case of transfer of

Officer-in-charge of the goods, materials etc., the transferred officer shall see that
the goods / material are made over correctly to his successor. A statement giving
all relevant details of the goods, materials etc., in question shall be prepared and
signed with date by the relieving officer and the relieved officer. Each of these
officers will retain a copy of the signed statement.

58
Rule 196. Disposal of Goods.
(i) An item may be declared surplus / obsolete / unserviceable if the
same is of no use to the Ministry / Department. The reasons for
declaring the item surplus / obsolete / unserviceable should be
recorded by the authority competent to purchase the item.
(ii) The competent authority may, at his discretion, constitute a
committee at appropriate level to declare item(s) as surplus /
obsolete / unserviceable.
(iii) The book value, guiding price and reserved price, which will be
required while disposing off the surplus goods, should also be
worked out. In case where it is not possible to work out the book
value, the original purchase price of the goods in question may be
utilised. A report of stores for disposal shall be prepared in Form
GFR - 17.
(iv) In case an item becomes unserviceable due to negligence, fraud or
mischief on the part of a Government servant, responsibility for the
same should be fixed.

Rule 197. Modes of Disposal :

(i) Surplus / obsolete / unserviceable goods of assessed residual value above
Rs. Two Lakh should be disposed off by :
a) obtaining bids through advertised tender or
b) public auction.
(ii) For surplus / obsolete / unserviceable goods with residual value less than
Rs. Two Lakh, the mode of disposal will be determined by the competent
authority, keeping in view the necessity to avoid accumulation of such
goods and consequential blockage of space and, also, deterioration in
value of goods to be disposed off.
(iii) Certain surplus / obsolete / unserviceable goods such as expired
medicines, food grain, ammunition etc., which are hazardous or unfit for
human consumption, should be disposed off / destroyed immediately by
adopting suitable mode so as to avoid any health hazard and / or
environmental pollution and also the possibility of misuse of such goods.
(iv) Surplus / obsolete / unserviceable goods, equipment and documents, which
involve security concerns (e.g. currency, negotiable instruments, receipt
books, stamps, security press etc.) should be disposed off / destroyed in an
appropriate manner to ensure compliance with rules relating to official
secrets as well as financial prudence.

Rule 198. Disposal through Advertised Tender.

(i) The broad steps to be adopted for this purpose are as follows :
a) Preparation of bidding documents.
b) Invitation of tender for the surplus goods to be sold.
c) Opening of bids.
d) Analysis and evaluation of bids received.
e) Selection of highest responsive bidder.
f) Collection of sale value from the selected bidder.
59
 g) Issue of sale release order to the selected bidder.
h) Release of the sold surplus goods to the selected bidder.
i) Return of bid security to the unsuccessful bidders.

(ii) The important aspects to be kept in view while disposing the goods through
advertised tender are as under :-
(a) The basic principle for sale of such goods through advertised tender
is ensuring transparency, competition, fairness and elimination of
discretion. Wide publicity should be ensured of the sale plan and the
goods to be sold. All the required terms and conditions of sale are to
be incorporated in the bidding document comprehensively in plain
and simple language. Applicability of taxes, as relevant, should be
clearly stated in the document.
(b) The bidding document should also indicate the location and present
condition of the goods to be sold so that the bidders can inspect the
goods before bidding.
(c) The bidders should be asked to furnish bid security along with their
bids. The amount of bid security should ordinarily be 10% of the
assessed / reserved price of the goods. The exact bid security
amount should be indicated in the bidding document.
(d) The bid of the highest acceptable responsive bidder should normally
be accepted. However, if the price offered by that bidder is not
acceptable, negotiation may be held only with that bidder. In case
such negotiation does not provide the desired result, the reasonable
/ acceptable price may be counter-offered to the next highest
responsive bidder(s).
(e) In case the total quantity to be disposed off cannot be taken up by
the highest acceptable bidder, the remaining quantity may be offered
to the next higher bidder(s) at the price offered by the highest
acceptable bidder.
(f) Full payment, i.e. the residual amount after adjusting the bid security
should be obtained from the successful bidder before releasing the
goods.
(g) In case the selected bidder does not show interest in lifting the
goods, the bid security should forfeited and other actions including
re-sale of the goods in question at the risk and cost of the defaulter,
after obtaining legal advice.
(iii) Late bids i.e. bids received after the specified date and time of receipt
should not to be considered.

Rule 199. Disposal through Auction :

(i) A Ministry / Department may undertake auction of goods to be disposed off
either directly or through approved auctioneers.
(ii) The basic principles to be followed here are similar to those applicable for
disposal through advertised tender so as to ensure transparency,
competition, fairness and elimination of discretion. The auction plan
including details of the goods to be auctioned and their location, applicable
terms and conditions of the sale etc. should be given wide publicity in the
same manner as is done in case of advertised tender.
60
(iii) While starting the auction process, the condition and location of the goods
to be auctioned, applicable terms and conditions of sale etc., (as already
indicated earlier while giving vide publicity for the same), should be
announced again for the benefit of the assembled bidders.
(iv) During the auction process, acceptance or rejection of a bid should be
announced immediately on the stroke of the hammer. If a bid is accepted,
earnest money (not less than 25% of the bid value) should immediately be
taken on the spot from the successful bidder either in cash or in the form of
Deposit-at-Call-Receipt (DACR), drawn in favour of the Ministry /
Department selling the goods. The goods should be handed over to the
successful bidder only after receiving the balance payment.
(v) The composition of the auction team will be decided by the competent
authority. The team should however include an officer of the Internal
Finance Wing of the department.

Rule 200. Disposal at scrap value or by other modes : If a Ministry /

Department is unable to sell any surplus / obsolete / unserviceable item in spite of
its attempts through advertised tender or auction, it may dispose off the same at its
scrap value with the approval of the competent authority in association with
Finance division. In case the Ministry / Department is unable to sell the item even
at its scrap value, it may adopt any other mode of disposal including destruction of
the item in an eco-friendly manner.

Rule 201. A sale account should be prepared for goods disposed off in Form GFR
18 duly signed by the officer who supervised the sale / auction.

Rule 202. (1) Powers to write off : All profits and losses due to revaluation,
stock-taking or other causes shall be duly recorded and adjusted where
necessary. Formal sanction of the competent authority shall be obtained in respect
of losses, even though no formal correction or adjustment in government accounts
is involved. Power to write off of losses are available under the Delegation of
Financial Powers Rules, 1978.

Rule 202. (2) : Losses due to : Losses due to depreciation shall be analyzed, and
recorded under following heads, as applicable :-
(i) normal fluctuation of market prices;
(ii) normal wear and tear;
(iii) lack of foresight in regulating purchases; and
(iv) negligence after purchase.

Rule 202. (3) : Losses not due to depreciation : Losses not due to depreciation
shall be grouped under the following heads :-
(i) losses due to theft or fraud;
(ii) losses due to neglect;
(iii) anticipated losses on account of obsolescence of stores or of
purchases in excess of requirements;
(iv) losses due to damage, and
(v) losses due to extra ordinary situations under ‘Force Majeure’
conditions like fire, flood, enemy action, etc.;
61
 CHAPTER - 8
CONTRACT MANAGEMENT
Rule 203. (1) All contracts shall be made by an authority empowered to do so by
or under the orders of the President in terms of Article 299 (1) of the Constitution
of India.

Rule 203. (2) All the contracts and assurances of property made in the exercise of
the executive power of the Union shall be executed on behalf of the President. The
words “for and on behalf of the President of India” should follow the designation
appended below the signature of the officer authorized in this behalf.

Note 1: The various classes of contracts and assurances of property, which may
be executed by different authorities, are specified in the Notifications issued by the
Ministry of Law from time to time.

Note 2 : The powers of various authorities, the conditions under which such
powers should be exercised and the general procedure prescribed with regard to
various classes of contracts and assurances of property are laid down in Rule 21
of the Delegation of Financial Powers Rules, 1978.

Rule 204. General principles for contract : The following general principles
should be observed while entering into contracts:

(i) The terms of contract must be precise, definite and without any
ambiguities. The terms should not involve an uncertain or indefinite
liability, except in the case of a cost plus contract or where there is a
price variation clause in the contract.

(ii) Standard forms of contracts should be adopted wherever possible,

with such modifications as are considered necessary in respect of
individual contracts. The modifications should be carried out only
after obtaining financial and legal advice.

(iii) In cases where standard forms of contracts are not used, legal and
financial advice should be taken in drafting the clauses in the
contract.

(iv) (a) A Ministry / Department may, at its discretion, make

purchases of value upto Rs. 1 lakh by issuing purchase orders
containing basic terms and conditions.

(b) In respect of Works Contracts, or Contracts for purchases

valued between Rs. 1 lakh to Rs. 10 lakh, where tender documents
include the General Conditions of Contract (GCC), Special
Conditions of Contract (SCC) and scope of work, the letter of
acceptance will result in a binding contract.

62
 (c) In respect of contracts for works with estimated value of Rs.
10 lakh or above or for purchase above Rs. 10 lakh, a Contract
document should be executed, with all necessary clauses to make it
a self-contained contract. If however, these are preceded by
Invitation to Tender, accompanied by GCC and SCC, with full details
of scope and specifications, a simple one page contract can be
entered into by attaching copies of the GCC and SCC, and details of
scope and specifications, Offer of the Tenderer and Letter of
Acceptance.

(d) Contract document should be invariably executed in cases of

turnkey works or agreements for maintenance of equipment,
provision of services etc.

(v) No work of any kind should be commenced without proper execution

of an agreement as given in the foregoing provisions.

(vi) Contract document, where necessary, should be executed within 21

days of the issue of letter of acceptance. Non-fulfilment of this
condition of executing a contract by the Contractor / Supplier would
constitute sufficient ground for annulment of the award and forfeiture
of Earnest Money Deposit.

(vii) Cost plus contracts should ordinarily be avoided. Where such

contracts become unavoidable, full justification should be recorded
before entering into the contract. Where supplies or special work
covered by such cost plus contracts have to continue over a long
duration, efforts should be made to convert future contracts on a firm
price basis after allowing a reasonable period to the
suppliers/contractors to stabilize their production /execution methods
and processes.

Explanation : A cost plus contract means a contract in which the

price payable for supplies or services under the contract is
determined on the basis of actual cost of production of the supplier
or services concerned plus profit either at a fixed rate per unit or at a
fixed percentage on the actual cost of production.

(viii) (a) Price Variation Clause should be provided only in long-term

contracts, where the delivery period extends beyond 18 months. In
short-term contracts firm and fixed prices should be provided for.
Where a price variation clause is provided, the price agreed upon
should specify the base level viz, the month and year to which the
price is linked, to enable variations being calculated with reference to
the price levels prevailing in that month and year.

(b) A formula for calculation of the price variations that have

taken place between the Base level and the Scheduled Delivery
Date should be included in this clause. The variations are calculated
63
by using indices published by Governments / Chambers of
Commerce periodically. An illustrative formula has been appended to
these rules at Appendix -15 for guidance.

(c) The Price variation clause should also specify cut off dates for
material and labour, as these inputs taper off well before the
scheduled Delivery Dates.

(d) The price variation clause should provide for a ceiling on price
variations, particularly where escalations are involved. It could be a
percentage per annum or an overall ceiling or both. The buyer
should ensure a provision in the contract for benefit of any reduction
in the price in terms of the price variation clause being passed on to
him.

(e) The clause should also stipulate a minimum percentage of

variation of the contract price above which price variations will be
admissible (e.g. where resultant increase is lower than two per cent,
no price adjustment will be made in favour of the supplier).

(f) Where advance / stage payments are made there should be a

further stipulation that no price variations will be admissible on such
portions of the price, after the dates of such payment.

(g) Where deliveries are accepted beyond the scheduled Delivery

Date subject to levy of liquidated damages as provided in the
Contract, the liquidated damages (if a percentage of the price) will be
applicable on the price as varied by the operation of the Price
variation clause.

(h) No price variation will be admissible beyond the original

Scheduled Delivery Date for defaults on the part of the supplier.

(i) Price variation may be allowed beyond the original Scheduled

Delivery Date, by specific alteration of that date through an
amendment to the contract in cases of Force Majeure or defaults by
Government.

(j) Where contracts are for supply of equipment, goods etc,

imported (subject to customs duty and foreign excha nge fluctuations)
and / or locally manufactured (subject to excise duty and other duties
and taxes), the percentage and element of duties and taxes included
in the price should be specifically stated, along with the selling rate of
foreign exchange element taken into account in the calculation of the
price of the imported item.

The mode of calculation of variations in duties and taxes and

Foreign exchange rates and the documents to be produced in

64
 support of claims for such variations, should also be stipulated in the
Contract.

(k) The clause should also contain the mode and terms of
payment of the price variation admissible.

(ix) Contracts should include provision for payment of all applicable

taxes by the contractor / supplier.

(x) “Lumpsum’ contracts should not be entered into except in cases of

absolute necessity. Where lumpsum contracts become unavoidable,
full justification should be recorded. The contracting authority should
ensure that conditions in the lumpsum contract adequately safeguard
and protect the interests of Government.

(xi) Departmental issue of materials should be avoided as far as

possible. Where it is decided to supply materials departmentally, a
schedule of quantities with the issue rates of such material as are
used in the contract work, should form an essential part of the
contract.

(xii) (a) In contracts where government property is entrusted to a

contractor, either for use on payment of hire charges or for doing
further work on such property, specific provision for safeguarding
government property (including insurance cover) and for recovery of
hire charges regularly, should be included in the contracts.

(b) Provision should be made in the contract for periodical

physical verification of the number and the physical condition of the
items at the contractors premises. Results of such verification should
be recorded and appropriate penal action taken where necessary.

(xiii) Copies of all contracts and agreements for purchases of the value of
Rs. 25 Lakh and above, and of all rate and running contracts entered
into by civil departments of the Government other than the
departments like the Directorate general of Supplies and Disposals
for which a special audit procedure exists, should be sent to the
Audit Officer and /or the Accounts officer as the case may be.

(xiv) (a) The terms of a contract, including the scope and specification
once entered into, should not be materially varied.

(b) Wherever material variation in any of the terms or conditions

in a contract becomes unavoidable, the financial effect involved
should be examined and recorded and specific approval of the
authority competent to approve the revised financial commitment
obtained, before varying the conditions.

65
 (c) All such changes should be in the form of an amendment to
the contract duly signed by all parties to the contract.

(xv) Normally no extensions of the scheduled delivery or completion

dates should be granted except where events constituting force
majeure, as provided in the contract, have occurred or the terms and
conditions include such a provision for other reasons. Extensions as
provided in the Contract may be allowed through formal
amendments to the contract duly signed by parties to the contract.

(xvi) All contracts shall contain a provision for recovery of liquidated

damages for defaults on the part of the contractor.

(xvii) A warranty clause should be incorporated in every contract, requiring

the supplier to, without charge, repair or rectify defective goods or to
replace such goods with similar goods free from defect. Any goods
repaired or replaced by the supplier shall be delivered at the buyers
premises without costs to the buyer.

(xviii) All contracts for supply of goods should reserve the right of
Government to reject goods which do not conform to the
specifications.

Rule 205. Management of Contracts : (1) Implementation of the contract should

be strictly monitored and notices issued promptly whenever a breach of provisions
occur.

Rule 205. (2) Proper procedure for safe custody and monitoring of Bank
Guarantees / other Instruments should be laid down. Monitoring should include a
monthly review of all Bank Guarantees / other instruments expiring after three
months, along with a review of the progress of supply/work. Extensions of Bank
Guarantees / other instruments, where warranted, should be sought immediately.

Rule 205. (3) Wherever disputes arise during implementation of a contract, legal
advice should be sought before initiating action to refer the dispute to conciliation
and/or arbitration as provided in the contract or to file a suit where the contract
does not include an arbitration clause. The draft of the plaint for arbitration should
be got vetted by obtaining legal and financial advice. Documents to be filed should
be carefully scrutinized before filing to safeguard government interest.

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 CHAPTER - 9
GRANTS-IN-AID AND LOANS
I. GRANTS-IN-AID

Rule 206. As a general principle grants-in-aid can be given to a person or a public

body or an institution having a distinct legal entity. Thus grants-in-aid inc luding
scholarships may be sanctioned by an authority competent to do so under the
Delegation of Financial Powers Rules, 1978 to :
(a) Institutions or organizations set up as Autonomous Organisation under a
specific statute or as a society registered under the Societies Registration
Act, 1860 or Indian Trusts Act 1882 or various State Trusts Acts etc.
(b) Voluntary organizations / Non Government Organisations carrying out
activities which promote the welfare schemes and programmes of the
Government. These organisations should be selected on the basis of well
defined criteria regarding financial and other resources, credibility and
type of activities undertaken.
(c) Educational and other institutions by way of scholarships or stipends to
the students.
(d) Urban and Rural local self government institutions
(e) Co-operative societies.
(f) Societies / clubs set up by Government servants to promote amongst
themselves social, cultural and sports activities as recreational avenue.

Rule 207. The Ministry / Department of the Central Government directly

concerned with the aim / activity of the Institution should consider requests for
grants-in-aid in consultation with the Financial Adviser. The Financial Adviser may
associate a representative of Ministry of Finance wherever considered necessary.

Rule 208. General Principles for setting up of Autonomous Organisations

referred to under Rule 206 (a) :
(i) No new autonomous institutions should be created by Ministries /
Departments without the approval of the Cabinet.
(ii) Stringent criteria should be followed for setting up of new
autonomous organisations and the type of activities to be
undertaken by them. The Ministry / Department should examine in
detail (a) whether the activities proposed to be taken up are
necessary at all (b) whether these activities, if necessary, need to
be undertaken by setting up an autonomous organisation only or
whether these could be performed by the concerned government
agency or any other organisation already existing.
(iii) All autonomous organisations, new or already in existence should
be encouraged to maximise generation of internal resources and
eventually attain self sufficiency.
(iv) Instead of giving recurring grants, wherever possible, the Ministry /
Department may consider creating a Corpus Fund, the returns on
investment of which, alongwith their internally generated
resources should enable the autonomous organisation to meet its
revenue expenditure.
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 (v) A system of external / peer review of autonomous organisations
every 3 or 5 years depending on the size and nature of activity
should be put in place. Such a review should focus, inter alia, on
(a) the objective for which the autonomous organisation was set
up and whether these objectives have been or are being
achieved;
(b) whether the activities should be continued at all, either
because they are no longer relevant or have been completed
or if there has been a substantial failure in achievement of
objectives. A zero based budget approach should be followed
in making this assessment.
(c) whether the nature of the activities is such that these need to
be performed only by an autonomous organisation.
(d) whether similar functions are also being undertaken by other
organisations, be it in the central government or state
governments or the private sector, and if so, whether there is
scope for merging or winding up the organisations under
review.
(e) whether the total staff complement, particularly at the support
level, is kept at a minimum, whether the enormous strides in
information technology and communication facilities as also
facilities for outsourcing of work on a contract basis, have been
taken into account in determining staff strength; and whether
scientific / technical personnel are being deployed on functions
which could well be carried out by non scientific / non technical
personnel etc.
(f) whether user charges, wherever the output or services are
utilised by others, are levied at appropriate rates
(g) the scope for maximizing internal resources generation in the
organisation so that the dependence upon government
budgetary support is minimised.
(vi) An organisation whose performance is found to be outstanding
and internationally acclaimed as a result of the review envisaged
under (v) above should be granted greater autonomy and
increased flexibility in matters of recruitment and financial rules,
enabli ng it to devise and adopt staff structures, procedures and
rules suited to improving their productivity.
(vii) Autonomous organisations as defined in (vi) above as also others
with a budgetary support of more than Rs. 5 crore per annum,
should be required to enter into a Memorandum of Understanding
with the Administrative Ministry / Department, spelling out clearly
the output targets in terms of details of programme of work and
qualitative improvement in output, alongwith commensurate input
requirements. The outp ut targets, given in measurable units of
performance, should form the basis of budgetary support
extended to these organisations.

Rule 209. Principles and Procedure for award of Grants-in-aid : (1) Any
Institution / Organisation seeking grants-in-aid from Government will be required to
68
submit an application which includes all relevant information such as Articles of
Association, By-laws, audited statement of accounts, sources and pattern of
income and expenditure, etc. enabling the sanctioning authority to assess the
suitability of the Institution / Organisation seeking grant. The application should
clearly spell out the need for seeking grant and should be submitted in such form
as may be prescribed by the sanctioning authority. The Institution / Organisation
seeking grants-in-aid should also certify that it has not obtained / applied for grants
for the same purpose / activity from any other Ministry / Department of the
Government of India or State Government.

NOTE : In order to obviate duplication in grants-in-aid each Ministry / Department

should maintain a list of Institutions / Organisations along with details of amount
and purpose of grants given to them on its web site.

Rule 209. (2) The Internal Finance Wing of the Ministry / Department concerned
should lay down the rules / pattern of assistance under the broad guidelines
contained in this Chapter and instructions issued by the Ministry of Finance from
time to time. All sanctions of grants-in-aid issued by a Ministry / Department of the
Central Government or an Administrator in exercise of their powers under Rule 20
of the Delegation of Financial Powers Rule, 1978, as amended from time to time,
should conform to the pattern of assistance or rules governing such grants-in-aid.

Rule 209. (3) Award of grants should be considered only on the basis of viable
and specific schemes drawn up in sufficient detail by the Institution / Organisation.
The budget for such schemes should disclose, inter alia, the physical milestones
likely to be attained against the outlay.

Rule 209. (4) Subject to the following terms and conditions, grants-in-aid towards
administrative expenditure may be sanctioned to voluntary organizations to ensure
a certain minimum staff structure and qualified personnel to improve their
effecti veness and expand their activities under the following conditions :-
(a) The grants-in-aid should not exceed 25% of approved administrative
expenditure on pay and allowances of the personnel of the voluntary
organisation concerned.
(b) Grants-in-aid to meet administrative expenditure to any private institutions
other than the voluntary organizations should not ordinarily be sanctioned.
In exceptional cases such grants can be considered for sanction in
consultation with Internal Finance Wing.

Rule 209. (5) Every order sanctioning a grant shall indicate whether it is recurring
or non-recurring and specify clearly the object for which it is being given and the
general and special conditions, if any, attached to the grant. In the case of non-
recurring grants for specified object, the order shall also specify the time limit
within which the grant or each instalment of it, is to be spent

Rule 209. (6) (i) The sanctioning authority may prescribe conditions regarding
quantum and periodicity for release of Grants-in-aid in instalments in consultation
with the Financial Adviser. However, the release of the last instalment of the

69
annual grant must be conditional upon the grantee institutions providing
reasonable evidence of proper utilization of instalments released earlier.
(ii) In order to avoid delay in sanction / release of grants in aid to the grantee
Institutions, the Ministry / Department should impress upon Institution /
Organisation desiring grants from Government, to submit their requirement
with supporting details by the end of October in the year preceding the year
for which the grants-in-aid is sought. The Ministry / Department on its part,
should finalize their examination of the requests with the utmost expedition
and make the necessary budget provision where it is decided to sanction
grants. The Institution / Organisation should be informed of the result of
their requests by April in the succeeding year.
(iii) When recurring grants-in-aid are sanctioned to the same Institution /
Organisation for the same purpose, the unspent balance of the previous
grant should be taken into account in sanctioning the subsequent grant.
(iv) (a) All grantee Institutions / Organisations which receive more than 50%
of their recurring expenditure in the form of grants-in-aid, should ordinarily
formula te terms and conditions of service of their employees which are, by
and large, not higher than those applicable to similar categories of
employees in Central Government. However in exceptional cases relaxation
may be made in consultation with the Ministry of Finance.

(b) Grantee Institutions / Organisations should be encouraged to take

advantage of the pension / gratuity schemes / group insurance schemes /
house, buildings loans / vehicle loans schemes etc., available in the market
for employees instead of undertaking liability on their own or Government
account.
(v) In making grants to non-government or quasi-government Institutions or
Organisations, a condition should be laid down that assets acquired wholly
or substantially out of Government grants, except those declared as
obsolete and unserviceable or condemned in accordance with the
procedure laid down in the General Financial Rules, shall not be disposed
of without obtaining the prior approval of the authority which sanctioned the
grants-in-aid.
(vi) The sanctioning authority, while laying down the pattern of assistance, may
decide whether the ownership of buildings constructed with grants-in-aid
may vest with Government or the grantee Institution / Organisation. Where
the ownership is vested in the Government, the grantee Institution /
Organisation may be allowed to occupy the building as a lessee. In such
cases suitable record of details of location, cost, name of lessee and terms
and conditions of lease must be maintained in the granting Ministry's /
Department's records. In all cases of buildings constructed with grants-in-
aid, responsibility of maintenance of such buildings should be laid on the
grantee Institution / Organisation.
(vii) Any other special terms and conditions or procedures for transaction of
business as Government may desire to be followed by the grantee
Institution / Organisation, shall be got incorporated in the Articles of
Association / By-laws of the Institution / Organisation concerned before
release of grants-in-aid.

70
(viii) Grants-in-aid may be sanctioned to meet the bona fide expenditure incurred
not earlier than a year prior to the date of issue of the sanction.
(ix) Before a grant is released, the grantee should be asked to execute a bond
in a prescribed format binding himself to
(a) abide by the conditions of the grants-in-aid by the target dates, if any,
specified therein.
(b) not divert the grants or entrust execution of the scheme or work
concerned to another Institution(s) or Organization(s).
(c) abide by any other conditions specified in this agreement.

In the event of the grantee failing to comply with the conditions or

committing breach of the bond, the grantee will be liable to refund to the
President of India, the whole or a part amount of the grant with interest at
10% per annum thereon or the sum specified under the bond. The stamp
duty for this bond shall be borne by the Government.

(x) Execution of bond will not apply to quasi-Government Institutions, Central

Autonomous Organisations and Institutions whose budget is approved by
Government.
(xi) The stipulation in regard to refund of the amount of grant-in-aid with interest
thereon should be brought out clearly in the letter sanctioning the grant as
well as in the bond required to be executed by the grantee.
(xii) (a) As a precondition to the sanction of grants-in-aid to the agencies where–
(aa) the recipient body employs more than 20 persons on a regular basis
and at least 50% of its recurring expenditure is met from grants-in-
aid from Central Government; and
(bb) the body is a registered society or a co-operative ins titution and is in
receipt of a general purpose annual grants-in-aid of Rs. 20 lakh and
above from the Consolidated Fund of India,
the grant sanctioning authority should ensure that a suitable clause is
invariably included in the terms and conditions under which the grants-in-
aid are given, to provide for reservation for Scheduled Castes and
Scheduled Tribes / OBC in posts and services under such organizations or
agencies. The relative provision may be on the following lines :-
“…………….. (Name of Institution / Organization etc.) agrees to make
reservations for Scheduled Castes and Scheduled Tribes / OBC in the
posts / services under its control on the lines indicated by the Government
of India”.

(b) While sanctioning grants-in-aid to Institutions / Organisations referred to

at (a) above, the grant sanctioning authority should keep in view the
progress made by such Institutions / Organisations in employing Scheduled
Castes and Scheduled Tribes / OBC candidates in their services.

(xiii) Central Autonomous Organisations which receive Plan grants as well as

Non-Plan grants, should account for expenditure (Capital and Revenue)
separately under Plan and Non-plan. The Government of India, Ministry of
Finance has formulated standard formats for presentation of final accounts,
for all Central Autonomous Organisations. All grant sanctioning authorities
71
 should enforce the condition of maintaining and presenting their annual
accounts in the standard formats on all Central Autonomous Organisations.
(xiv) The grant sanctioning authorities should not only take into account the
internally generated resources while regulating the award of grants but
should consider laying down targets for internal resource generation by the
grantee Institutions / Organisations every financial year, particularly where
grants are given on a recurring basis year after year.

Rule 210. Accounts of Grantee Institutions : Institutions or Organisations

receiving grants should, irrespective of the amount involved, be required to
maintain subsidiary accounts of the Government grant and furnish to the Accounts
Officer a set of audited statement of accounts. These audited statements of
accounts should be required to be furnished after utilization of the grants-in-aid or
whenever called for.

Rule 211. Audit of Accounts of Grants-in-aid : (1) The accounts of all grantee
Institutions / Organisations shall be open to inspection by the sanctioning authority
/audit both by the Comptroller and Auditor General of India under the provision of
CAG(DPC) Act 1971 and internal audit by the Principal Accounts Office of the
Ministry / Department, whenever the Institution / Organisation is called upon to do
so and a provision to this effect should invariably be incorporated in all orders
sanctioning grants-in-aid.

Rule 211. (2) (a) The accounts of the grantee Institution / Organisation shall be
audited by the Comptroller and Auditor General of India under Section 14 of the
Comptroller and Auditor General of India (Duties, Powers and Conditions of
Service) Act, 1971, if the grants or loans to the institution in a financial year are not
less than Rs. 25 lakh and also not less than 75% of the total expenditure of the
Institution. The accounts may also be audited by the Comptroller and Auditor
General of India if the grants or loans in a financial year are not less than Rs. 1
Crore. Where the accounts are so audited by the Comptroller and Auditor General
of India in a financial year, he shall continue to audit the accounts for a further
period of two years notwithstanding that the conditions outlined above are not
fulfilled.

(b) Where any grant and /or loan is given for any specific purpose to any Institution
/ Organisation or authority, not being a foreign State or international
Body/Organization, the Comptroller and Auditor General is competent under
Section 15 (1) of the CAG's (DPC) Act, 1971, to scrutinize the procedures by
which the sanctioning authority satisfies itself as to the fulfilment of the conditions
subject to which such grants and/or loans were given and shall, for this purpose,
have right of access to the books and accounts of that Institute / Organisation or
authority.

Rule 211. (3) In all other cases, the Institution / Organisation shall get its accounts
audited from Chartered Accountants of its own choice.

72
Rule 211. (4) Where the Comptroller and Auditor General of India is the sole
auditor for a local Body / Institution, auditing charges will be payable by the
auditee Institution in full unless specifically waived by Government.

Rule 212. Utilization Certificates : (1) In case of recurring or non-recurring grants

to an Institution / Organisation, a certificate of actual utilization of the grants
received for the purpose for which it was sanctioned in Form GFR 19-A, should be
insisted upon in the order sanctioning the grants-in-aid. The Utilization Certificate
in respect of grants referred to in Rule 209 (6) should also disclose whether the
physical milestones that should have been reached against the amount utilised,
were in fact reached, and if not, the reasons therefor. They should contain an
output based performance assessment instead of input based performance
assessment. The Utilization Certificate should be submitted within 12 months of
the closure of the financial year by the Institution / Organisation concerned.
Receipt of such certificate shall be watched by the Ministry /Department
concerned. Where such certificate is not received from the grantee within the
prescribed time, the Ministry / Department will be authorised to blacklist such
Institution / Organisation from any future grant, subsidy or other type of financial
support from the Government. This fact should also be put on the website referred
to in the Note under Rule 209 (1) above.

In respect of recurring grants, Ministry / Department concerned should

examine the annual audited Statement of Accounts of the grantee Institution /
Organisation and utilization certificate to satisfy itself about the proper utilization of
grants released for the preceding year before admitting their claim for grants-in-aid
in the subsequent financial year. Reports submitted by the Internal Audit parties of
the Ministry / Department and inspection reports received from Indian Audit and
Accounts Department and the performance reports if any received for the 3rd and
4th quarter in the year should also be looked into while sanctioning further grants.

NOTE. 1. Utilization certificates need not be furnished in cases where the grants-
in-aid are being made as reimbursement of expenditure already incurred on the
basis of duly audited accounts. In such cases the sanction letters should specify
clearly that the utilization certificates will not be necessary.

NOTE 2. In respect of Central Autonomous Organisations, the Utilization

Certificate shall disclose separately the actual expenditure incurred and the Loans
and Advances given to suppliers of stores and assets, to construction agencies, to
staff (for house building and purchase of conveyance, etc.), which do not
constitute expenditure at that stage. These shall be treated as unutilized grants but
allowed to be carried forward. While regulating the grants for the subsequent year,
the amounts carried forward shall be taken into account.

Rule 212. (2) (i) In the case of private and voluntary organizations receiving
recurring grants-in-aid from Rs. 10 lakh to Rs. 25 lakh, all the Ministries /
Departments of Government of India should include in their annual report a
statement showing the quantum of funds provided to each of those organizations
and the purpose for which they were utilized, for the information of Parliament. The
annual reports and accounts of private and voluntary organizations receiving
73
recurring grants-in-aid to the tune of Rs. 25 lakh and above should be laid on the
Table of the House within nine months of the close of the succeeding financial
year of the grantee organisations.

(ii) In the case of organizations receiving one-time assistance / non recurring

grants as grants-in-aid from Rs. 10 lakh to Rs. 50 lakh, all Ministries / Departments
of Government of India should include in their annual reports, statements showing
the quantum of funds provided to each of these organizations and the purpose for
which the funds were utilized, for the information of Parliament. The annual reports
and audited accounts of private and voluntary organizations / societies registered
under the Registration of Societies Act, 1860, receiving one-time assistance / non
recurring grants of Rs. 50 lakh and above should also be laid on the Table of the
House, within nine months of the close of the succeeding financial year of the
grantee Organisations.

Rule 212. (3) Submission of Achievement-cum-Performance Reports :

(i) The grantee Institutions / Organisations should be required to submit
performance cum achievement reports soon after the end of the
financial year. A time limit may in this regard be prescribed by the
sanctioning authority concerned. This requirement should be included in
the grants-in-aid sanction order.
(ii) In regard to non-recurring grants such as those meant for celebration of
anniversaries, conduct of special tours and maintenance grants for
education, performance-cum-achievement reports need not be obtained.
(iii) In the case of recurring grants, submission of achievement cum
performance reports should usually be insisted upon in all cases.
However, in the case of grants-in-aid not exceeding Rs. 5 lakh, the
sanctioning authority may dispense with the submission of performance
cum achievement reports and should, in that event, refer to the
utilization certificates and other information available with it with a view
to deciding whether or not the grants-in-aid should continue to be given.
(iv) The annual reports and audited statements of accounts of Autonomous
Organisations are required to be laid on the table of the Parliament. In
such cases, the Ministries / Departments of Central Government need
not incorporate performance-cum-achievement reports in the annual
reports. In all other cases, if the grants-in-aid exceed Rs. 25 lakh, the
Ministry / Departments of the Central Government should include in their
annual report a review of the utilization of the grants-in-aid individually,
specifying in detail the achievements vis-à-vis the amount spent, the
purpose and destination of the grants. In cases where the grants-in-aid
are for Rs. 25 lakh or less, the Ministry / Departments of the Central
Government should include in their annual report their own assessment
of the achievements or performance of the Institution / Organiszations.
(v) Where the accounts of the grantee Institutions / organisations are
audited by the Indian Audit and Accounts Department, copies of the
performance-cum-achievement reports, furnished by the grantee
institution to the Administrative Ministry /sanctioning authority should be
made available to audit. In other cases copies of such reports, received
by the Departments of the Central Government or the sanctioning
74
 authority should be made available to audit when local audit of such
grants-in-aid in the Administrative Ministry / Department or sanctioning
authority is conducted or when it is called for by the Accountant General.

Rule 212. (4)

(a) Register of Grants : A Register of Grants shall be maintained by the
sanctioning authority in the format given in Form GFR - 39.
(b) Columns (i) to (v) of the register in format at Form GFR - 39 should be filled
in simultaneously with the issue of the order sanctioning each grant. These
columns should be attested by any Gazetted Officer nominated for the
purpose by the sanctioning authority. The serial number should be recorded
on the body of the sanction at the time the item is entered in the Register as
under :
“Noted at serial No ………………… in the Register of Grants”.

(c) Such a record will guard against the possibility of double payment. Columns
(vi) and (vii) should be filled in and attested by the Gazetted Officer
concerned as soon as the bill is ready. The bill should then be submitted to
the Gazetted Officer nominated to act as Drawing and Disbursing Officer
with the register for signing the bill and to the sanctioning authority for
giving dated initials in column (viii) of Register. It should also be the duty of
the sanctioning authority to verify that the conditions, if any, attached to the
grant have been duly accepted by the grantee without any reservation and
that no other bill for the same purpose has already been paid before. No bill
should be signed unless it has been noted in the Register of Grants against
the relevant sanction. This will also facilitate watching of payments in
instalments, if any, in the case of lump sum sanctions.
Information at column (xiii) above should be used also for regulating
the subsequent grants.

Rule 212. (5) State Government to submit utilization certificate when

expenditure incurred through local bodies : When Central grants are given to
State Governments for expenditure to be incurred by them through local bodies or
private institutions, the utilization certificates should be furnished by the State
Government concerned.

Rule 213. Discretionary Grants : When an allotment for discretionary grants is

placed at the disposal of a particular authority, the expenditure from such grants
shall be regulated by general or special orders of the competent authority
specifying the object for which the grants can be made and any other condition(s)
that shall apply to them. Such discretionary grants must be non-recurring and not
involve any future commitment.

Rule 214. Other Grants : Grants, subventions, etc., including grants to States
other than those dealt with in the foregoing rules, may be made under special
orders of Government.

Rule 215. (1) Regulation of recurring grants-in-aid for Government

employees' welfare :–
75
1. Grants-in-aid for provision of amenities or of recreational or welfare facilities to
the staff of the offices of the Government are regulated under orders of the
Ministry of Home Affairs issued from time to time. The admissibility of the grants-
in-aid for the welfare of the employees of the Government should be regulated in
the following manner :-
(i) The grant in aid will be admissible on the basis of the total strength borne
on the regular strength of an organization, i.e., Ministry / Department, etc.,
and its Attached and Subordinate Offices and such statutory bodies whose
budget forms part of Consolidated Fund of India, irrespective of the fact
whether any individual is a member of the staff club, etc., or not. However,
grant-in-aid in respect of Gazetted Officers will be admissible only to that
Ministry / Department / Office where membership of recreation club is open
to such officers.

Staff paid from contingencies, work-charged staff etc., will not be

taken into calculation for this purpose. Staff eligible for similar concession
under some other rule/statutory provision, e.g., industrial workers will also
not be covered by these orders.

(ii) Amounts of grants-in-aid. –(a) The rate of the grant-in-aid will be Rs. 50 per
head per annum. In addition to this, an additional grant-in-aid up to Rs. 25
per head per annum to match the subscriptions collected during the
previous financial year by the existing staff clubs will be admissible. In the
case of staff clubs which are started during the financial year in which grant-
in-aid is to be given, an additional matching grants-in-aid up to Rs. 25 per
head per annum, to match the subscription collected by such clubs up to
the date on which the proposal for the grant is mooted, may be sanctioned.
The total strength of the eligible staff will be that existing on the 31st March
of the previous financial year or that on the date on which proposal for grant
is mooted in the case of new staff clubs.

(iii) An illustrative list of items on which expenditure can be incurred out of

grants-in-aid sanctioned by Government for provision of amenities is given
below –
(i) Articles of sports – Outdoor and indoor games equipment.
(ii) Cost of uniforms, etc., supplied to teams of players.
(iii) Magazines and periodicals.
(iv) Entry fee for tournaments
(v) Hiring of playgrounds
(vi) Hiring and repair for furniture, etc.,
(vii) Purchase of furniture.
(viii) Conveyance expenses incurred locally.
(ix) Entertainments.
(x) Prizes.
(xi) Film shows.
(xii) Hiring of accommodation for Club/Association, etc.
(xiii) Cultural, Sports and Physical development programme(s).
(xiv) Inter-Ministry meets.
(xv) Inter-Departmental meets.
76
2. A maximum one time grant of Rs. 50,000 may be sanctioned for setting up of a
Recreation Club.

3. Grants-in-aid to the Ministry / Departments of the Central Government and their

Attached and Subordinate Offices will be allocated by the concerned Ministry /
Department on receipt of formal requests in the prescribed manner. For the
purposes of these grants-in-aid, the Departments of the Central Government and
their attached and Subordinate Offices will be treated as a single unit. It will be the
responsibility of that Ministry / Department to distribute the amount further to its
Attached and Subordinate Offices and to their different clubs. The accounts of
these clubs for the preceding year duly audited by an Internal Auditor should be
obtained immediately after the close of the financial year in any case by the 30th
April by the Ministry / Department before allocating funds for the next financial
year.

4. Grants-in-aid for the provision of amenities or recreational or welfare facilities to

the staff of the Indian Audit and Accounts Department are regulated by separate
orders.

Rule 215. (2) General Principles for award of Grants-in-aid for Centrally
Sponsored Schemes : The following principles should be kept in view by
Ministries / Departments of the Central Government at the time of designing
Centrally Sponsored Schemes for implementation in States Governments / Union
Territories and approving and releasing assistance to State Governments / Union
Territories for such schemes: -
(i) Every Centrally Sponsored Scheme should be treated as a Project with
time bound targets for monitoring, midterm evaluation and detailed impact
studies.
(ii) The scheme should be designed in consultation with individual States /
Union Territories and the outlays should be demand driven. States should
be delegated adequate powers to change the details of the schemes to suit
local conditions, subject to reporting such changes to the concerned
Ministry / Department.
(iii) Where plan schemes are in operation with similar objectives targeting the
same population, the schemes should be converged and the schemes not
yielding results should be weeded o ut.
(iv) To ensure monitoring and effective control over such schemes, the number
of schemes should be restricted, so that the gain from the expenditure on
such schemes is maximized. The role of the Central Ministries /
Departments should be capacity building, inter-sectoral coordination and
detailed monitoring.
(v) Apart from making provisions in the budget and releasing funds, the
Ministries / Departments should establish a mechanism to ensure that the
funds earlier released have been effectively utilised and that the data and
facts reported by the State Governments / Union Territories relating to
physical and financial performance are correct. Before releasing further
funds, it should also be ensured that the State Governments / Union

77
 Territories have the capacity to actually spend the balance from the
previous years and the releases during the current year.
(vi) The Ministries / Departments should focus attention on the attainment of the
objectives and not on expenditure only. A mechanism for avoiding release
of large part of funds towards the end of the year should be devised and
incorporated in the Scheme design itself.
(vii) An evaluation mechanism should be built into the Project, providing for
concurrent reviews and applying, mid-course corrections where necessary.
(viii) A post-completion review of every Centrally Sponsored Scheme should be
undertaken by the State Government(s) / Union Territories implementing
the scheme, highlighting the time and cost overruns, if any, and
suggestions for formulating and implementing future schemes. A copy of
the review should be obtained by the Ministry concerned and kept in view
while formulating new Centrally Sponsored Schemes.

Rule 215. (3) Funding of Sponsored Projects / Schemes :-

1) Ministries / Departments of Government sponsor projects / schemes to be
undertaken by Universities, Indian Institutes of Technology and other similar
autonomous organizations such as ICAR, CSIR, ICMR, etc., the results from
which are expected to be in national interest. Normally the entire expenditure
on such projects / schemes including capital expenditure, is funded by the
Ministry / Department. The funds released for such projects / schemes in one
or more instalments are not treated as grants-in-aid in the books of the
implementing agency. Apart from the requirement of submission of technical
and financial reports on completion of the project / scheme, a stipulation should
be made in such cases that the ownership in the physical and intellectual
assets created /acquired out of such funds shall vest in the sponsor. While the
Project / Scheme is ongoing, the recipients should not treat such assets as
their own assets in their Books of Accounts but should disclose their holding
and using such assets in the Notes to Accounts specifically.

2) On completion of the Projects / Schemes and the receipt of technical and

financial reports, the Ministries / Departments should decide and communicate
to the implementing agencies whether the assets should be returned, sold or
retained by them.

3) If the assets are to be sold, the proceeds therefrom should be credited to

Government Account. If the assets are allowed to be retained by the Institution
/ Organisation, the implementing agency should include the assets at book
value in their own accounts.

II. LOANS

Rule 216. The rules in this section shall be observed by all authorities competent
to sanction loans of public moneys to State Governments, Local Administrations of
Union Territories, local bodies, private individuals, institutions and others.

Rule 217. Powers and Procedure for sanction of loans : The powers of
Departments of the Central Government and Administrators as well as other
78
subordinate authorities to sanction loans are contained in Rule 20 of the
Delegation of Financial Powers Rules, 1978 and other general and special orders
issued under that rule.

Rule 218. All sanctions of loans issued by a Department of Central Government or

an Administrator in exercise of their powers under Rule 20 of the Delegation of
Financial Powers Rules, 1978, should include a suitable certificate to the effect
that the same is in accordance with the rules or principles prescribed with the
previous consent of the Ministry of Finance and that the rate of interest on the loan
and the period of repayment thereof have been fixed with the approva l of that
Ministry.

Rule 219. (1) All sanctions to loans shall be subject to proviso (b) to Rule 20 of the
Delegation of Financial Powers Rules, 1978, and shall specify the terms and
conditions relating to them including the terms and conditions of their repayment
and payment of interest.

Rule 219. (2) Borrowers shall be required to adhere strictly to the terms settled for
the loans made to them. Modifications of these terms in their favour can be made
subsequently only for very special reasons.

Rule 220. (1) General conditions for regulating all loans : All loans, other than
loans to cultivators, etc., which are governed by special rules, should be regulated
by the following general conditions :-
(i) A specific term should be fixed which should be as short as possible,
within which each loan should be fully repaid with interest due. The terms
may, in very special cases, extend to 30 years.
(ii) The term is to be calculated from the date on which the loan is completely
drawn or declared by competent authority to be closed.
(iii) The repayment of loans should be effected by instalments, which should
ordinarily be fixed on annual basis, due dates of payment being specially
prescribed.
(iv) Any instalment paid before its due date may be taken entirely towards the
principal, provided it is accompanied by payment toward interest due up-
to-date of actual payment of instalment; if not, the amount of the
instalment will first be adjusted towards the interest due for preceding and
current periods and the balance, if any, will alone be applied towards the
principal. If, however, the payment of the instalment is in advance of the
due date by 14 days or less, interest for the full period (half-year or full
year, as the case may be) will be payable.
(v) When the due date of repayment of any instalment of principal or interest
falls on a Sunday or a public holiday, the payment made on the next
working day following the Sunday or the public holiday, shall be regarded
as payment on the due date and no interest shall be charged for the day
or days by which the recovery is so postponed.

Exception. –If an instalment of principal or interest is payable on the 31st March of

a year, and if that day happens to be a public holiday the recoveries should be
made on the immediately preceding working day. In case, the due date for the
79
repayment of a loan or payment of interest falls on a holiday observed by the
Reserve Bank of India, at which the effective credit is to take place this should be
shifted to the next working day, except when the due date is 31st March.

(vi) The payment of interest and the repayment of principal of a loan are
always to be made with reference to the calendar date on which the
loan in question is paid. However, where payment of instalment is in
advance of the due date by 14 days or less, interest for the full year
or half year (depending on the prescribed mode of recovery) will be
charged thereon. In the case of a loan sanctioned by the Central
Government to a State Government on or before 31st March of a
year, which is adjusted in the books of the Reserve Bank of India in
the month of April but in the accounts of the previous year the
instalment of principal and/or interest will fall due for payment on the
31st March of the succeeding year and not on the anniversaries of
the calendar date in April on which the inter-Governmental
adjustment was carried out.
(vii) The date of drawal of a loan by a State Government will be
determined as indicated below –
(a) When monetary settlement is involved -Normally the calendar
date on which amount of a loan is actually credited to the
account of the State Government by the Reserve Bank is to
be treated as the date of its drawal.

This position will also hold in cases where adjustment in

accounts is made in one month but date of adjustment in the
books of the Reserve Bank of India falls in the following
calendar month. The calendar date on which the credit is
actually afforded to the State Government in the books of the
Reserve Bank of India in such cases will be treated as the
date of its drawal.

Exception. –An exception to this arrangement is in the case of loans for which
credit is afforded to the recipient State Government in the month of April by the
Reserve Bank of India but in the accounts of previous year. In such cases, a loan
should be deemed to have been paid on the 31st March of the financial year in the
accounts of which the payment is adjusted. Consequently, payment of annual
interest as also repayment of instalment of principal in respect of such loans will
fall due on the 31st March of the succeeding years and not on the anniversaries of
the calendar date in April on which inter-Governmental adjustment on account of
such loans was carried out in the books of the Reserve Bank of India.

(b) Where no monetary settlement is involved. –In regard to

cases where adjustment in the books of the Accounts Offices
are only involved and actual credit through the Reserve Bank
of India is not necessary, the last date on the month of
account in which the adjustment is effected should be taken
as the date of drawal of loan for purposes of repayment and
charging interest.
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 (viii) In order to avoid any default in the payment of loan, the Principal
Accounts Officers /Pay and Accounts Officers who maintain the
detailed accounts of loans, should issue notices in Form GFR 36 to
the loanees (other than State and Union Territory Governments), i.e.,
Public Sector Undertakings, statutory bodies and institutions, etc.,
say, a month in advance of the due date for the repayment of any
instalment of the principal and/ or interest thereon. However,
omission to give notice does not give the loanees any claim to
exemption from the consequences of default in the repayment of the
principal and/or interest thereon.

Rule 220. (2) Before sanctioning a loan to private Institutions the lending Ministry /
Department should ensure adequate managerial ability and experience on the part
of such private institutions.

Rule 220. (3) (i) Before considering a loan application from parties other than
State Governments and Local Administrations of Union Territories, the following
requirements should be fulfilled:-
(a) it should be seen that there is adequate budget provision;
(b) it should be seen whether the grant of the loan would be in
accordance with approved Government policy and accepted patterns
of assistance.

(ii) Before approving the loan, the applicant should be asked to furnish the
following materials and information :-
(a) copies of profit and loss (or income and expenditure) accounts and
balance sheets for the last 3 years;
(b) the main sources of income and how the loan is proposed to be
repaid within the stipulated period;
(c) the security proposed to be offered for the loan together with a
valuation of the security offered by an independent authority and a
certificate to the effect that the asset offered as security is not
already encumbered.
(d) Details of loan or loans taken from the Central Government or a
State Government in the past, indicating amount, purpose, rate of
interest, stipulated period of repayment, date of original loan and
amount outstanding against the loan(s) on the date of the application
and the assets, if any, given as security;
(e) a complete list of all other loans, outstanding on the date of
application and the assets given as security against them;
(f) the purpose for which the loan is proposed to be utilized and the
economics of the scheme.

NOTE. – Where the loan is to be given to an institution on the strength of a

guarantee given by the trust managing it, similar information should be called for in
respect of the trust also.

81
(iii) On receipt of the information called for as in (ii) above, confidential
enquiries should be made from the other Departments of the Central
Government/State Governments from which the party has taken loans, to
judge the performance in regard to the previous loans. If the replies indicate
that the performance was not satisfactory, the loan should be refused. The
financial position of the party should be analysed to ensure soundness. It
should also be ensured that the security offered is adequate and its value is
at least 33 1/3% above the amount of the loan. If possible an independent
valuation of the security offered should be obtained. The applicant for the
loan must satisfy both the criteria for financial soundness and adequacy of
security before a loan is sanctioned.

(iv) In the case of institutions which receive grants-in-aid from Government to

meet a part of their deficits and the balance is met by the State Government
and the Trustees of Management, it should be ensured –
(a) that in computing the deficit for purpose of the grant-in-aid, the income
from the scheme, if any, earmarked for servicing the loan and the
instalment of repayment of the loan and interest (if any) is not
included;
(b) that as far as possible the scheme for which the loan is given is self-
financing and does not throw an additional burden on the general
income of the institutions, e.g., in the case of hostels for colleges that
the rents proposed are adequate;
(c) the institution produces an undertaking from the State Government or
the Management that any shortfall towards repayment of the loan and
interest will be made good by them. In the latter case the financial
position of the Management (Trust) should be investigated after calling
for information on the lines of Rule 220. (3) (i) above.

(v) Ministries / Departments of the Central Government should lay down a

procedure for periodical review of the old loans so that prompt action can
be taken, if necessary, for enforcing regular payments.

Rule 220. (4) The detailed procedure to be followed in connection with the grant of
loans to local bodies will be regulated by the provisions of the Local Authorities
Loans Act and other special Acts and by rules made thereunder.

Rule 221. Interest on Loans : (1) Interest shall be charged at the rate prescribed
by the Government for any particular loan or for the class of loans concerned.

Rule 221. (2) A loan shall bear interest for the day of payment but not for the day
of repayment. Interest for any shorter period than a complete year shall be
calculated as –
Number of days X Yearly rate of interest
365 (366 in case of Leap Year)
unless any other method of calculation is prescribed in any particular case of class
of cases.

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Rule 222. (1) Procedure to be followed for recovery of loans and interest
thereon and grant of moratorium : (i) The instructions issued by the Ministry of
Finance from time to time prescribing the interest rates and other terms and
conditions of loans to State and Union Territory Governments, Local Bodies,
Statutory Corporations, financial, industrial and commercial undertakings in the
Public Sector, Private institutions/parties and individuals, should be strictly
followed.

Rule 222. (2) The recovery of loans should ordinarily be effected in annual equal
instalments of principal together with interest due on the outstanding amount of
principal from time to time. The repayment and interest instalments may be
rounded off to the nearest rupee subject to final adjustment at the time of payment
of last instalment of principal and/or interest.

Rule 222. (3) A suitable period of moratorium towards repayment might be agreed
to in individual cases having regard to the projects for which the loans are to be
utilized. However, no moratorium should ordinarily be allowed in respect of interest
payable on loans.

Rule 223. Loans to State and Union Territory Governments, Local Bodies,
Statutory Corporations, Public Sector Undertakings, Private
Institutions/Parties and Individuals, etc. : (1) – Loans should ordinarily be
sanctioned at the normal rates of interest prescribed by Government for the
particular category of the loanee. In cases where the normal rate is considered too
high and a concession is justified, it should take the form of direct subsidy
debitable to the grants of the sanctioning authority. In such cases interest should,
however, be paid by the borrower in the first instance at the normal rates and
subsidy should be claimed separately;

Provided that the provisions of this decision should not apply where the
number of borrowers is very large and amount of individual loans is comparatively
small (as in the case of loans to displaced persons, taccavi loans, loans for land
improvement, etc.) and where the accepted policy is to lend money at rates of
interest below the normal rates, or to waive the recovery of interest in whole or in
part. In such cases, a token provision should be made in the budget of the
Department/Office concerned for obtaining the specific approval of Parliament for
the grant of the concession. No actual adjustment of accounts will, however, be
necessary in such cases.

Rule 223. (2) Agreements and other documentation : (i) In the case of loans to
parties other than State Governments and wholly owned Government Companies,
a loan agreement specifying all the terms and conditions shall be executed. A
clause shall invariably the inserted in all such agreements enabling Government at
any time to call for accounts of the applicant relating to any accounting year with
power to depute an officer specially authorized for this purpose to inspect the
applicant’s books, if necessary.

(ii) A written undertaking in Form GFR 32 should be obtained from a wholly

Government-owned company at the time of sanctioning the loan. The sanction
83
should specifically state that such an undertaking would be obtained from the
loanee before the drawal of the amount of loan and a certificate that the
undertaking has been obtained should be recorded by the Drawing Officer of the
office of the sanctioning authority in the bill for drawal of the amount of loan. The
sanction in respect of loans to other organizations, where a formal agreement is
required to be executed, will also be issued in the same manner.

(iii) In the case of loans sanctioned to the Departmental/Cooperative

canteens/tiffins rooms in Central Government Offices, no formal agreement need
be executed, but a written undertaking in Form GFR 32 suitably modified should
be obtained from the loanee.

Rule 224. Undertaking to be obtained from wholly -owned Government

Companies : In the case of loans to wholly-owned Government Companies, a
written undertaking to the effect that the fixed assets of the company shall not be
hypothecated without prior approval of the Government should be obtained in
Form GFR 32. No stamp duty need be paid on these written undertakings.

Rule 225. Loans to parties other than State Governments, wholly owned
Government Companies and Local Administration of Union Territories shall be
sanctioned only against adequate security. The security to be taken shall ordinarily
be at least 331/3 per cent more than the amount of the loan. However, a competent
authority may accept security of less value for adequate reasons to be recorded.

Rule 226. Submission of utilization certificate, reports, statements, etc. : (1)

In cases in which conditions are attached to the utilization of loan, either in the
shape of the specification of the particular objects on or the time within which the
money must be spent or otherwise, the authority competent to sanction the loan
shall be primarily responsible for certifying to the Accounts Officer where
necessary, the fulfillment of the conditions attaching to the loan, unless there is
any special rule or order to the contrary. The loans sanctioned to the State
Governments and the Local Administration of Union Territories shall no t, however,
come within the purview of this rule.

Rule 226. (2) (i) The certificate referred to in Rule 226 (1) above should be
furnished as in Form GFR 19-B and at such intervals as may be agreed to
between the Audit Officer and/or the Accounts Officer, as the case may be, and
the Ministry / Department concerned. Before recording the certificate, the certifying
officer should take steps to satisfy himself that the conditions, on which the loan
was sanctioned, have been or are being fulfilled. For this purpose, he may require
the submission to him at suitable intervals of such reports, statements, etc., which
will establish the utilization of loan for the purpose for which it was sanctioned. The
loanee institution may also be required to furnish a certificate from its Auditors that
the conditions attaching to the loan have been or are being fulfilled. The certificate
should give details of the breaches, if any, of those conditions.

(ii) A certificate of utilization of the loan should be furnished to the Accounts

Officer in every case of loan made for specific purposes, even if any
conditions are not specifically attached to the grant. Such certificates are
84
 not, however, necessary in cases where loans are sanctioned not for any
specific purpose or object but take the shape of a temporary financial aid or
where the plan loans have been sanctioned to the Public Sector
Undertakings intended for financing of their approved capital outlays. The
repayment of loan, however, has to be watched in the usual manner.

(iii) In respect of loans the detailed accounts of which are maintained in the
Audit Offices, the authorities sanctioning the loan should furnish the
utilization certificate in respect of each individual case.

(iv) Where the detailed accounts of the loans are maintained by the
departmental authorities, a consolidated utilization certificate should be
furnished to Audit by the Ministries / Departments sanctioning the loans to
Institutions / Organisations for the total amount of the loans disbursed
during each year for different purposes including the loans sanctioned by
their subordinate officers. This certificate will not cover the loans to
individuals for which utilization certificates need not be furnished to the
Accounts Officer. The certificate should indicate the year wise and object
wise break-up of loans disbursed and the loans for which utilizations
certificates are furnished. The utilization certificate should also show the
loans disbursed separately for each sub -head of account to facilitate
verification by the Accounts Officer.

(v) The utilization certificates should be furnished within a ‘reasonable time’

after the loan is paid to the institutions. The Department of Central
Government should prescribe, in consultation with the Finance Ministry
target dates for the submission of the utilization certificates by the
Department concerned to the Accounts Officer. The target date should, as
far as possible, be not later than 18 months from the date of sanction of the
loan.

(vi) In respect of loans, the detailed accounts of which are maintained by

Departmental Officers and where consolidated utilization certificates are to
be furnished to Accounts Officer, the period of 18 months should be
reckoned from the expiry of the financial year in which the loans are
disbursed. The consolidated utilization certificates in respect of such loans
paid each year should, therefore, be furnished not later than September of
the second succeeding financial year.

(vii) The due dates for submission of the Utilization Certificates should be
specified in the letter of sanction for loan. The target date as specified
should be rigidly enforced and extension should only be allowed in very
exceptional circumstances in consultation with the Ministry of Finance
under intimation to the Audit Officer and/or the Accounts Officer, as the
case may be. No further loans should be sanctioned unless the sanctioning
authorities are satisfied about the proper utilization of the earlier loan
sanctioned to an Institution, etc.

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(viii) In respect of loans sanctioned to departmental co-operative canteens in
Government Offices the Heads of Departments should furnish the
Utilization certificate.

Rule 227. Instalments of Loans : When a loan of public money is taken out in
instalments, each instalment of the loan so drawn shall be treated as a separate
loan for purposes of repayment of principal and payment of interest thereon except
where the various instalments drawn during a financial year are, for this purpose,
allowed to be consolidated into a single loan as at the end of that particular
financial year. In the latter event, simple interest at the prescribed rate on the
various loan instalments from the date of drawal of each instalment to the date of
their consolidation shall be separately payable by the borrower. Repayment of
each loan or the consolidated loan, as the case may be, and the payment of
interest thereon shall be arranged by the borrower annually on or before the
anniversary date of drawal or consolidation of the loan in such number of
instalments as the sanctioning authority may prescribe. The sanctioning authority
may allow, in deserving cases a moratorium towards repayment of principal but
not for the payment of interest. Should it appear that there is an undue delay on
the part of the debtor in taking out the last instalment of a loan the authority
sanctioning the loan may at any time declare that loan closed, and order
repayment of capital to begin. The Accounts Officer shall bring to notice any delay
that appears to him to require this remedy and he shall take this step whether or
not there are any dates fixed for taking of instalments.

NOTE 1. These instructions are applicable mutatis mutandis to loans, the

repayments of which are made by other than annual instalments.

NOTE 2. –It must be remembered that the calculation fixing the amount of equal
periodical instalments, by which a loan is repaid with interest, presupposes
punctual payment of the instalment and that, if any instalment is not punctually
repaid, the Interest amount will need to be recalculated.

Rule 228. Defaults in Payment : (1) The loan sanctions in favour of State / Union
Territory Governments and the loan sanctions / undertakings / agreements in case
of wholly Government owned companies / Public Sector Undertakings should
invariably include provision for the levy of penal interest on overdue instalments of
interest or principal and interest. The loan sanctions and agreements in all other
cases should invariably stipulate a higher rate of interest and provide for lower rate
of interest in the case of punctual payments. The penal or the higher rate of
interest, as the case may be, shall not, except under special orders of
Government, be less than 2 ½ % per annum above the normal rate of interest
prescribed by Government from time to time for the loans advanced.

Rule 228. (2) Any default in the payment of interest upon a loan or in the
repayment of principal, shall be promptly reported by the Accounts Officer, to the
authority which sanctioned the loan. The responsibility of the Accounts Officer,
under this rule refers only to the loans, the detailed accounts for which are kept by
him.

86
Rule 228. (3) Procedure to be followed in case of defaults in repayment of interest
free loans or loans sanctioned at concessional rates of interest :
(i) In the case of grant of interest free loans, e.g., loans to technical
educational institutions for construction of hostels, prompt repayment
should be made a condition for the grant of interest free loans. The
sanction letter in such cases should provide that in the event of any
default in repayment, interest at rates prescribed by Government from
time to time will be chargeable on the loans.
(ii) In the case of loans sanctioned at concessional rates of interest, e.g.,
loans under the State Aid to Industries Act and Rules, the payment of
subsidy (to cover the concession, viz., difference between the normal rate
and concessional rate), should be made conditional upon prompt
repayments of principal and payment of interest thereon by the party
concerned.
(iii) In the cases where in addition to interest free loans, subsidy is also
provided to meet running expenses, e.g., loans to departmental canteens,
the sanction letter should provide that in the event of any default in
repayment, the defaulted dues would be recovered out of the subsidy
payable.

Rule 228. (4) On receipt of a report of default referred to in sub-rule (2) above, the
authority concerned shall immediately take steps to get the default remedied and
also consider enforcement of penal /higher rate of interest on the overdue
amounts. Where the sanctioning authority is satisfied, having regard to the
circumstances of the case, that penal/higher interest need not be recovered, the
borrower should ordinarily be asked to pay interest, at the normal rate prescribed
in the loan sanction, on the overdue amount (of principal and/or interest) from the
due date of payment up to the date of settlement of the default. The recovery of
additional interest should not be waived except in special circumstances or where
the period of defaults is very short, e.g., a few days.

Rule 229. Irrecoverable Loans : A competent authority may remit or write off any
loans owing to their irrecoverability or otherwise.

Rule 230. Accounts and Control : (1) Subject to such general or specific
directions as may be given by the Comptroller and Auditor-General in this behalf,
detailed accounts of loans to Institutions and Organizations, etc., shall be
maintained by the Accounts Officer who shall watch their recovery and see that
the conditions attached to each loan are fulfilled.

Rule 230. (2) In the case of loans to private individuals the detailed accounts of
such loans shall be maintained by the departmental authorities concerned who
shall also watch their recovery and see that the conditions attached to each loan
are fulfilled. The detailed procedure to be followed for the various categories of
loans to private individuals should be laid down in consultation with Finance
Ministry and the Comptroller and Auditor-General of India.

Rule 231. The instructions contained in this Chapter relating to cost of audit of
grants-in-aid are applicable mutatis mutandis in the case of loans as well.
87
Rule 232. Annual Returns : Each Principal Accounts Officer shall submit to the
concerned Ministry / Department of Government a statement in Form GFR 20
showing the details of outstanding Central Loans borne on his books as on 31st
March each year. This statement should be submitted not later than the following
30th September and should indicate the aggregate of outstanding balance of loans,
details of defaults, if any, in repayment of principal and/or interest and the earliest
period to which the default pertains, against each State /Union Territory
Government, foreign Government, Railway / Department of Posts funds, public
sector and private sector enterprises, Co-operative and other institutions, etc.
Where, however, detailed accounts are not required to be maintained by the
Accounts Office, the statement should contain departmental authority wise
aggregate balances of outstanding loans.

Rule 233. Review of annual statements with a view to enforce repayments of

the principal and interest due : The Administrative Ministries should keep watch
over the receipt of the annual statements in Form GFR 20 regularly from the
Accounts Officer and conduct a close review of the cases of defaults in repayment
of the instalments of principal and/or interest due, as revealed from these annual
statements and take suitable measures for enforcing repayments of the principal
and interest due. If these statements are not received in time, the Accounts Officer
should be reminded promptly. To facilitate a proper review of the position of
outstanding loans, the Ministries may also arrange to maintain centrally a list of all
sanctions issued relating to loans advanced to State Governments and other
parties.

88
 CHAPTER - 10

BUDGETING AND ACCOUNTING

OF EXTERNALLY AIDED PROJECTS
Rule 234. Implementation of Projects / Schemes through external aid receipt:
(1) The projects / schemes of the Government of India to be implemented through
external aid receipt from multilateral / bilateral funding agencies shall be shown in
the budget proposals approved annually by the Parliament.

Rule 234. (2) : The external aid comes from bilateral and multilateral sources as
follows :
(i) Bilateral funding to finance specific project(s) by the funding
agency(ies) under Government to Government agreement(s) and,
(ii) Multi-lateral funding by Multi-Lateral Funding Agencies, like the
World Bank under agreement(s) between the borrower (Government
of India) and the Multilateral Funding Agency(ies).

Rule 234. (3) The Department of Economic Affairs, Ministry of Finance as the
nodal agency shall execute the legal agreement for loans / grants from external
funding Agency(ies). However, grant agreements for Technical Assistance can
also be executed by the beneficiary Ministries / Departments with the approval of
Ministry of Finance, Department of Economic Affairs.

Rule 234. (4) The Office of the Controller, Aid Accounts and Audit (CAAA) in the
Department of Economic Affairs, Ministry of Finance shall be responsible for
implementing the financial covenants laid down in the agreement(s) executed by
Department(s) of Government of India and the External Funding Agency(ies). A
copy of all such agreements shall be sent to the Office of Controller, Aid Accounts
and Audit, Department of Economic Affairs for this purpose.

Rule 235. Currency of external aid : The external aid shall flow from the Funding
Agency in foreign currency or Indian rupees and shall be received by the Reserve
Bank of India, Mumbai who shall remit the rupee equivalent to the account of
Controller, Aid Accounts and Audit, Department of Economic Affairs at Reserve
Bank of India, New Delhi. The remittances shall be accounted as external
loan/Grant receipts in the Consolidated Fund of India.

Rule 236. Accounting of Cash grants : Cash grants, as distinct from commodity
grant or other assistance in kind received from external sources shall be
accounted for only by the office of Controller of Aid Accounts and Audit,
Department of Economic Affairs.

Rule 237. Procedure for withdrawal : The concerned administrative Ministries /

Departments shall be required to make provision of funds under the relevant head
of account as ‘External Aided Component’ in their Detailed Demands for Grants for
release of external aid amounts during the year to the respective Project
89
Implementing Agencies. There are mainly two procedures laid down for withdrawal
of funds from the loan/grant account: –

(i) Reimbursement procedure : Under the reimbursement procedure the

Project Implementing Agency shall initially spend / incur expenditure and
subsequently claim the amount from the Funding Agency through the office
of the Controller, Aid Accounts. The remittances shall be accounted as
External Loan/Grant receipt in the Consolidated Fund of India. There are
two ways of dealing with the reimbursement claims as given below:

(a) Reimbursement through Special Account (Revolving Fund

Scheme) : Under the Revolving Fund Scheme, the Funding Agency
disburses the estimated expenditure of four months for the projects
as initial advance to Government of India under the respective
loan/credit / grant agreement. Office of Controller of Aid Accounts &
Audit withdraws the amount specified in the agreement as initial
deposit from the Funding Agency, by sending a simple withdrawal
application in the prescribed format after the loan is declared
effective. Such initial deposit designated in US $ is received by
Reserve Bank of India, Mumbai and Rupee equivalent shall be
passed on to Controller of Aid Accounts & Audit through Government
Foreign Transaction (GFT) advice. However, Reserve Bank of India,
Mumbai shall maintain a loan wise Pro forma account for liquidation
of advance received from Funding Agency. Office of Controller, Aid
Accounts and Audit, on receipt of reimbursement claims from Project
Implementing Agency, shall send an advice to Reserve Bank of
India, Mumbai advising them to debit the Special Account with the
US$ equivalent of the amount of the eligible claim. Office of
Controller, Aid Accounts and Audit shall consolidate all such claims
and submit to Funding Agency for replenishment of Special Account.
This will be accompanied by a statement of debits and credits made
during the period by Reserve Bank of India, Mumbai and supporting
documents received from the Project Implementing Agency.

(b) Reimbursement outside Special Account :. Under the

reimbursement procedure (where there is no provision in the
loan/credit agreement for the Special Account or the balance in the
Special Account is ‘Nil’) office of Controller of Aid Accounts and Audit
shall send the reimbursement claims received from the Project
Implementing Agency direct to the Funding Agency after checking
the eligibility aspect. The Funding Agency shall disburse the eligible
expenditure to the borrower’s account with Reserve Bank of India,
Mumbai, who shall pass on the Rupee equivalent to the account of
the Controller of Aid Accounts and Audit at Reserve Bank of India,
New Delhi by issue of Government Foreign Transaction (GFT)
advice.

(ii) Direct Payment Procedure : Under this procedure, adopted in some

cases, the Funding Agency on the request of the Project Implementing
Agency (received through Controller of Aid Accounts and Audit), duly
90
 supported by relevant documents, shall directly pay to the contractor /
supplier / consultant from the loan / credit / grant account. The Funding
Agency after satisfying itself as to the eligibility of the expenditure etc.
remits the amount directly to the account of the payees as per the payment
instructions. The Funding Agency apprises the office of Controller of Aid
Accounts and Audit and the Project Implementing Agency of the particulars
of the payment made. Office of Controlle r of Aid Accounts and Audit shall
work out the rupee equivalent of the foreign currency payment. This rupee
equivalent shall be recovered by office of Controller of Aid Accounts and
Audit from the Project Implementing Agencies / State Governments which
have availed of the Direct Payment Procedure.

Note : In the case of Central Projects, Centrally Sponsored Projects and Public
Sector / Financial Institutions, the concerned administrative Ministry / Department
shall release the fund to the Project Implementing Agency with the instruction to
deposit rupee equivalent of the foreign currency that have been availed of under
Direct Payment Procedure by them to the account of Controller of Aid Accounts
and Audit at Reserve Bank of India, New Delhi or State Bank of India, Tis Hazari,
Delhi through a challan.

Rule 238. (1) Fund Flow for State Projects financed from external aid source:
The respective Departments of the State Government shall provide in the Budget
such expenditure proposed to be incurred under Plan Schemes during the
financial year by the Project Implementing Agencies. These shall be in respect of
State projects to be financed from external aid sources both under loan/credit and
grants and eligible for disbursement from Funding Agency under Reimbursement
or Direct Payment Procedure.

Rule 238. (2) Fund flow for State Projects under Reimbursement Procedure:
The disbursements under the “Reimbursement through Special Account” and
“Reimbursement out side Special Account”, referred to in Rule 237 (i), shall be
consolidated at periodical intervals under each loan/credit State -wise by the office
of the Controller of Aid Accounts and Audit. The details of the same shall be sent
to Plan Finance Division of the Department of Expenditure in the Ministry of
Finance for release of funds to the respective State Governments. The Plan
Finance division of Department of Expenditure in the Ministry of Finance shall
issue sanctions for actual release of the disbursement for each State. A copy of
such sanction shall be endorsed to the Finance Department of the concerned
State Government for information. The office of the Chief Controller of Accounts,
Ministry of Finance shall issue the Inter-Government (IG) Advice to Reserve Bank
of India, Central Accounts Section, Nagpur for effecting the release to the
concerned State Governments. The account of the State Government maintained
at Reserve Bank of India, Central Accounts Section, Nagpur shall be credited with
the amount so released, thus completing the cycle of funds from the expenditure
incurred from the Budget of the State till receipt of funds of such expenditure from
Government of India to the State.

Rule 238 (3). Fund flow for State Projects under Direct Payment Procedure:
Under Direct Payment Procedure the claims shall be processed as mentioned in
Rule 237 (ii). Office of Controller of Aid Accounts and Audit shall work out the
91
Rupee equivalent of such Direct Payment based on Reserve Bank of India buying
rate applicable for the value date on which the Direct Payment was made. Office
of Controller of Aid Accounts and Audit shall consolidate such disbursement in
Rupees, and send a list of such disbursement State-wise to Plan Finance Division
of Department of Expenditure at periodical intervals requesting them to release the
amount to the State concerned notionally and recover the same for credit to
Controller of Aid Accounts and Audit’s account. The Plan Finance Division shall
issue a separate sanction for the amount to be released to the State concerned
and for simultaneous recovery and credit back to the account of the Controller of
Aid Accounts and Audit. A copy of such sanction shall also be endorsed to the
Finance Department of the State Government concerned. The office of the Chief
Controller of Accounts, Ministry of Finance shall advise Reserve Bank of India,
Central Accounts Section, Nagpur for making necessary adjustment entries in the
accounts of the State concerned under intimation to the Finance Department of
the State and Controller of Aid Accounts and Audit. This completes the cycle of
funds flow in the case of direct payment claims.

Rule 239. Fund flow for Central / Central sponsored Projects : Under the
Central / Central sponsored project financed from external aid, whether loan or
grant, the process of disbursement of such claims by the Funding Agency shall be
the same as explained in Rule 237. The respective Ministry / Department get
funds when Demands for Grants are passed in the Parliament and advised by the
Budget Division of the Ministry of Finance. The funds shall be released to Project
Implementing Agency by the administrative Ministry / Department with reference to
expenditure incurred by the Project Implementing Agency.

Rule 240. Fund flow for Public Sector / Financial Institutions : When the
Project Implementing Agency under Loan / Credit Agreement is a Public Sector /
Financial Institution / Autonomous Body and Government of India is the Borrower,
the Administrative Ministry concerned shall provide in its budget funds required to
be passed on to the Project Implementing Agency for the expenditure incurred by
the latter under the externally aided project. The Project Implementing Agency
shall submit claims under reimbursement/direct payment procedures to the office
of the Controller of Aid Accounts and Audit, Department of Economic Affairs. The
disbursement of the claims by the Funding Agency shall be similar as explained in
Rule 237. The concerned administrative Ministry / Department releases the
amount to Project Implementing Agency based on the certification of disbursement
received from the Funding Agency as certified by the office of the Controller of Aid
Accounts and Audit.

However, where the loan is negotiated directly by a particular Public Sector

Undertaking / Financial Institution, the funds from the Funding Agency will flow
direct to the borrowing entity.

Rule 241. Repayment of loans : Office of Controller of Aid Accounts and Audit
shall be responsible for prompt repayment of principal on the due date as per the
agreements. The remittance of foreign currency is arranged through designated
Public Sector Commercial Banks and Reserve Bank of India. The rupee
equivalent and the amount of foreign currency remitted shall be intimated by the
Banks to Controller of Aid Accounts and Audit. The rupee equivalent of the foreign
92
currency remitted is credited to the respective Banks’ account maintained at
Reserve Bank of India, New Delhi by debit to Controller of Aid Accounts and
Audit’s account as per standing arrangement. On the receipt of the advice from
Reserve Bank of India, New Delhi, Controller of Aid Accounts and Audit shall debit
the concerned loan account in the Consolidated Fund of India. The repayment of
loans shall be classified as charged expenditure.

Rule 242. Interest Payments : Interest on external loans shall be paid on the due
date as stipulated in the loan / credit agreements against the budget provision
made for this purpose. Interest payments shall be accounted for as debit under the
Major Head ‘2049-Interest Payments’ for external loans in the Consolidated Fund
of India. The procedure for transfer of amount shall be the same as followed in the
case of repayment of loans, referred to in Rule 241 above. The interest payment
shall be classified as charged expenditure.

Rule 243. Accounting of exchange variation : The exchange variation in

respect of foreign loans that have been fully repaid shall be written off to “8680-
Miscellaneous Government Accounts - Write off from Heads of Accounts closing to
balance” per contra credit to relevant Mi nor Head, Sub Head under “6002-External
Debt” to which the expenditure / repayment stands debited.

Rule 244. Aid in form of materials and equipments : In cases where materials,
equipments and other commodities, without involving any cash inflow, are
received as aid from foreign countries, the Funding Agency issues an advice to the
concerned Ministry / Department giving details of materials supplied along with the
value thereof. The Ministry / Department concerned in turn shall intimate the
details to the office of the Controller of Aid Accounts and Audit, Department of
Economic Affairs for making the budget provision in regard to aid material /
equipment.

Note : Refer to Para 4.8.1 of Civil Accounts Manual and Note (1) below Major
Head '3606-Aid Materials and Equipments' of List of Major and Minor Heads of
Account of Union and States for detail procedure of adjustment of value of the
materials etc. received.

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 CHAPTER - 11

GOVERNMENT GUARANTEES

Rule 245. The power of the Union Government to give guarantees emanates from
and is subject to such limits as may be fixed in terms of Article 292 of the
Constitution of India, the Fiscal Responsibility and Budget Management Act, 2003
and Rules framed there under

Rule 246. (1)Guidelines for grant of Government of India Guarantee :Powers

to grant Government of India Guarantee vest with the Ministry of Finance, Budget
Division. The following guidelines should be followed by the
Ministries/Departments of the Government of India for recommending
guarantee/counter guarantee:-
(i) A proposal for guarantee by Government must be justified by public interest
such as in the case of borrowings by public sector institutions for approved
development purposes or borrowings by public sector undertakings from
Banks for working capital and other purposes etc.

(ii) The concerned Ministry / Department shall examine the proposal in

consultation with the Financial Adviser in the same manner as a proposal
for loan. While examining the proposal the following considerations shall be
kept in view :-
(a) Public interest which the guarantee is expected to serve.
(b) Credit worthiness of the borrower to ensure that no undue risk is
involved.
(c) Terms of the borrowing take into account the yields as applicable on
Government paper of similar maturity.
(d) The conditions prescribed in the guarantees in order to ensure
continued credit worthiness of the borrower.

(iii) After examination in the concerned Ministry / Department, all proposals for
extending guarantees shall be referred to Ministry of Finance (Budget
Division) for approval. No guarantees shall be given without the approval of
the Ministry of Finance (Budget Division).

(iv) Government guarantees shall not be provided to the private sector.

(v) Government guarantees should normally not be extended for external

commercial borrowings.

(vi) Government guarantees may be given on all soft loan components of the
bilateral aid. However guarantee should not be given for the commercial
loan components of such aid. In case of power sector, extension of
Government guarantee even in respect of commercial components may be
considered on a case to case basis.
94
(vii) Government of India guarantee will not be given in cases of grants.
However, if the donor / insists on ensuring performance, the same may be
listed as a negotiating condition for getting the grant.

(viii) The conditions, if any which should be made by Government while giving
the guarantee e.g. period of guarantee, levy of fee to cover risk
representation for Government on the Board of Management, Mortgage or
lien on the assets, submission to Government of periodical reports and
accounts, right to get the accounts audited on behalf of Government etc.
Even if fee, representation and mortgage are not considered necessary, the
right to verify the continued credit –worthiness of the borrower should be
ensured

Rule 246. (2) The Department of Economic Affairs (DEA) shall act as the nodal
agency for external borrowings. The credit divisions of DEA shall prescribe limits
for external borrowings, sector wise / lender wise and play a role in negotiating
external assistance and evolving monitoring systems. In the case of external
borrowings where guarantees, are sought to be provided, credit divisions of
Department of Economic Affairs should obtain prior approval of Budget Division.

Rule 247. Borrowings from multilateral agencies by Central Public Sector

Undertakings :
(a) All borrowings from the multilateral agencies by Central Public Sector
Undertakings would be direct (without Government of India’s
intermediation) on the terms as agreed mutually between the borrower and
the lender and approved by the Government of India. However, where such
terms involve grant of Government of India Guarantee, prior approval of the
Budget Division of the Ministry of Finance may be obtained.
(b) The borrowing should relate to approved Projects.
(c) Wherever guarantee is to be given by Government of India, the borrower
shall enter into an agreement with the Government of India for the payment
of guarantee fee on the principal amount of the loan drawn and loan
outstanding from time to time.
(d) The borrower shall bear the exchange risk and get the funds directly on
terms and conditions prescribed by the lending agency.

Rule 248. Levy of Guarantee Fees : (1) The rates of fee on guarantees are laid
down by the Budget Division in the Ministry of Finance, Department of Economic
Affairs, from time to time. The rates of guarantee fee prevalent in July, 2004 are
given in Appendix - 16. Ministries / Departments should levy the prescribed fee in
respect of all cases. The fees are also to be levied in respect of non-fund based
borrowings / credits (viz. letters of credit, Bank guarantees etc.). In case of any
doubt with regard to the categorisation of any particular undertaking / organization
or the nature of borrowing for the purpose of levy of fee, the matter may be
referred to the Budget Division for clarification. The Ministries / Departments
should also take adequate steps to ensure prompt recovery of the prescribed fees.
95
Rule 248. (2) The guarantee fee should be levied before the guarantee is given
and thereafter on 1st April every year. The rate of guarantee fee is to be applied on
the amount outstanding at the beginning of the guarantee year. Where the
guarantee fee is not paid on the due date, fee should be charged at double the
normal rates for the period of default.

Rule 249. Review of Guarantees (1) : All Ministries / Departments shall ensure
that all guarantees are reviewed every quarter. The monitoring / review
undertaken should examine whether the borrower is discharging repayment
obligations / interest obligations as per terms of the loan agreement. The Financial
Advisers of the Ministries / Departments should undertake these reviews.

Rule 249. (2) The Financial Adviser of the Ministries / Departments would be
responsible for ensuring that the periodical reviews are carried out by the
Ministries / Departments concerned. They shall also ensure that a register of
guarantees in Form GFR 43 is maintained :
(i) to keep a record of guarantees.
(ii) to retain information required from time to time in respect of
guarantees.
(iii) to keep record of the periodical reviews to see that these are carried
out regularly.
(iv) to keep record of levy and recovery of guarantee fee.
(v) to send data as contained in Form GFR 43, duly updated every
quarter to the Budget Division in the Ministry of Finance, Department
of Economic Affairs by 10th of the month following the quarter.

Rule 249. (3) In respect of guarantees issued by the Ministry of Finance for
external loans, the respective credit divisions shall conduct a quarterly review. For
this purpose the Financial Adviser (Finance) shall ensure the maintenance of the
required registers, as well as ensure that the periodical reviews are carried out by
the concerned credit divisions, and report forwarded to the Budget Division in the
Form GFR 43. In cases, where the guarantees on external loans are issued by the
concerned administrative Ministry, that Ministry would be responsible for
conducting the review.

Rule 249. (4) Classification of guarantees : For the purpose of record keeping,
guarantees shall be classified as under :
(i) Guarantees given to the RBI, other banks and industrial and financial
institutions for repayment of principal and payment of interest, cash credit
facility, financing seasonal agricultural operations and / or providing working
capital to companies, corporations and cooperative societies and banks;
(ii) Guarantees given for repayment of share capital, payment of minimum
annual dividend and repayment of bonds / loans, debentures issued / raised
by the statutory corporations and financial institutions;
(iii) Guarantees given in pursuance of agreements entered into by the
Government of India with international financial institutions, foreign lending
agencies, foreign governments, contractors, suppliers, consultants, etc.,

96
 towards repayment of principal, of interest / commitment charges on loans,
etc., and /or for payment against supplies of material and equipment;
(iv) Counter guarantees to banks in consideration of the banks having issued
letters of credit / authority to foreign suppliers for supplies made / services
rendered;
(v) Guarantees given to Railways / State Electricity Boards and other entities
for due and punctual Payment of dues by companies / Corporation;
(vi) Performance guarantees given for fulfillment of contracts / projects awarded
to Indian companies in foreign countries;
(vii) Performance guarantees given for fulfillment of contracts / projects awarded
to foreign companies in foreign countries.
(viii) Others

Rule 250. Accounting for Guarantees : A statement showing the guarantees

given by the Central Government is required to be annexed to the Detailed
Demands for grants prepared by the Ministries / Departments. The statements
should show the position upto 31st March of the second preceding year, to the year
to which the Budget documents relate. For example, the Budget documents for
2004-05 will show the position of guarantees outstanding as at 31st March 2003.
The form in which the statement of guarantees is to be shown would be as
prescribed in the Budget circulars. Where interest payments are also guaranteed,
the outstanding shown under the columns for sums guaranteed and outstanding
should disclose the interest element outstanding, if any, separately. While
furnishing the summary statement of guarantees to the Finance Ministry, the
Ministries / Departments should ensure and certify that the amounts shown tally
with the total figures in the statement to be included in the Detailed Demands for
grants. While furnishing the summary statements, the Ministries / Departments
should also certify that the information tallies with the material furnished to the
Controller General of Accounts for the purpose of inclusion in the Finance
Accounts of the relevant year.

Rule 251. Invocation of Guarantee : In the event of invocation of a guarantee,

the obligation may be discharged by sanctioning loan equal to the amount of
guarantee outstanding with the approval of Budget Division, Ministry of Finance.
However, any payment on this account will finally be charged to the Guarantee
Redemption Fund maintained in the Public Account.

Rule 252. Furnishing of data regarding Guarantees : With a view to enable the
Ministry of Finance to examine cases of Government of India guarantees and
extension thereto, all Ministries / Departments should furnish to that Ministry, data
of certain operational parameters of the Public Sector Undertaking / Entity. In case
the accounts of the Public Sector Undertaking have been audited by the
Comptroller & Auditor General of India under Section 619 (4) of the Companies
Act, the effect of the comments of the Comptroller & Auditor General of India on
the Public Sector Undertaking's profitability should be brought out. Further, where
BIFR targets have been assigned to the Company, the actuals vis-à-vis targets for
the preceding three years should be indicated. The data should be furnished in the
Form GFR 44 along with the proposal.

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 CHAPTER - 12

MISCELLANEOUS SUBJECTS

I. ESTABLISHMENT
Rule 253. Proposal for additions to Establishment : (1) All proposals for
additions to establishment shall be submitted to sanctioning authority in
accordance with the instructions contained in Rule 11 of the Delegation of
Financial Powers Rules and other such instructions which may be prescribed in
this regard.

Rule 253. (2) All proposals for creation of a new establishment or a revision in an
existing establishment, whether temporary or permanent in excess of delegated
powers should contain, inter alia
(a) The present cost of the establishment in existence
(b) Cost implications of the cha nge proposed giving details of pay and
allowances of post(s) proposed
(c) Expenditure in respect of claim to pension / gratuity / other
retirement benefits that may arise in consequence of the proposals.
(d) Details on how the expenditure is proposed to be met including
proposed re-appropriations.

Rule 253. (3) A full review of the justification for continuation / conversion of
temporary posts in consultation with Integrated Finance or Ministry of Finance
where necessary, should precede any order for continuation of temporary posts /
conversion into permanent posts.

Rule 253. (4) All proposals for increase in emoluments for an existing post(s) shall
be referred to the Ministry of Finance for approval.

Rule 254. Adjustment in Appointments : A Ministry / Department competent to

make appointment to posts in any cadre may make appointments in a lower post
in the cadre to the extent of vacancies left unfilled in the higher posts.

Rule 255. Transfer of Charge : (1) A report of transfer of a Gazetted Government

servant duly made in Form GFR 33 and signed both by the relieved and relieving
Government servants, shall be sent on the same day to the Head of the
Department or other Controlling Officers concerned except in the following types of
cases in respect of which report of transfer of charge need not be signed both by
the relieving and relieved Government servants simultaneously and may be sent
independently.
(i) Where a Gazetted Government servant assumes charge of a newly
created or vacant post or relinquishes charge of a post which has been
abolished
(ii) Where a Gazetted government servant vacates a post for a short period
and no formal appointment or officiating arrangement is made in his
place.

98
 (iii) Where due to administrative exigencies a government servant is required
to move to another post relinquishing his post against local arrangement.

Rule 255. (2) In cases in which the transfer of charge involves assumption of
responsibility for cash, stores, etc., the following instructions should be observed :-
(i) The Cash Book or imprest account should be closed on the date of
transfer and a note recorded in it over the signatures of both the relieved
and the relieving Government servants, showing the cash and imprest
balances and the number of unused cheques / receipt books, if any,
made over and received by them respectively.
(ii) The relieving Government servant should bring to notice anything
irregular or objectionable in the conduct of business that may have come
officially to his notice. He should examine the accounts, count, weight
and measure certain selected articles, as applicable, in order to test the
accuracy of the returns.
(iii) In the case of any sudden casualty occurring or any emergent necessity
arising for a Government servant to relinquish his charge, the next senior
officer of the department present shall take charge. When the person
who takes charge is not a Gazetted Government servant, he must at
once report the circumstances to his nearest departmental superior and
obtain orders as to the cash in hand, if any.

Rule 255. (3) The additional procedure to be followed by an Audit Officer /

Accounts Officer, etc., in making over charge of his functions in connection with
the Charitable Endowments and other Trust Accounts is laid down in Appendix -
12.

Rule 256. Date of Birth : Every person newly appointed to a service or a post
under Government shall, at the time of the appointment, declare the date of birth
by the Christian era with confirmatory documentary evidence such as a
Matriculation Certificate, where prescribed qualification for appointment is
Matriculation or above. In other cases Municipal Birth Certificate or Certificate from
the recognised school last attended shall be treated as a valid document.

Rule 257. (1) Service Book : Detailed Rules for maintenance of Service Books
are contained in SR 196 to 203. Service Books maintained in the establishment
should be verified every year by the Head of Office who after satisfying himself
that the services of Government servants concerned are correctly recorded in
each Service Book and shall record the following certificate "Service verified from
…………….. upto …………………."

Rule 257. (2) The service book of a government servant shall be maintained in
duplicate. First copy shall be retained and maintained by the Head of the Office
and the second copy should be given to the government servant for safe custody
as indicated below :-
(a) To the existing employees - within six months of the date on which
these rules become effective.
(b) To new appointees - within one month of the date of appointment.

99
Rule 257. (3) : In January each year the Government servant shall handover his
copy of the Service Book to his office for updation. The office shall update and
return it to the Government Servant within thirty days of its receipt.

Rule 257. (4) In case the Government servants' copy is lost by the government
servant, it shall be replaced on payment of a sum of Rs. 500/-.

Rule 258. Retrospective claim due from date of sanction : In the case of
sanction accorded with retrospective effect the charge does not become due
before it is sanctioned. In such cases the time-limit specified in Rule 264 (1)
should be reckoned from the date of sanction and not from the date on which the
sanction takes effect.

Rule 259. Due date of T.A. claim : Travelling allowance claim of a government
servant shall fall due for payment on the date succeeding the date of completion of
the journey. He shall submit the travelling allo wance claim within one-year of its
becoming due failing which it shall stand forfeited.

Rule 260. Reckoning the date in case of T.A. claims by retired Government
servants appearing in a Court of Law for defending himself : Retired
Government servants become eligible for reimbursement of Travelling expenses in
respect of travel(s) for appearing in court of law for defending himself only when
the judgement relating to his honorable acquittal is pronounced by the court. In
such cases the date of pronouncements of the judgement shall be the reference
point for submission and forfeiture of his T.A claim.

Rule 261. Due date of LTC claim : LTC claim of a government servant shall fall
due for payment on the date succeeding the date of completion of return journey.
The time limit for submission of the claims shall be as under :-
(i) In case advance drawn : Within one month of the due date.
(ii) In case advance not drawn : Within three month of the due date.

In case of (i) above if the claim is not submitted within one month of the due
date, the amount of advance shall be recovered but the Government employee
shall be allowed to submit the claim as under (ii) above.

In case of failure to submit the claim in both the cases within three months
of the due date, the claim shall stand forfeited.

Rule 262. Due date of OTA claims : A claim for overtime allowance shall fall due
for payment on first day of the month following the month to which the overtime
allowance relates. The claim shall stand forfeited if not submitted within one year
of the due date.

Rule 263. Due date of a withheld increment : In the absence of any specific
order withholding an ordinary increment under FR 24 before the date on which it
falls due for payment, the period of one year should be counted from the date on
which it falls due and not with reference to the date on which the Increment
Certificate is signed by the competent authority. Even where an increment is
100
withheld, the time-limit should be reckoned from the date on which it falls due after
taking i nto account the period for which it is withheld.

Rule 264. Arrear Claims : (1) Any arrear claim of a Government servant which is
preferred within two years of its becoming due shall be settled by the Drawing and
Disbursing Officer / Accounts Officer, as the case may be, after usual checks.

Rule 264. (2) For the purpose of the above provisions the date on which the claim
is presented at the office of disbursement should be considered to be the date on
which it is preferred.

Rule 264. (3) (i) A claim of a government servant which has been allowed to
remain in abeyance for a period exceeding two years, should be investigated by
the Head of the Department concerned. If the Head of Department is satisfied
about the genuineness of the claim on the basis of the supporting documents and
there are valid reasons for the delay in preferring the claims, the claims should be
paid by the Drawing and Disbursing Officer / Accounts Officer, as the case may
be, after usual checks.

(ii) A Head of Department may delegate the powers, conferred on him by sub rule
(i) above to the subordinate authority competent to appoint the Government
servant by whom the claim is made.

Rule 265. Procedure for dealing with time-barred claims : (1) Even a time
barred claim of a Government servant, shall be entertained by the concerned
authority provided that the concerned authority is satisfied that the claimant was
prevented from submitting his claim within the prescribed time limit on account of
causes and circumstance beyond his control.

Rule 265. (2) A time barred claim referred to in Rule 265 (1) shall be paid with the
express sanction of the Government issued with the previous consent of the
Internal Finance Wing of the Ministry / Department concerned.

Rule 266. Time barred claims of persons not in Government service : The
provisions of Rule 258 to Rule 265 shall apply mutatis mutandis to arrear claims
preferred against Government by persons not in Government service.

Rule 267. Retrospective sanctions : Retrospective effect shall not be given by

competent authorities to sanctions relating to revision of pay or grant of
concessions to Government servants, except in very special circumstances with
the previous consent of the Finance Ministry.

Rule 268. Currency of sanction of Provident Fund advance/withdrawal : A

sanction to an advance or a non-refundable part withdrawal from Provident Fund
shall, unless it is specifically renewed, lapse on the expiry of a period of three
months.
This will, however, not apply to withdrawals effected in instalments. In such
cases the sanction accorded for non-refundable withdrawals from Provident Fund

101
will remain valid up to a particular date to be specified by the sanctioning authority
in the sanction order itself.

II. REFUND OF REVENUE

Rule 269. Sanctions of refunds of revenue : All sanctions to refunds of revenue,
shall be regulated by the orders of an Administrator or of the departmental
authority, as the case may be, according to the provisions of the rules and orders
contained in the departmental manuals, etc.

Rule 270. (1) Communication of refund sanctions to audit : The sanction to a

refund of revenue may either be given on the bill itself or quoted therein; and a
certified copy of the same attached to the bill in latter case.

Rule 270. (2) Suitable note of refund to be made in original Cash Book entry
and other documents : Before a refund of revenue is made, the original demand
or realization, as the case may be, must be linked and a reference to the refund
should be recorded against the original entry in the Cash Book or other documents
so as to make the entertainment of a double or erroneous claim impossible.

Rule 270. (3) Remission of revenue before collection is not refund :

Remissions of revenue allowed before collection are to be treated as reduction of
demands and not as refunds.

Rule 270. (4) Refunds not regarded as expenditure for allotment : Refunds of
revenues are not regarded as expenditure for purposes of grants or appropriation.

Rule 270. (5) Competent authority in case of credits wrongly classified : In

cases where revenue is credited to a wrong head of account or credited wrongly
under some misapprehension, the authority competent to order refund of revenue
shall, in such cases, be the authority to whom the original receipts correctly
pertain.

Rule 271. Compensation for accidental loss of property : No compensation for

accidental loss of property shall be paid to an officer except with the approval of
the Finance Ministry. While evaluating the proposal for compensation the following
shall be specifically considered. Compensation will not ordinarily be granted to an
officer for any loss to his property which is caused by floods, cyclone, earthquake
or any other natural calamity or which is due to an ordinary accident, which may
occur to any citizen, for example, loss by theft or as the result of a railway accident
or fire, etc. The mere fact that at the time of the accident, the Government servant
is technically on duty or is living in Government quarters in which he is forced to
reside for the performance of his duties will not be considered as a sufficient
ground for the grant of compensation.

102
 III. DEBT AND MISCELLANEOUS OBLIGATIONS OF
GOVERNMENT.
Rule 272. Public Debt : The public debt raised by Government by issue of
securities shall be managed by the Reserve Bank. The Reserve Bank shall also
manage securities created and issued under any other law or rule having the force
of law provided such law or rule provides specifically for their management by the
Reserve Bank.

Rule 273. Provident Funds : The procedure relating to the recovery of,
subscriptions to and withdrawals from, the Provident Funds established under the
provisions of Provident Funds Act, 1925 shall be regulated strictly, in accordance
with the provisions of the respective Provident Fund Rules. Following instructions
should be carefully observed by the Head of the Offices for correct preparation of
the Provident Fund schedules.
(i) A complete list of subscribers to each fund should be maintained in each
disbursing office in the form of a schedule.
(ii) Each new subscriber should be brought on this list and any subsequent
changes resulting from his transfer or in the rate of subscription, etc.,
clearly indicated in a schedule.
(iii) When a subscriber dies, quits service or is transferred to another office,
full particulars should be duly recorded in the list.
(iv) In the case of transfer of a subscriber to another office, the necessary
note of transfer should be made in the list of both the offices.
(v) From this list the monthly schedule to be appended to the pay bill should
be prepared and tallied with recoveries made before the submission of
the bill for payment.

Rule 274. (1) Crediting of Interest : The deposit accounts of these funds on the
Government book will be credited with interest at such rates and at such intervals
as may be prescribed by Finance Ministry in each case.

Rule 274. (2) Maintenance of a register for recovery of PLI Premia : All
drawing officers should maintain in Form (GFR 38) record of Postal Life Insurance
policy (PLI) holders. The register should be kept up to date, the names of the
policy holders should be noted in alphabetical order according to surnames,
leaving sufficient space between two entries to enable newcomers names being
inserted in the right place. A separate entry should be made in the register for
each policy in the case of a policy holder having more than one policy. On receipt
of an intimation from the Director, Postal Life Insurance, Kolkata, about the issue
of a policy in favour of a subscriber authorizing the Drawing Officer to commence
recovery from pay, or on receipt of a Last Pay Certificate in respect of the
subscriber, transferred from another office, the Drawings Officer should make a
note of the particulars of the policy in the register. The name of the office from
which the subscriber has been transferred should be invariably be noted in the
remarks column. Wherever a subscriber is transferred to another office or his
policy is discharged, his name should be scored out from the register, giving
necessary remarks regarding discharge of policy or indicating the office to which
the insurant has been transferred, as the case may be.
103
 After the preparation of the monthly pay bill, the amount of recovery on
account of PLI premium shown in the bill should be posted in the monthly column
in the register with proper reference to the bills or the vouchers. The fact of excess
/ non-recovery should be briefly noted in the remarks column. Extracts should be
attached to the relevant bills in support of the recoveries. While taking extracts it
should be seen that the names of those insurants from whom recoveries were
made in previous months but no recoveries have been made during the current
month either on account of transfer or discharge of that policy or on account of
leave salary being not drawn or the official being on leave without pay, should be
included in the current month's schedule with necessary remarks noted against
their names. Similarly, the remarks 'New Policy' or Transferred from…………….
Office, should be given in the schedule against the names of insurants entered for
the first time in current month. Reasons for short or excess recovery should be
noted briefly in the remarks column. In short, schedule of Postal Life Insurance
recoveries to be attached to the bills, would be a record not only of those from
whom the recovery has actually been effected but also of those from whom
recovery was being effected previously but has not been effected.

IV. SECURITY DEPOSITS

Rule 275. Furnishing of security by Government servants handling cash : (1)

Subject to any general or special instructions prescribed by Government in this
behalf, every Government servant, who actually handles cash / stores shall be
required to furnish security, for such amount and in such form as Central
Government or an Administrator may prescribe according to circumstances and
local conditions in each case, and to execute a security bond setting forth the
conditions under which Government will hold the security and may ultimately
refund or appropriate it.

Rule 275. (2)The amount of security to be obtained from a Government servant

shall be determined on the basis of actual cash handled which shall not include
account payee cheques and drafts.

Rule 275. (3) In cases, where the security is furnished in the form of cash, the
security bond should be executed in Form GFR 30 and, in cases where security is
furnished in the form of a Fidelity Bond in GFR 34, the security bond should be
executed in Form GFR 31. In cases where security is furnished by way of Fidelity
Bond (in Form GFR 34), the Administration shall see that the government servant
pays the premia necessary to keep the Bond alive, for which the government
servant shall submit premimum receipt in time. If the government servant fails to
submit the premium receipt he shall not be allowed to perform the duties of his
post and he shall be dealt with in accordance with the terms of his appointment.

Rule 275. (4) A Government servant who is appointed to officiate for another cash
/ store handling Government servant shall be required to furnish the full amount of
the security prescribed for the post.
The Ministry / Department of Central Government, Administrators and the
Comptroller and Auditor-General in respect of persons servi ng in Indian Audit and
104
Accounts Department may, however, exempt a Government servant officiating in
such a short-term vacancy from furnishing security if the circumstances warrant
such exemption provided that -
(i) they are satisfied that there is no risk involved;
(ii) such exemption is granted only in the case of a permanent
Government servant; and
(iii) the period of officiating arrangement does not exceed four months.

Rule 276. Notwithstanding anything contained in Rule 275, security need not be
furnished in cases of -
(a) Government servants who are entrusted with the custody of stores, which in
the opinion of the competent authority are not considerable.
(b) Government servants, who are entrusted with the custody of office furniture,
stationery and other articles required for office management, if the Head of
Office is satisfied about the safeguards against loss through pilferage.
(c) Librarian and Library Staff.
(e) Drivers of Government vehicles.

Rule 277. Retention of Security : A security deposit taken from Government

servant shall be retained for at least six months from the date he vacates his post,
but a security bond shall be retained permanently or until it is certain there is no
further necessity for keeping it.

V. TRANSFER OF LAND AND BUILDINGS

Rule 278. Save as otherwise provided in any law, rule or order relating to the
transfer of Government land, no land belonging to the Government shall be sold to
a local authority, body or any person or institution without previous sanction of the
Government.

Rule 279. Transfer of Land : (1) Transfer of land from a Union Territory to a
Central Government Department (i.e. Ministry or Department of the Union
Government including Defence, Railways, and Posts and Telegraphs) or vice
versa shall be on 'no profit no loss' basis.

Rule 279. (2) Transfer of land from one Department of the Government (as
defined in Rule 278) to another shall be on 'no profit no loss' basis.

Rule 279. (3) Transfer of buildings and superstructures on land vide above shall
be at the present day cost minus depreciation of these structure(s) standing on the
land. Valuation for this purpose shall be obtained from the Central Public Works
Department at the time of transfer.

Rule 279. (4) The allotment of land to, and recovery of cost of buildings from the
Public Sector Undertakings shall be at 'market value' as defined in paragraph - 2
of Appendix - 11.

105
Rule 279. (5) The transfer of land and building between the Union and State
Governments shall be regulated by the provisions of Articles 294, 295, 298 and
299 of the Constitution and subsidiary instructions issued by the Union
Government which are reproduced as Appendix - 11.

VI. CHARITABLE ENDOWMENTS AND OTHER TRUSTS

Rule 280. Detailed instructions relating to Charitable Endowments and other
Trusts are embodied in Appendix -12.

VII. LOCAL BODIES

Rule 281. Financial arrangements between Central Government and Local

Bodies : (1) Unless any one of the following arrangements is authorized by
specific orders of Government, a local body will be required to pay, in advance, the
estimated amount of charges to be incurred or cost of services to be rendered, by
Government on account of the fund :-
(i) payments made by Government are debited to the balances of the
deposits of the local fund with Government, or
(ii) payments are made as advances from public funds in the first
instance pending recovery from the local funds.

Rule 281. (2) Not withstanding the provision contained in Rule 281 (1) in case of
emergency such as epidemics pre-payment will not be insisted upon from local
bodies for supply of medicines from Medical Stores Depots of the Ministry of
Health.

Rule 282. Any amount / loan not paid on due date to Government by a local body,
may be adjusted from any non-statutory grant sanctioned for payment to it.

Rule 283. Taxes etc. collected by Government on behalf of Local Bodies :

Proceeds of taxes, fines or other revenues levied or collected by Government for
or on behalf of local bodies shall not be appropriated direct to a local fund without
passing them through the Consolidated Fund unless expressly authorised by law.

Rule 284. Payments to Local Bodies : Subject to provision of relevant act and
rules, payments to local bodies in respect of revenue and other moneys raised or
received by Government on their behalf will be made in such manner and on such
date, as may be authorized by general or special orders of Government.

Rule 285. Audit of Account of Local Bodies : Subject to the provisions of any
law made under Article 149 of the Constitution, the accounts of local bodies, other
non-Government bodies, or institutions will be audited by the Indian Audit and
Accounts Department under such terms and conditions as may be agreed upon
between the Government and the Comptroller and Auditor-General of India.

106
Rule 286. Audit Fees : Audit fees on the basis of daily rates prescribed by
Government from time to time shall be charged by the Indian Audit and Accounts
Department for the audit of local and other non-Government funds, excluding
funds for the audit of which the rates of fees recoverable are prescribed by law or
by rules having the force of law.

Nothing contained in this rule shall be held to override any special

instructions of Government exempting any particular local body or institution
wholly or partially from the payment of audit fees.

Rule 287. In the case of Government Companies, the recovery of the cost of
Supplementary audit conducted under Section 619(3) (b) of Companies Act, 1956
as amended from time to time, should be waived in those cases where the audit is
done by the Comptroller and Auditor-General through his own departmental staff
but should be enforced in cases where the Comptroller and Auditor-General
employs professional auditors for the Supplementary audit.

Rule 288. Financial transactions between Government and local bodies shall be
rounded off to the nearest Rupee.

VIII. DESTRUCTION OF RECORDS CONNECTED WITH

ACCOUNTS
Rule 289. Subject to any general or special rules or orders applicable to particular
departments as prescribed in their departmental manuals, no Government record
connected with accounts shall be destroyed except in accordance with the
provisions of Appendix -13.

IX. CONTINGENT & MISCELLANEOUS EXPENDITURE

Rule 290. Rules relating to contingent expenditure are available at Rule 13 of the
Delegation of the Financial Powers Rules, 1978 and Rules 96 to 98 of the
Government of India (Receipts and Payments) Rules, 1983.

Rule 291. Permanent Advance or Imprest : Permanent advance or Imprest for

meeting day to day contingent and emergent expenditure may be granted to a
government servant by the Head of the Department in consultation with Internal
Finance Wing; keeping the amount of advance to the minimum required for
smooth functioning. Procedures for maintenance of permanent advance / imprest
are available in para 10.12 of the Civil Accounts Manual, Volume - I.

Rule 292. Advances for Contingent and Miscellaneous purpose : (1) The
Head of the Office may sanction advances to a Government Servant for purchase
of goods / services / any other special purpose needed for the management of the
office, subject to the following conditions.

107
(i) The amount of expenditure being higher than the Permanent Advance
available, can not be met out of it.
(ii) The purchase / other purpose can not be managed under the normal
procedures, envisaging post-procurement payment system.
(iii) The amount of advance should not be more than the power delegated to
the Head of the Office for the purpose.
(iv) The Head of the Office shall be responsible for timely recovery / adjustment
of the advance.

Rule 292. (2) The adjustment bill, along with balance if any, shall be submitted by
the government servant within 15 days of the drawal of advance, failing which the
advance / balance shall be recovered from his next salary(ies).

Rule 293. The Ministry / Department may sanction the grant of an advance to a
Government Pleader in connection with law suits, to which Government is a party,
up to the maximum limit of Rs. 5,000/- at a time. The amount so advanced should
be adjusted at the time of settlement of Counsel's fee bills.

108
 APPENDICES

APPENDIX - 1
[ See Rule 37 ]

INSTRUCTIONS FOR REGULATING THE ENFORCEMENT OF

RESPONSISBILITY FOR LOSSES, ETC.

1. The cardinal principle governing the assessment of responsibility is that,

every Government officer should exercise the same vigilance in respect of
expenditure from public fund generally as a person of ordinary prudence would
exercise in respect of the expenditure and the custody of his own money. While,
the competent authority may, in special cases, condone an officer's honest errors
of judgement involving financial loss if the officer can show that he has acted in
good faith and done his best up to the limits of his ability and experience, personal
liability shall be strictly enforced against all officers who are dishonest, careless or
negligent in the duties entrusted to them.

2. In cases where loss is due to delinquencies of subordinate officials and

where it appears that this has been facilitated by laxity of supervision on the part of
a superior officer, the latter shall also be called strictly to account and his personal
liability in the matter carefully assessed.

3.
(a) The question of enforcing pecuniary liability shall always be
considered as well as the question of other forms of disciplinary
action. In deciding the degree of an officer's pecuniary liability, it will
be necessary to look not only to the circumstances of the case but
also to the financial circumstances of the officer, since it should be
recognized that the penalty should not be such as to impair his future
efficiency.
(b) In particular if the loss has occurred through fraud, every endeavour
should be made to recover the whole amount lost from the guilty
persons and if laxity of supervision has facilitated the fraud, the
supervising officer at fault may properly be penalized either directly
by requiring him to make good in money a sufficient proportion of the
loss or indirectly by reduction or stoppage of his increments of pay.
(c) It should always be considered whether the depreciated value of the
Government property or equipment lost, damaged or destroyed by
the carelessness of individuals entrusted with their care should be
recovered from the delinquent official. The depreciated value of the
stores may be calculated by applying the 20% of depreciation in the
case of vehicles, including cycles, and 15% in the case of calculating
109
 machines, on the reduced balance every year. The amount to be
recovered may be limited to the Government servant's capacity to
pay.

4. When a pensionable Government servant is concerned in any irregularity

or loss, the authority investigating the case shall bear in mind the provisions
contained in Central Civil Services (Pension) Rules 1972 as amended from time to
time and immediately inform the Audit Officer and/or the Accounts Officer, as the
case may be, responsible for reporting on his title to Pension or Death-Cum-
Retirement Gratuity, and the authority competent to sanction Pension or Death-
Cum-Retirement Gratuity and it will be the duty of the latter to make a note of the
information and see that the Gratuity or Death-Cum -Retirement Gratuity is not paid
before a conclusion is arrived at as regards the Government servant's culpability
and final orders are issued thereon.

5. The fact that Government servants who were guilty of frauds or

irregularities have been demobilized or have retired and have thus escaped
punishment, should not be made a justification for absolving those who are also
guilty but who still remain in service.

6. It is of the greatest importance to avoid delay in the investigation of any

loss due to fraud, negligence, financial irregularity, etc. Should the administrative
authority require the assistance of the Audit Officer and/or the Accounts Officer, as
the case may be, in pursuing the investigation, he may call on that officer for all
vouchers and other documents that may be relevant to the investigation; and if the
investigation is complex and he needs the assistance of an expert Audit Officer/
Accounts Officer to unravel it, he should apply forthwith for that assistance to
Government which will then negotiate with Audit Officer and/or the Accounts
Officer concerned for the services of an investigating staff. Thereafter, the
administrative authority and the Audit /Accounts authority shall be personally
responsible within their respective spheres, for the expeditious conduct of the
enquiry. In any case in which it appears that recourse to judicial proceedings is
likely, the Special Police Establishment or the State Police should be associated
with the investigation.

7. Depending upon the results of the inquiry, departmental proceedings

and/or prosecution shall be instituted at the earliest moment against the delinquent
officials concerned and conducted with strict adherence to the Central Civil
Services (Classification, Control and Appeal) Rules, 1957, and other instructions
prescribed in this regard by Government.

110
 APPENDIX - 2
[ See Note below Rule 48 ]

PROCEDURE FOR PREPARATION OF DETAILED

ESTIMATES OF RECEIPTS

1. Revenue receipts. - These comprise (i) Central taxes, duties and cesses
administered by the Central Board of Direct Taxes and the Central Board of Excise
and Customs; (ii) local taxes and duties and other receipts in relation to the Union
Territories without Legislature; (iii) interest receipts of loans and advances by the
Central Government as also interest charged to commercial departments, etc., (iv)
notional receipts from adjustments based on principles of accounting like grant
assistance from foreign Governments or International institutions; and (v) all other
revenue receipts including dividends on equity investments of the Central
Government, cesses collected by the Ministries and Departments, etc.

2. Capital Receipts. - These comprise (i) Internal debt (market loan,

treasury bills, etc.); (ii) External debt; (iii) Repayment of loans and advances made
by the Central Government; (iv) Disinvestment Receipts (v) Other Liabilities.

3.(1) Estimates of receipts of Central Taxes and Duties and External Aid
receipts are prepared within the Finance Ministry by the Central Board of Direct
Taxes, the Central Board of Excise and Customs and the Controller of Aid
Accounts and Audit. Estimates of internal debt (market loans) receipts are framed
by the Budget Division.

3.(2) Estimates of revenue receipts of the Union Territory Administrations

will be furnished to the Finance Ministry by the concerned Audit Officer / Accounts
Officer wherever departmentalization of accounts has not taken place and by the
Controller of Accounts of the Union Territory Administrations where
departmentalization of accounts has been introduced.

3.(3) Estimates of receipts in all other cases will be prepared by Controller

of Accounts of each Department after obtaining necessary data by the 30th
November from the various organizations / field units and such scrutiny as may be
necessary in the light of policy decisions and other post Budget developments.

4. Estimates will be furnished to the Finance Ministry in prescribed forms

(GFR 5, 5 -A and 5-B) by the 31st December, each year for the e nsuing Budget.

5.(1) In preparing the Revised Estimates, while previous year's actuals and
current year's trends will be material factors to review the original Budget
Estimates, special attention should be devoted to making as realistic an estimate
as possible of receipts which are likely to materialize during the rest of the financial
year.

5.(2) In framing the Budget Estimates for the ensuing year, the estimating
authorities should exercise utmost care. While all receipts which can be foreseen
111
in the light of latest trends, decisions and developments must be provided for, care
should be taken to ensure that undue optimism does not influence these
estimates. Similarly, where the receipts have a seasonal character, due note
should be taken thereof in preparing the estimates.

5.(3) Receipts by way of recoveries from Central Government Ministries /

Departments, are to be excluded in preparing Receipt Estimates. Other recoveries
(from the State and Union Territory Governments, foreign Governments,
companies and statutory bodies, individuals, etc.) will, however, be included in the
Receipt Estimates.

5.(4) Estimates of receipts by way of interest on loans and advances will be

based on the terms of the loans sanctioned, as entered in the Loan Registers,
including defaults, if any. The estimates should be realistic; that is to say, that the
estimates should reflect not merely what is due but what is likely to be realized
during the year together with the reasons for non-recovery of the difference
between receipts due and assumed in the estimates. In the case of Public Sector
Units, interest receipts expected from their internal resources should be
distinguished from notional recoveries offset by corresponding expenditure
provisions in the form of Plan/Non-plan subsidies and loans.

Similarly, where repayments due are refinanced by further Non-Plan loans

or by conversion of past loans into equity, the details should be furnished.

5.(5) In reporting estimates of receipts by way of foreign grant assistance in

cash or in kind, care should be taken to classify foreign grant receipts in cash
under the Major Head '1605 External Grant Assistance' and those in the form of
commodities under the Major Head '1606 Aid Materials and Equipment'. In the
case of commodities grants, identical provision will be made in expenditure
estimates under the Major head '3606 Aid Materials and Equipments' (both as
debits to represent the notional payment therefor and as credits - recoveries in
reductions of expenditure - to reflect the counter-balancing entries), as well as
under the final functional Head of Account showing the final destination and use of
the aid materials and equipment.

NOTE. - For utilization of cash grants, provision in expenditure estimates

under the final functional Heads of Account will be necessary.

5.(6) In reporting the estimates, the estimating authorities should confine

their estimates to those items of receipts which are to be accounted for finally in
their own accounts and ultimately in the accounts of the Ministry / Department to
which they are subordinate. All other receipts / recoveries entering the accounts of
another Ministry / Department should be communicated to the concerned Ministry /
Department for consolidation in their estimates (e.g., receipts of CGHS
contributions and rent recoveries in respect of Government accommodation).

112
 APPENDIX - 3
[ See Note below Rule 48 ]

INSTRUCTIONS FOR PREPARATION OF DETAILED

ESTIMATES OF EXPENDITURE FROM
THE CONSOLIDATED FUND

1. For purpose of Budget Estimates, expenditure from the Consolidated

Fund falls in two categories - Non-Plan expenditure and Plan expenditure -each
comprising expenditure on revenue account and on capital account including loans
and advances.

A. NON-PLAN EXPENDITURE ESTIMATES

2. To facilitate appropriate scrutiny and consolidation of Expenditure

Estimates for reporting to the Finance Ministry, the Financial Adviser in each
Ministry / Department will obtain detailed estimates and other supporting data from
each of the estimating authorities under the control of the Ministry / Department, in
appropriate forms, sufficiently in advance.

3. The framing of the Revised Estimates for the current year should always
precede estimation for the ensui ng year. The Revised Estimates should be framed
with great care to include only those items which are likely to materialize for
payment during the current year, in the light of (i) actuals so far recorded during
the current year, compared with the actuals for corresponding period of the last
and previous years, (ii) seasonal character or otherwise of the nature of
expenditure, (iii) sanctions for expenditure and orders of appropriation of re-
appropriation already issued or contemplated and (iv) any other relevant factor,
decision or development.

The Budget Estimate for the ensuing year should likewise be prepared on
the basis of what is expected to be paid, under proper sanction, during the
ensuring year, including arrears of previous years, if any. Due attention to
considerations of economy must be paid and while all inescapable and
foreseeable expenditures should be provided for, care should be taken that the
estimate is not influenced by undue optimism.

4. No lump sum provision will be made in the Budget except where urgent
measures are to be provided for meeting emergent situations or for meeting
preliminary expenses on a project / scheme which has been accepted in principle
for being taken up in the financial year. In latter cases Budget provision will be
limited to the requirements of preliminary expenses and for such initial outlay, as,
for example, on collection of material, recruitment of skeleton staff, etc.

Provision for a 'token' demand should not be made in the Budget Estimates
for the purpose of seeking approval in principle for big schemes without the full
financial implications being worked out and got approved by the appropriate
authorities. In accordance with instructions contained in Paragraph (vii) of
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Appendix (6), a 'token' demand can be made during the course of a year for a
project / scheme when the details thereof are ready and funds are also available
for undertaking it but it cannot be started without Parliament's approval, it being in
the nature of a 'New Service / New Instrument of Services'.

5. All estimates should be prepared on gross basis and 'voted' and

'charged' portions must be shown separately; even expenditure met partly or fully
from receipts taken in reduction of such expenditure or those counterbalanced by
receipts credited as revenue to the Consolidated Fund, must be reported in such
estimates on gross basis. Care should also be taken to ensure that all notional
receipts reported in 'Receipt Estimates' (such as interest receipts fully or partly
subsidized, loan repayment receipts partly or fully refinanced throug h further loans
or conversions into equity, receipts of foreign grant assistance in the form of
commodities or material, etc.) are properly matched by adequate provisions in
expenditure estimates.

6. The estimates of Non-Plan expenditure should include all items which

are fully accounted for in the accounts of the Ministry / Departments to which the
estimating authority is subordinate; they shall also cover expenditure, if any, in
Union Territories without Legislature, whether provided for in the demands of the
said Ministry / Department or in the 'Area' demand of the concerned Union
Territory. Estimates of 'Works Expenditure', if any, against the provisions in the
demands of the Ministry of Urban Development, as well as expenditure on
pensions (including commutation payments, gratuity payments, pension
contributions, etc.) interest payments, loans and advances to Government
servants, etc., which are provided for in the centralized Grants / Appropriations
controlled by the Finance Ministry should be furnished to the Ministry of Urban
Development and the Finance Ministry.

7. The estimate of establishment charges should be framed taking into

account the trends over preceding three years and other relevant factors like
changes in rates of pay, allowances, number of posts and their filling and the
economy instructions issued by the Ministry of Finance from time to time.

8. Expenditure estimates will be prepared with full accounts classification,

i.e., by Major/Sub-Major Head, Minor Head, Sub-Head and Detailed Head and
Object Head of Account. The correctness of accounts classification must be
ensured in each case an in case of any doubt, cleared beforehand with the
Ministry of Finance, Budget Division/CGA. The relevant Grant number and title of
Appropriation should also be mentioned to facilitate identification of the provision
in Budget Estimates for the current year.

9. Unless otherwise indicated by the Finance Ministry, estimates of Non-

Plan expenditure (both Revised Estimates for the current year and Budget
Estimates for the ensuing year) should reach the Finance Ministry, Department of
Economic Affairs, Budget Division, by the date prescribed by the Ministry of
Finance, each year, in triplicate in Form GFR 7, a separate form being used for
each Major Head of Account.
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 10. To facilitate appreciation and scrutiny of the estimates, any major
variations between the Budget and Revised Estimates for the current year and
also between the Revised Estimates for the current year and Budget Estimates for
the ensuing year should be explained cogently. In particular, all Non-Plan
provisions for subsidy, capital investment or loan to a Public Sector Undertaking,
must be explained by indicating their purpose and the extent to which they are
intended to cover losses, working capital needs, debt or interest liabilities of the
undertaking.

11. Wherever the proposed estimates attract the limitations of 'New

Service/New Instrument of Service', the fact must be specifically highlighted. The
guidelines to be followed in this regard are indicated in Annexure - I to this
Appendix. For all 'new' schemes, other than purely 'works' projects, the estimates
proposed should be supported by details set out in Annexure - II to this Appendix.
In the case of provisions of 'Grants-in-aid' to non-Government entities, the full
purpose thereof and the nature of the grants, whether recurring or non-recurring,
should also be indicated.

12. All provisions for transfer of Government assets to Public Sector

Undertaking and other non-Government entities must also be highlighted,
indicating whether the transfer is by way of grants or by way of equity investment
or loan. Similarly, in the case of nationalization or take-over of any private sector
assets, the related provisions in estimates must be supported by full details, such
as the effective date of take-over, the agreed compensation amount and the
manner of its payment, etc. In cases of takeover, where the assets are
simultaneously transferred to a Public Sector Undertaking, it must be ensured that
the estimates provide for (i) payment of compensation for the take-over, (ii) for
transfer of assets to the Public Sector Undertaking, by means of recovery of
compensation payment to be taken in reduction of expenditure, and (iii) provisions
for equity or loan to the Public Sector Undertaking.

B. PLAN EXPENDITURE ESTIMATES

13. The Planning Commission prescribe each year the form and the
manner in which proposals are required to be submitted to them for determining
the Plan allocations for the ensuing year. The Financial Adviser in each Ministry /
Department of the Central Government will accordingly call for requisite data from
the estimating authorities, public sector and other enterprises under the control of
the Ministry / Department, etc. The approved Plan allocations will be
communicated by the Planning Commission to the Central Ministries /
Departments, indicating the total Plan outlay approved for each scheme /
organization and the extent to which it is to be met from extra-budget resources
and from provisions in the Demands for Grants.

14. Subject to such directions as may be issued by the Finance Ministry

from time to time, the Revised Estimates for the current year and Budget
115
Estimates of the ensuing year, in respect of Plan provisions, are to be sent to the
Finance Ministry in Form GFR 7. For furnishing these estimates, instructions for
preparation and submission of Non-Plan Expenditure Estimates will apply to the
extent relevant; in addition, the following points should also be borne in mind :-
(i) Such part of the approved budgetary support for Plan outlay as
relates to 'works expenditure' and has been accepted by the Ministry
of Urban Development for inclusion in their Demands for Grants
should be excluded by the other Ministries / Departments in reporting
the estimates to the Finance Ministry in Form GFR 7.
(ii) In the case of Plan, provisions for equity investments and loans to
public sector and other enterprises, as well as those for grants-in-aid,
specific schemes, for which the outlay is provided and the extent for
each of them is also to be indicated clearly.
(iii) Provisions for Plan expenditure on Central and Centrally Sponsored
Plan Schemes, including such expenditures in Union Territories, are
to be included in the relevant demand of the Administrative Ministry /
Department and not in 'Area' Demand of the concerned Union
Territory.

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 ANNEXURE - 1 TO APPENDIX – 3
(Refer: Ministry of Finance, Budget Division’s OM No. F(15)-
B(RA)/82 dated 13.4.1982)
[ See Paragraph 11 of Appendix - 3 ]

FINANCIAL LIMITS TO BE OBSERVED IN DETERMINING CASES RELATING

TO 'NEW SERVICE' / 'NEW INSTRUMENT OF SERVICE'

Nature of transaction Limits up to which Limits beyond which

expenditure can be met by prior approval of
reappropriation of savings Parliament is
in a Grant subject to report required for
to Parliament expenditure from the
Consolidated Fund
1 2 3
1. Capital Expenditure :

A. Departmental Undertakings :
(i) Setting up a new undertaking,
or taking up a new activity by ……. All cases.
an existing undertaking.
(ii) Additional investment in an Above Rs. 50 lakhs but not Above Rs. 1 crore.
existing undertaking. exceeding Rs. 1 crore.

B. Public Sector Companies /

Corporations :
(i) Setting up of a new
Company, or splitting up of
an existing Company, or
amalgamation of two or
more Companies, or taking ……… All cases.
up a new activity by an
existing Company.
(ii) Additional investment in
/loans to an existing
Company :
(a) Where there is no Above Rs. 10 lakhs but not Above Rs. 20 lakhs.
Budget Provision. exceeding Rs. 20 lakhs
(b) Where Budget
Provision exists for
investment and / or
loans.

Paid up Capital of
Company:

Up to Rs. 1 crore. Above Rs. 10 lakhs but nut Above Rs. 20 lakhs.
117
 exceeding Rs. 20 lakhs
Above Rs. 1 crore and up to Above Rs. 1 crore but not Above Rs . 2 crores.
Rs. 25 crores exceeding Rs. 2 crores.

Above Rs. 25 crores and up Above Rs. 5 crores but not Above Rs. 10
to Rs. 100 crorers. exceeding Rs. 10 crores. crores.

Above Rs. 100 crores. Above Rs. 7.5 crores but Above Rs. 15
not exceeding Rs. 15 crores.
crores.

NOTE 1. - In computing additional requirements

for applying the above limits, loan and capital
investments, over and above the Budget provision
therefor, should be taken together.

NOTE 2. - For additional fund requirements of

terms lending institutions which are under the
Audit of the Comptroller and Auditor-General of
India, the limits will be twice those specified
above.

Where an institution does not have paid up

capital, the limits will be applied with reference to
Central Loans outstanding against it at the end of
the previous financial year.

NOTE 3. - For financing projects under

construction, within the approved cost estimates
already brought to the notice of Parliament,
augmentation of Budget provisions beyond the
monetary limits prescribed above will be
permissible subject to availability of savings in the
Grant. A report of such cases to Parliament will,
however, be necessary.

NOTE 4. - Short terms (working capital) loans,

repayable within five years, will not be treated as
"New Instrument of Service" but will require to be
reported to Parliament.

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C. Port Trusts, Delhi Municipal
Corporation, Khadi and Village
Industries Commission, Tea Board
and Coffee Board.
Loans :
The limits prescribed for public sector companies
will apply with reference to central loans
outstanding against them at the end of the
previous financial year.

D. Private Sector Companies /

Private Institutions :
(i) Investments to be made
for the first time except in
Units coming under
Government ……… All cases.
Management with the
approval of Parliament.
(ii) Additional investments in Above Rs. 50 lakhs but not Above Rs. 1 crore.
or loans to an existing exceeding Rs. 1 crore.
company / institution
including private sector
units coming under
Government
Management with the
approval of Parliament.
NOTE 1. - While applying these limits loans and
capital investments are to be taken together.

NOTE 2. - In the case of loans to statutory and

other public institutions (other than those
mentioned under item 'C' above) substantially
financed by grants-in-aid from Government, e.g.,
University Grants Commission, Indian Institute of
Technology and Joint sector enterprises, limits as
applicable to private sector companies /
institutions should be applied.

NOTE 3. - Where there is no Budget provision for

investment / loans to a company / institution, prior
approval of Parliament will be necessary for
investment / loans exceeding Rs. 10 lakhs except
in the case of units brought under Government
Management.
E. Expenditure on new Works (Land, Above Rs. 10 lakhs but not Above Rs. 50 lakhs
Building and /or Machinery) exceeding Rs. 50 lakhs.

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2. Revenue Expenditure

F. Grants-in-aid to statutory and

other public institutions
(i) Institution in receipt of
grant-in-aid up to Rs. 1 ………. Rs. 10 lakhs
crore.
(ii) Institutions in receipt of 10% of the Budget
grant-in-aid of more than ………… provision or Rs. 2
Rs. 1 crore. crores, whichever is
less.
NOTE 1. - These limits will apply with reference to
moneys disbursed by an individual Ministry /
Department and not by the Government as a
whole.

NOTE 2. - The above limits will also apply to

institutions which are substantially financed by
grants-in-aid from Government and to Pubic
Sector Undertakings in receipt of grants-in-aid.

NOTE 3. - Where a lump sum provision is made

for providing grant-in-aid under a particular
scheme in the absence of institutions-wise break
up at the time the provision is made, the aforesaid
limits will not apply to releases to such institutions
within the Budgeted provision. The details will,
however, be reported to Parliament.
G. Grants-in-aid to Private
institutions other than for Export
Promotion Scheme :
……… Above Rs. 5 lakhs.
(i) Recurring.
……… Above Rs. 10 lakhs.
(ii) Non-recurring

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 NOTE 1. - In the case of recurring grants
exceeding Rs. 5 lakhs per annum, the financial
implications should be reported to Parliament
where the grant is to be made for 2 years or more.

NOTE 2. - The limits for non-recurring and

recurring grants-in-aid will apply with reference to
moneys disbursed by an individual Ministry /
Department and not Government as a whole.

NOTE 3. - Where a lump sum provision is made

for providing grant-in-aid under a particular
scheme in the absence of institution-wise break
up at the time the provision is made, the aforesaid
limits will not apply to releases to such institutions
within the budgeted provisions. The details will,
however, be reported to Parliament.
H. Subsidies and Grants under The Budget provision should be split up as under -
Export Promotion Schemes. (i) Product Promotion and Commodity
Development (this sub-head will
accommodate payment of cash
compensatory support on all items of
exports including textiles.)
(ii) Grants-in-aid to Export Promotion and
Market Development Organisation (this
sub-head would accommodate grants to
Export Promotion Councils and other
organizations like Trade Development
Authority, Indian Institute of Foreign Trade,
etc., for their establishment expenditure as
well as developmental activities and also to
recognized export houses for specified
export houses for specified export
promotion activities).
(iii) Export Credit Development (This sub-head
will cover payments made to commercial
Banks towards interest subsidy under the
Export Credit Subsidy Scheme.)

Limits for augmentation of total provision under

the Export Promotion Scheme :
Above Rs. 50 lakhs but not Above Rs. 2 crores.
exceeding Rs. 2 crores

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I. Food Subsidy. Above Rs. 50 lakhs but not Above RS. 2 crores.
exceeding Rs. 2 crores.

J. Other subsidies. ………… Above RS. 10 lakhs

K. Payments against cess collections. Limits as applicable to Limits as applicable

grants-in-aid to statutory or to grants-in-aid to
public institutions will statutory or public
apply. institutions will
apply.
…………. Above Rs. 4 lakhs
L. New Commissions or Committees
of Enquiry. (total expenditure)

M. Write-off of Government loans. Above Rs. 50,000 but not Above Rs. 1 lakh
exceeding Rs. 1 lakh (Individual cases).
(Individual cases).
NOTE. - This limit will also apply where it is
decided to sanction grant to a private institution /
individual for repayment of loan.
N. Others cases of Government Each case to be considered on merits.
expenditure.

O. P & T, Railways and Defence. The aforesaid limits, including those relating to
Works expenditure will also apply to those
Departments subject to considerations of security
in the case of Defence.

NOTE 1. - For investment in Ordnance Factories,

the limit of Rs. 1 crore mentioned in 'item 'A' (ii)
will be applicable with reference to investment in
all the factories as a whole.

NOTE 2. - Civil Works, which do not form part of

any project of the departmental undertakings
(Ordnance Factories) should be treated as
ordinary Defence works. As such, prior approval
of Parliament will be necessary if the cost of
individual works exceeds Rs. 50 lakhs and in
cases where the individual works cost RS. 10
lakhs or more but not exceeding Rs. 50 lakhs, a
report to Parliament will be required. A list of such
works should, however, be supplied to Director of
Audit, Defence Services.

122
 ANNEXURE – II TO APPENDIX – 3
[ See Paragraph 11 of Appendix – 3 ]

MEMORANDUM FOR PROPOSALS INVOLVING

EXPENDITURE ON NEW SERVICE OR NEW
INSTRUMENT OF SERVICE

Government of India
Ministry of …………………………
Department of …………………….
New Delhi, the ……………………

MEMORANDUM

1. Statement of proposal :
(a) Title of the proposal / scheme.
(b) Description of the proposal / scheme and its objects.
(c) Justification for the proposal / scheme and what alternatives have been
considered.
(d) Description of the manner in which the proposal / scheme is proposed to
be implemented including mention of agency through which the scheme
will be executed.
(e) Schedule of programme and target date of completion.

2. Financial implications of the proposal :

(a) Nature of the scheme (Plan-Central or Centrally sponsored – or Non-
Plan.)
(b) Total outlay (recurring and non-recurring separately), its broad details
and its year-wise phasing.
(c) (i) Plan allocation, in a Plan scheme; and
(ii) Budget provision in the current financial year;
if no Budget provision exists, how is the expenditure proposed to be
met?

(d) Foreign exchange component of the outlay and how it is proposed to be

met.
(e) Component of grant, loan and subsidy, if any, in the total outlay involved
and their proposed terms.
(f) Number of posts, their pay scales and the basis adopted for staffing
(Statement attached).
(g) Broad details of construction works, their justification and basis of
estimates (Statement attached).
(h) Requirement of stores and equipment together with justification and
cost (Statement attached).
(i) Achievement / return expected and other economic implications, if any.

123
3. (a) Comments, if any, of the Planning Commission (for Plan Schemes only).
(b) Comments, if any, of other Ministries / Departments which may have
been consulted.

4. Supplementary information, if any.

5. Points on which decision / sanctions are required.

Secretary to the Government of India.

Ministry of ……………………………..
Department of …………………………

APPENDIX – 4
[ See Note below Rule 48 ]
PROCEDURE FOR COMPILATION OF
DETAILED DEMANDS FOR GRANTS

1. The Demand for Grants are presented to Parliament at two levels. The
Main Demands for Grants are presented to Parliament by the Ministry of Finance
along with the Annual Financial Statement while the Detailed Demands for Grants
are laid on the Table of the Lok Sabha by the concerned Ministries a few days in
advance of the discussion of the respective Ministries Demands in that House.

Both the Main Demands for Grants as also the Detailed Demands for
Grants comprise three parts each, viz. -

Part - I shows the Service for which the Demand (or Appropriation) is
intended and the estimates of the gross amount, separately for Voted and
Charged Expenditure, under Revenue and Capital (including Loan) sections
required in the ensuing year in respect of that Service.

Part - II shows break up of the estimates separately for Plan and Non-Plan
expenditure. In the Main Demands for Grants, the break up is exhibited up to the
level of Major Heads of Account which correspond to functions of the Government.

In the Detailed Demands for Grants the break up in respect of

activities/schemes/organization up to the object head level is given.

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 The Detailed Demands for Grants also exhibit actuals of the previous year
in Part - II.

Both in the Main Demands for Grants as well as in the Detailed Demands
for Grants, the details of recoveries taken in reduction of expenditure provided for
in the Demand or Appropriation are also depicted.

2. All Detailed Demands for Grants of a Ministry / Department are

consolidated in a single volume and presented to Lok Sabha by the concerned
Ministry / Department. The Detailed Demands show ‘actual expenditure’ as per
accounts in the previous year, Budget and Revised Estimates for the current years
and Budget Estimates for the ensuing year, each showing ‘Plan’ and ‘Non-Plan’
items separately.

(i) The process of compilation should start in July / August with the preparation
of a manuscript skeleton. Manuscript skeletons of Detailed Demands for the
ensuing year should be prepared by using the printed Detailed Demands for
the current year by making necessary alterations therein. New sub-heads
sanctioned by the Finance Ministry, if any, and those expected to be
required should also be added in the manuscript at appropriate places. The
manuscript should then be sent to the designated press for a proof. Where
necessary, a second proof may be obtained. The printed skeletons should
be available with the Ministries / Departments preferably by the 15th
October each year.

(ii) Two copies of the Demand skeleton may then be sent to the Principal
Accounts Officer, as the case may be, for filling the ‘Actuals’ column for the
previous year and to return one copy duly filled in.

(iii) In the master copy of the Demand, the Ministry / Department will then post
(1) the figures of actuals as reported by the Principal Accounts Officer /
Accountant-General; (2) Revised Estimates for the current year and the
Budget Estimates for the ensuing year from the office copy of the SBEs
/Demands for Grants sent to Finance Ministry. While posting these entries,
care should be taken to ensure that –

(a) “Charged” items are shown in italics and are not mixed up with
“Voted” provisions;
(b) posting is done accurately against the proper item / head of account
including “recoveries”, if any, taken as reduction of expenditure;
(c) new items are inserted at the proper place under the relevant minor
head;
(d) “Plan” and “Non-Plan” provisions are noted in the relevant columns;
(e) totals of sub-heads, minor heads, major heads, etc., are correctly
worked out and posted; that totals of Revenue section and Capital
section as well as the grand totals are correct and show “Charged”
and “Voted” figures distinctly; and

125
 (f) new sub -head (opened through Supplementary Demands) or
otherwise or any change in the numbering and nomenclature
sanctioned by the Budget Division since the proof of the skeleton
should also be incorporated in the Master Copy.

NOTE. – A sub-head should appear in the Demand only when there is

provision thereunder, either in the current year (Budget or Revised) or the
ensuing year. Wherever only actuals of the previous year pertaining to a
sub-head are to be exhibited, this should be done by inserting suitable
footnote on the relevant page.

(iv) The process of compilation and printing of the Demands should be

undertaken in stages.

3. The first proof of individual Demands may be obtained after posting actuals
of previous year and Non-Plan estimates (preferably by 15th December). The
second proof may be similarly obtained (preferably by 15th January) after “Plan”
Revised estimates are posted in the first proof. As soon as “Plan” provisions for
the ensuing year are finalized and communicated to the Finance Ministry, they
should be posted in the second proof. Before obtaining the third proof, the
following material may also be added.

(A) Main Demands for Grants :

(i) Notes on the Demands for Grants highlighting the following :-
(a) The objectives of the concerned Ministry / Department, how the
programmes undertaken or contemplated contribute towards
attainment of such objectives and the agencies entrusted with the
execution of such programmes;
(b) Details of important provisions included in Demands for Grants with
particular emphasis on Plan provisions and new items of expenditure;
(c) Cogent reasons for significant variations between the Budget Estimates
and Revised Estimates for the current year and between the Revised
Estimates, for the current year and the Budget Estimates for the
ensuing year;
(d) Provisions for subsidy in lieu of interest on loans by the Government or
token provisions for concessional rate of interest (along with number of
likely cases involved and financial implications, if determinable; and
(e) Complete details of the estimated cost of a project together with its
economics and financial implications (whenever these estimates are
revised and the cost of escalation exceeds 20 percent of the
sanctioned cost or Rs. 3 crores, whichever is more, full reasons
therefor and the effect thereof on the economics of the projects should
also be included in the Notes on Demands).

(ii) A statement giving details of provisions in the Budget which attract

limitations of "New Service"/"New Instrument of Service".

(B) Detailed Demands for Grants :

126
 The Detailed Demands for Grants will be accompanied by the following
schedules/statements:-

(i) Schedule showing the estimated strength of establishment and provision

therefor.
(ii) Statement showing project-wise provision for expenditure on externally
aided projects in the Central Plan.
(iii) Schedule showing broad details of Non-Plan expenditure provisions of Rs.
25 lakhs and above.
(iv) Schedule showing provision for payment of grants in aid to non-
Government bodies.
(v) Statement showing details of individual works and projects costing Rs. 5
crore or above.
(vi) Statement showing revised cost estimates of projects of public sector
enterprises and departmental undertakings.
(vii) Statement showing transfer or gift of Government properties of value
exceeding Rs. 5 lakhs to non-Government bodies.
(viii) Statement showing contributions to International bodies. This statement
will include only items of contribution, membership fees to international bodies,
which constitute revenue expenditure. Subscriptions to international bodies, which
represent investments and are accounted for in the Capital section, are to be
excluded from it.
(ix) Statement showing guarantees given by the Central Government and
outstanding as on 31st March of the preceding year.
(x) Statement showing grants-in-aid exceeding Rs. 5 lakhs (recurring ) or Rs.
10 lakhs (non-recurring) actually sanctioned to private
institutions/organizations/individuals.

4. In addition the Detailed Demands for Grants will also include where
necessary, "Notes on Important Projects and Schemes", e.g., where the Ministry /
Department do not bring out performance Budgets.

5. The third proof on receipt from the press should be thoroughly checked for
accuracy of all estimates and other data, as these must necessarily conform with
the main Demands for Grants. Therefore for obtaining page proof, all pages
should be serially numbered and table of contents prepared. The page proof
received from the Press should be fully scrutinized.

6. A sample printed copy of the Demands should be scrutinized on receipt

from Press and where necessary an errata may be prepared, got printed and
pasted by the Press in individual copies of the Printed Demands.

7. The Demands of smaller Departments like Lok Sabha, Rajya sabha,

Department of Parliamentary Affairs, Staff, Household and Allowances of the
President, Secretariat of the Vice-President and Union Public Service Commission
which are clubbed in a single volume are to be prepared and presented by the
Ministry of Finance.

127
 APPENDIX – 5
(Deleted)

APPENDIX – 6
[ See Note below Rule 48 ]

PROCEDURE TO BE FOLLOWED IN CONNECTION

WITH THE DEMANDS FOR SUPPLEMENTARY GRANTS

An excess over the sanctioned Grant or Appropriation may arise owing to

either –
(a) an unforeseen emergency; or
(b) under-estimated or insufficient allowance for factors leading to the
growth of expenditure.

In the case of an excess of either type the Head of the Department or the
Controlling Officer concerned should proceed as fo llows :-
(i) He should, in the first place, examine the allotments given to other
Disbursing Officers under the same detailed head within the unit of
appropriation, and transfer to the Disbursing Officer who requires an
additional allotment such sum as can be permanently or temporarily
spared. Since appropriation audit is ordinarily conducted against total
allotments for a unit, reappropriation in the technical sense of the word is
not involved in such cases. The process amounts only to redistribution
which the Controlling Officer can ordinarily effect without reference to any
other authority.

(ii) Should he find such redistribution impossible he should examine the

allotments against other detailed heads inside the primary units of
appropriation, with the object of discovering probable savings and effecting
a transfer. Where such redistribution is feasible, he should if he has been
vested with the necessary powers, carry it out. Otherwise, he should obtain
the sanction of the competent authority.

(iii) If the provision of funds from within the primary units proves to be
impossible, an examination of the whole grant should be undertaken to see
whether there are likely to be savings under any of the other units of grant
or appropriation which can be utilized to meet it. If so, he should proceed
as indicated in Clause (ii) above.

(iv) If such savings are not available, it should be seen whether special
economies can be effected under other primary units of appropriation. If
funds cannot be provided by either of these methods, it will have to be
considered whether the excess should be met by postponement of

128
 expenditure or whether an application for supplementary grant or
appropriation should be made.

(v) The Supplementary Demand for Grants shall be presented to the

Parliament in a number of batches as decided by the Ministry of Finance,
Department of Economic Affairs. The first batch shall normally consist of
requirements of the following nature :-
(a) Cases where advances from Contingency Fund of India have
been granted, which are required to be recouped to the Fund.
(b) Payment against a court decree, which cannot be postponed;
and
(c) Cases of additional requirement of funds for making immediate
payments, which can be met by re-appropriation of savings in
the Grant but attract the limitation of New Service / New
Instrument of Service.

(vi) All applications for supplementary grants or appropriations should be

submitted by the Department of the Central Government administratively
concerned to the Finance Ministry on such dates and in such forms /
batches as may be prescribed by the latter from time to time.

(vii) On receipt of an application for a supplementary grant, the Finance

Ministry will review the position of the grant of appropriation as a whole
with reference to the known actuals of the year to date and the actuals and
estimates for previous years. If after this examination, the Finance Ministry
comes to the conclusion that it should be possible for the Administrative
Department to meet the expenditure from within the sanctioned grant
either from normal savings or by special economics or in the last resort by
judicious postponement of other expenditure or in the last resort by
judicious postponement of other expenditure, the Administrative
Department will be so informed and no supplementary demand will be
presented to Parliament. If, on the other hand, the Finance Ministry
considers that a supplementary grant will be necessary, a demand will be
placed before Parliament.

(viii) If during the course of the year it is fo und necessary to incur expenditure
on a ‘New Service’ not provided for in the annual budget the Administrative
Department shall explain to the Finance Ministry why the expenditure was
not provided for in the original budget and why it cannot be postponed for
consideration in connection with the next budget. The Finance Ministry, if
satisfied on these points, will consider whether it would not be reasonable
to ask the department concerned to curtail its other expenditure so as to
keep the total within the grant. Ordinarily, no "new service" or item will be
accepted by the Finance Ministry, unless the department concerned can
guarantee that the extra expenditure will be met from normal savings or by
special economies within the grant. Cases which involve additional grant
will normally be accepted by the Finance Ministry only if they relate to
matters of real imperative necessity or to the earning or safeguarding of
129
 revenue. The demand for a supplementary grant of appropriation or a
token vote in respect of a “new service” will be presented to Parliament as
soon as practicable after the need arises.

NOTE. – The expression ‘New Service’ wherever used in this Appendix

includes – ‘New Instrument of Service’.

APPENDIX – 7
[ See Note below Rule 61. (4) ]

THE CONTINGENCY FUND OF INDIA RULES

SRO 1358. - In exercise of the powers conferred by Section 4 of the

Contingency Fund of India Act, 1950 (XLIX of 1950), the Central Government
hereby makes the following rules :-

CONTINGENCY FUND OF INDIA RULES

1. These rules may be called the Contingency Fund of India Rules.

2. The Contingency Fund of India shall be held on behalf of the

President by the Secretary to the Government of India, Ministry of Finance,
Department of Economic Affairs.

3. From out of the Balance in the Fund, such amounts as may be

agreed upon from time to time shall be placed at the disposal of the Financial
Commissioner of Railways for the purpose of meeting the unforeseen expenditure
of the Railways.

4. Subject to the provisions of Rule 5 below, all applications for

advances from the Fund shall be made to the Secretary to the Government of
India, Ministry of Finance, Department of Economic Affairs. The applications shall
give -
(i) brief particulars of the additional expenditure involved.
(ii) the circumstances in which provision could not be included in the
budget,
(iii) why its postponement is not possible,
(iv) the amount required to be advanced from the Fund with full cost of
the proposal for the year or part of the year, as the case may be, and
(v) the grant or appropriation under which supplementary provision will
eventually have to be obtained.

130
 5. Applications for advances required by Railways shall be made to the
Financial Commissioner of Railways in the manner provided for in Rule 4.

6. Advances from the Fund shall be made for the purpose of meeting
unforeseen expenditure including expenditure on a new service not contemplated
in the annual financial statement.

7. A copy of the order sanctioning the advance, which shall specifiy the
amount, the grant or appropriation to which it relates and give brief particulars by
sub-heads and units of appropriation of the expenditure for meeting which it is
made, shall be forwarded by the Ministry of Finance or the Financial
Commissioner of Railways, as the case may be, to the Audit and Accounts
Officers concerned. In addition, the Ministry of Finance and the Financial
Commissioner of Railways shall forward copies of such orders to the Accountant-
General, Central Revenues and the Director of Railway Audit respectively.

8. (1) Supplementary Estimates for all expenditure so financed shall be

presented to Parliament at the first session meeting immediately after the advance
is sanctioned unless such advance has been resumed to the Contingency Fund in
accordance with the provisions of sub-rule (2).

NOTE 1. -While presenting to Parliament Estimates for expenditure

financed from the Contingency Fund, a note to the following effect shall be
appended to such Estimates :-

'A sum of Rs. ………………………… has been advanced from the

Contingency Fund in …………………………… and an equivalent amount is
required to enable repayment to be made to that Fund.'

NOTE 2. - If the expenditure on a new service not contemplated in the

Annual Financial Statement can be met, 'wholly or partly' from savings available
within the autho rized appropriation, the note appended to the Estimates submitted
shall be in the following form :-

'The expenditure is one a new service. A sum of Rs. ………………….. has

been advanced from Contingency Fund in ……………….. and an equivalent
amount is required to enable repayment to be made to that Fund.'

The amount, viz., Rs. …………………………… can be found by re-

appropriation.

'A part of that amount, viz., Rs. ……………………… of savings within the
grant and a token vote only is now required, viz., Rs. ……………………. only.
a vote is required for the balance

(2) As soon as Parliament has authorized additional expenditure by

means of a Supplementary Appropriation Act, the advance or advances made
from the Contingency Fund, whether for meeting the expenditure incurred before
131
the Supplementary Estimates were presented to the Parliament or after they were
so presented, shall be resumed to the Fund to the full extent of the appropriation
made in Act."

8. A. If in any case, after the order sanctioning an advance from the

Contingency Fund has been issued in accordance with Rule 7 and before action is
taken in accordance with Rule 8, it is found that the advance sanctioned will
remain wholly or partly unutilized, an application shall be made to the sanctioning
authority for cancelling or modifying the sanction, as the case may be.

8. B. All advances sanctioned from the Contingency Fund to meet

expenditure in excess of the provision for the service included in an appropriation
(Vote on Accounts) Act shall be resumed to the Contingency Fund as soon as the
Appropriation Act in respect of the expenditure on the service for the whole year,
including the excess met from the advances from the Contingency Fund has been
passed.

8. C. If during an Election year, two Budgets are presented to the

Parliament, all advances, sanctioned from the Contingency Fund of India during
the period between the presentation of first and second Budgets or during the
period between the presentation of the second Budget and the passing of the
connected Appropriation Act to meet expenditure on a service not included in an
Appropriation (Vote on Account) Act and the advances outstanding at the end of
the preceding financial year being advances the estimates for which are included
in the second Budget, shall be resumed to the Contingency Fund as soon as the
Appropriation Act in respect of the expenditure on the service for the whole year
has been passed.

NOTE. - A suitable explanation regarding the advance and the recoupment

thereof shall be incorporated in the "Notes on Demands for Grants". Wherever
required, such a case will be included in the statement of 'New Service' / 'New
Instrument of Service' appended at the end of the demands.

9. A copy of the order resuming the advance, which shall give a

reference to the number and date of the order in which the original advance was
made and to the Supplementary Appropriation Act referred to in Rule 8, shall be
forwarded by the Ministry of Finance and the Financial Officers concerned. In
addition, the Ministry of Finance and the Financial Commissioner of Railways, as
the case may be, to the Audit and Accounts Officers concerned. In addition, the
Ministry of Finance and the Financial Commissioner of Railways, shall forward
copies of such orders to the Accountant Ge neral, Central Revenues, and the
Director of Railways Audit respectively.

10. An account of the transactions of the Fund shall be maintained by

the Ministry of Finance in Form 'A' annexed to these rules.

NOTE. - The Financial Commissioner of Railways shall maintain in the

same form an account of the sum placed at his disposal under Rule 3 above
132
 11. Actual expenditure incurred against advances from the Contingency
Fund shall be recorded in the account relating to the Contingency Fund in the
same details as it would have been shown if it had been paid out of the
Consolidated Fund.

133
134
 ANNEXURE
FORM 'A'

[ See Paragraph 10 of Appendix -7 ]

CONTINGENCY FUND OF INDIA

Amount of the Fund ………………………………………………………………………………… Rs.

……………………….
Amount placed at the disposal of the Financial Commissioner of Railways …………………. Rs.
……………………….

Supplementary
Number and Number and Number and Appropriation Amount
SI. No. Date of name of date of the date of the Amount of act providing of Balance Initials of
transact- grant of application for order making advance for the advance after each Officer-in- Remarks
ion appropriation advance the advance resumed Additional resumed transaction charge
Expenditure
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)

NOTE 1. - The balance should be struck after each transaction.

NOTE 2. - The amount of the advances should be entered in black ink when made and in red ink when
resumed.
 APPENDIX - 8
Deleted

APPENDIX - 9
Deleted

APPENDIX - 10
Deleted

APPENDIX - 11
[See Rule 279. (4) and 279. (5) ]

TRANSFER OF LAND AND BUILDINGS BETWEEN

THE UNION AND STATE GOVERNMENTS

1. These rules apply to the transfer of land and buildings between the Union
and the State Governments and also to the surrender to the State Governments of
land belonging to Railways.

The general position under Article 294 of the Constitution is that as from the
commencement of the Constitution -
(a) all property and assets which immediately before such
commencement were vested in His Majesty for the purposes of the
Government of the Dominion of India and all property and assets
which immediately before such commencement were vested in His
Majesty for the purpose of the Government of each Governor's
Province, shall vest respectively in the Union and the corresponding
State; and
(b) all rights, liabilities and obligations of the Government of the
Dominion of India and of the Government of each Governor's
Province, whether arising out of any contract or otherwise, shall be
the rights, liabilities and obligations respectively of the Government
of India and the Government of each corresponding State.

subject to any adjustment made or to be made by reason of the creation before

the commencement of the construction of the Dominion of Pakistan or of the
Province, of West Bengal, West Punjab and East Punjab.

Article 294, as is evident, relates to succession to property, assets, rights,

liabilities and obligations in certain cases only; Article 295 of the Constitution which
relate to succession to property, assets, rights, liabilities and obligations in other
cases, provides that -
136
 (I) As from the commencement of the Constitution :

(a) all property and assets which immediately before such

commencement were vested in any Indian State corresponding to a
State specified in Part -B of the First Schedule shall vest in the Union
if specified in Part - B of the First Schedule shall vest in the Union if
the purpose for which such property and assets were held
immediately before such commencement will thereafter be purposes
of the Union relating to any of the matters enumerated in the Union
List; and

(b) all rights, liabilities and obligations of the Government of any

Indian State corresponding to a State specified in Part -B of the First
Schedule, whether arising out of any contract or otherwise, shall be
the rights, liabilities and obligations of the Union Government, if the
purposes for which such rights were acquired or liabilities or
obligations were incurred before such commencement will thereafter
be purposes of the Union Government relating to any of the matters
enumerated in the Union List:

subject to any agreement entered into in that behalf by the Union Government with
the Government of that State.

(II) Subject as aforesaid, the Government of each State specified in Part

'B' of the First Schedule shall, as from the commencement of the Constitution, be
the successor of the Government of the corresponding Indian State as regards all
property and assets and all rights, liabilities and obligations, whether arising out of
any contract or otherwise, other than those referred to in Clause (1).

All property and assets, which include land and buildings, and which vest in
the State Government under Articles 294 and 295 of the Constitution or otherwise
shall be at the disposal of the respective State Governments, who will be at liberty
to dispose them of by sale, mortgage, etc., and the proceeds thereof shall be
credited to the revenues of the respective State Governments.

From the commencement of the Constitution, the transfer of land between

the Union and the State Government shall be regulated by mutual agreement
except when they are acquired under some Act. The Union Government have laid
down the following principles to be observed in regard to certain points :-

(i) (a) When land belonging to a private party has to be acquired on

behalf of the Union Government acquisition shall be at the expense
of that Government.

(b) In cases where the Union Government require any land, which is
in occupation of the State Government, to be transferred to them, the

137
 amount payable by the Union Government will ordinarily be the
market value of the land and buildings, if any, thereon.

(c) The amount payable will include the capitalized value of land
revenue assessable on the land when the transfer causes actual loss
of land revenue to the State Government.

(d) Solatium of 15 per cent payable under the Land Acquisition Act
will not apply to such transfers.

(ii) Land surplus to the requirements of the Union Government :- When

the Union Government no longer required land in their possession, the
Government of the State in which it is situated will be given the option of
assuming possession of the whole or any portion thereof subject to the
following conditions :-

(a) the Union government themselves shall be the judges of

whether they require to retain any particular land or not;
(b) if the State Government desire to assume possession of the
land, the option to do so shall be exercised within six months
of the date on which the Union Government signify their
intention of surrendering the land;
(c) the amount payable for the land will in all cases be its market
value at the date of transfer;
(d) when the State Government desire to assume possession of
only a portion of the land surrendered, they shall be entitled to
do so only if the value of the land as a whole is not materially
reduced by the division; and
(e) if the State Government do not desire to assume possession
of any land on the foregoing terms, the Union Government will
be free to dispose if of to a third party. Before, however, so
disposing of the land, the Union Government will consult the
State Government as to the levy of ground rent or assessment
and the conditions, if any, subject to which it should be sold
and they will, as far as possible, dispose of the land subject to
the conditions which the State Government may desire to
impose. The Union Government are not, however, bound to
obtain the concurrence of the State Government in all cases,
and in cases of disagreement the Union Government shall be
the sole judge of the terms and conditions to be imposed.

(iii) Determination of Disputes as to Titles. - Disputes as to title between

the Union Government and a State Government shall be determined by the
Supreme Court.

2. Market value defined. -Market value when applied to land may be defined
as the price which the land would fetch if sold in the open market subject to the
138
ground rent or assessment shown against it in the revenue registers, or, if no
ground rent or assessment shown against it in the revenue registers, subject to a
ground rent or assessment levied at the rate at which ground rent or assessment
is actually being levied on similar lands in the neighborhood excluding all cases in
which such similar lands in the neighborhood are held free of ground rent or
assessment at favorable or unfavorable rates of ground or assessment. This is the
market value which has to be credited or debited, as the case may be, in the case
of all transactions between the State Governments and the Union Government or
between the Union Government and State Governments or the Railways.

APPENDIX - 12
[ See Rule 255. (3) and Rule 281 ]

CHARITABLE ENDOWMENTS AND OTHER TRUSTS

I. CHARITABLE ENDOWMENTS

1. The duties of the Treasurer of Charitable Endowments for India are

prescribed in the Charitable Endowments Act, 1890 (Act VI of 1890), and the rules
framed thereunder, which are printed as an Annexure hereto.

2. Under sub-section (1) of Section 3 of the Charitable Endowments

Act, the Deputy Secretary (Budget) in the Ministry of Finance, Department of
Economic Affairs, nominated for the purpose, has been appointed ex officio to be
the Treasurer of Charitable Endowments for India with effect from the 1st April,
1954. All the property of Charitable Endowments, the objects of which extend
beyond a single State or which are objects to which the executive authority of the
Central Government extend, vest in him.

The Treasurer of Charitable Endowments for India is authorized to employ

the agency of the Treasurer of Charitable Endowments of a State, with the
consent of the State Governments, for discharging any of the functions assigned
to his under the rules referred to in Paragraph 1 above.

3. When a copy of a vesting order is received by the Treasurer of Charitable

Endowments for India, he should at once place himself in communication with the
persons who appear from the order to be the holders of the documents of title
relating to the property or of the securities mentioned in the order, and request
them to forward the Title Deeds, or securities in a registered cover and to insure
the cover for Rs. 100. These do not require to be endorsed, as the vesting order
operates to transfer the securities to the Treasurer.

4. At every change of Office of the Deputy Secretary (Budget) in the

Ministry of Finance, Department of Economic Affairs nominated for the purpose, a
139
formal transfer of charge of the Treasurer of Charitable Endowments for India
should also take place and as separate charge report, supported by a statement of
the total of the balances of the Funds vested in the Treasurer, duly signed by the
relieved and the relieving Treasurers should be sent to Government.

A list of receipts granted by the Reserve Bank in acknowledgement of the

securities forwarded to it for safe custody as also of the securities kept in the
custody of the Treasurer should also be prepared and signed by the relieved and
the relieving Treasurers, and sent to Government along with the charge report.

NOTE. - Whenever there is a change in the Office of a Treasurer of

Charitable Endowments of a State who has been acting as an agent of the
treasurer of Charitable Endowments for India, a charge report prepared in the
manner indicated in this paragraph should be furnished to the latter.

II. MISCELLANEOUS TRUST ACCOUNTS

5. If, under any general or special orders of Government, an Audit Officer /

Accounts Officer or any other Government officer is required to act in his official
capacity as a Trustee or Depository of any public or quasi-public fund, which does
come within the scope of the accounts of Government, or of any Charitable
Endowment and is not a Government security held in trust under the rules in
Chapter IX of the Government Securities Manual, such an officer should endeavor
to have the trust vested, if possible, in the Treasurer of Charitable Endowments for
India; but, if that course is not possible, he should open an account with the State
Bank of India, or with any other approved Bank, for the deposit of moneys
received by him on account of Trust. Full and clear record of all transactions
relating to the trust fund should be kept in the books of accounts in his personal
custody in a form complying with the terms and conditions of the Trust. The
securities, if any, deposited with him should be dealt with in accordance with the
instructions contained in Chapter IX of the Government Securities Manual.

6. The books of accounts should be supported by a short statement

descriptive of the nature and obligation of the Trust, with reference to the
documents bearing upon it, so that any other Government officer on receiving
charge may know by reference to it exactly what his obligations are in the matter.

NOTE. - The receipt and disposal of interest should be recorded in these

accounts which are meant for the principal of the Trusts only.

7. The accounts should be balanced and closed every 31st day of March.
They should also be balanced and closed when the Government officer acting as
the Trustee makes over charge of his office to a successor or substitute, a balance
sheet being appended to the charge report and signed both by the officer receiving
and the officer giving over charge.

8. The accounts will be sub ject to such audit check as may be prescribed
by Government.
140
 ANNEXURE
[ See Paragraph 1 of Appendix -12 ]

In exercise of the powers conferred by Section 13 of the Charitable

Endowments Act, 1890 (VI of 1890), and in supersession of the late Home
Department Notification No. 1569 - Judicial, dated the 24th October, 1890, the
Central Government is pleased to make the following rules and forms :-

THE CHARITABLE ENDOWMENTS (CENTRAL) RULES, 1942

1. Short Title. -
(1) These rules may be called the Charitable Endowments
(Central) Rules, 1942.
(2) They apply to charitable endowments the objects of which
extend beyond a single State or are objects, to which the
executive authority of the Central Government extends.

2. Interpretation.- In these rules -

(a) "the Act" means the Charitable Endowments Act, 1890;
(b) "Treasurer" means the Treasurer of Charitable Endowments for
India for the time being, appointed under sub-section (1) of
Section 3 of the Act, and includes such other officer as the
Treasurer may appoint to discharge any of the functions
assigned to him under these rules;
(c) "Form" means a form appended to these rules.

3. Previous publication of vesting orders and schemes. - On cases in which

private persons apply for a vesting order or a scheme or modification of a scheme,
and in all cases in which it is proposed to depart in any respect from the
ascertained wishes or presumable intentions of the founder of an endowment,
there shall ordinarily, and unless the Central Government otherwise directs, be
precious publication of the proposed vesting order or scheme or modification.

4. Mode of previous publication. -

(1) Unless the Central Government is of opinion that a proposed
vesting order or proposed scheme or modification of a scheme
may be made or settled without previous publication, it shall
publish a draft of the proposed order, scheme or modification or
a sufficient abstract thereof, for the information of persons likely
to be affected thereby.
(2) The publication shall be made in the Official Gazette and in such
other manner as the Central Government may direct.
(3) A notice specifying a date on or after which the proposed order,
scheme or modification will be taken into consideration by the
Central Government should be published with the draft or
abstract.

141
 (4) The Central Government shall consider any objection or
suggestion which it may receive from any person with respect to
the proposed order, scheme or modification thereof before the
date specified in the notice under sub -rule (3).

5. Costs.- The cost of the previous publication under Rule 4 of any

proposed order, scheme or modification of a scheme, and any other costs incurred
or which may be incurred in the making of the orders or in the settlement of a
scheme or modification of a scheme, shall be paid by the applicant for the order,
scheme or modification, as the case may be, and, if the Central Government so
directs may be paid by him out of any money in his possession pertaining to the
trust to which his application relates.

6. Securities which may vest in the Treasurer. - No securities for money

except the securities mentioned in Clauses (a), (b), (bb), (c) and (d) of Section 20
of the Indian Trusts Act, 1882 (II of 1882), shall be vested in the Terasurer.

7. Accounts of trusts consisting of immovable property. -In the case of

property vested in the Treasurer other than securities for money, the person acting
in the administration of the trust and having, under sub-section (3) of Section 8 of
the Act, the possession, management and control of the property and the
application of the income thereof, shall in books to be kept by him, regularly enter
or cause to be entered full and true accounts of all moneys received and paid
respectively on account of the trust, and shall, on the demand of the Central
Government, submit annually to such public servant as the Central Government
may appoint in this behalf, in such form and at such time as the Central
Government may prescribe, an abstract of those accounts and such returns as to
other matters relating to the administration of the trust as the Central Government
may from time to time see fit to require.

8. Fees. -
(1) The following are prescribed as the fees to be paid to the Central
Government in respect of any property vested under the Act in the
Treasurer :-
(i) In the case of property other than securities for money, the
actual charge incurred by the Treasurer in the discharge of his
functions in respect of he property.

(ii) In the case of securities for money, at the rate of one Paisa for
every rupee of interest collected. The fee shall be charged on
interest by rounding off the amount to the nearest rupee,
fractions of a rupee below fifty Paisa or more being reckoned
as one rupee.

(2) The Treasurer may deduct any fees payable to the Central
Government under this rule on account of any endowment from
any money in his hands on account of such endowment. If he holds

142
 no such moneys the amount shall be claimed form the
administrators of the endowment.

9. Vesting orders how filed. - All copies of vesting orders received by the
Treasurer shall be filed together and shall be numbered in consecutive order of
their receipt; when a sufficient number have been received they shall be bound in
volumes. A note shall be made on each vesting order of any entries in the
registers prescribed under these rules relating to the property vesting in the
Treasurer under the order.

10. Registers of securities. - On the receipt of any securities for money, or

on their purchase by himself, the Treasurer shall record their receipt in a register in
Form 1. He shall also keep a separate account for each endowment in Form 2, in
which he shall record all receipts including any amount sent for investment, and all
disbursements. In the cash account in Part - II of Form 2 the Treasurer shall
record only his own transactions (such as the payment of the money to the
administrator), and not the transactions of the administrators of the endowment
fund.

11. Stock Disposal Register. - The Treasurer shall enter all securities
returned or sold by him in a register in Form 3. Returns shall also be entered in
Form 2, where the amount returned will be deducted from the capital of the
endowment concerned.

12. Custody of Securities. - On the issue of a vesting order under Section 4

of the Act in respect of any securities for money, the person authorized under
Section 6 of the Act to make the application for such vesting order shall, as soon
as practicable, forward to the Treasurer the said securities. The Treasurer shall,
after recording the receipt of the said securities in the registers kept under
Rulef10, take steps, as soon as practicable, to have them converted into stock and
keep the stock certificate in his custody. After conversion, entries shall be made in
the Treasurer's Stock Register in Form 7. A consolidated register showing the
securities (e.g., Promissory Notes and the Stock Certificates) in the custody of the
Treasurer shall also be maintained in Form 8.

13. Accounting of Interest. - The Treasurer, on receipt of any interest

securities, shall pass it through his General Trust Interest Account under a special
Sub-Head "Interests on Charitable Endowments under Act VI of 1890". The
interest will then be distributed to the various ledger accounts in the register in
Form 2, in which the gross amounts shall be shown, any deductions for fees, etc.,
being shown as a charge, and the payment of the balance to the administrators
being shown as a disbursement. The Treasurer shall maintain personal, ledger
account in the Reserve Bank and shall make payment to the administrators by
cheques. The entries in the ledger of interest received shall be taken out and
agreed annually with the total amount of the interest drawn.

143
 14. Balance Sheet. - The registers in Form 1 shall show all securities
vested in the Treasurer as such. In order to prove the balance actually held by the
Treasurer in his own hands, a balance sheet in Form 4 shall be made out actually
and agreed with the actual securities in the Treasurer's possession. Such
agreement shall be certified on the balance sheet.

15. Publication of accounts. - A list of all properties vested in the Treasurer

and an abstract of the accounts of the interest and the annual agreement of
balance shall be published in the Official Gazette on the 15th June of each year.

16. Register of property other than securities. - The Treasurer shall enter in
a register in Form 5 any property other than securities which becomes vested in
him, and shall record in the same register against the original entry a note of any
property of which he is divested.

17. Form of publication of list and abstract. - The list of properties vested in
the Treasurer to be published annually under Rule 15 shall be in Form 6. Part - I
will relate to properties other than securities; Part - III will relate to securities and
will also contain the abstract of accounts required by the Act to be published. The
Treasurer shall demand and receive acknowledgements of the correctness of the
balances when so published, from the administrators of endowment funds or from
any one or more of their body who may have been authorized by the
administrators to give such acknowledgements and such acknowledgements shall
be furnished within 3 months from the date of publication of accounts in the Official
Gazette.

18. Audit. - Arrangements for annual audit of the Treasurer's accounts shall
be made by the Comptroller and Auditor-General.

144
 SI. No.

1.
Date of Receipt

2.
Number or brief description of

3.
Charitable Endowments

From whom received

4.
No. and date of forwarding
letter

5.
Nature of Securities, e.g.
Government securities 3 ½
per cent Loan of 1865,
6.

Guaranteed Railway
Debentures, etc., etc.
FORM 1

Distinguishing number of
each security
7.
Particulars of Securities received

Nominal value of each

security
8.
Register of Securities held under Act VI of 1890

Total nominal value of each

separate endowment
9.

Ledger Folio
10.

Remarks
11.
 FORM 2
Ledger Account of Securities held under Act VI of 1890.

1. Name of Endowment …… ……
2. Particulars of vesting order …… ……
3. When vested in Treasurer …… ……
4. Name of Administrators …… ……
5. To whom interest is to be sent …… ……

PART - I - Account of Capital

Value of each security Date to

SI. No. Particulars Details of (separate column for each Amount of which Initials of
in (e.g. securities kind) half yearly interest has Treasurer or
Form 1 received or (distinguishing 3 ½ per cent Guaranteed interest been paid Assistant-in-
returned) number, etc.) Loan of 1865 Railway on receipt Charge
Debentures
1 2 3 4 5 6 7 8 9 10 11

NOTE.- The balance of the value columns must be worked out on every day on which there is a new entry.
 PART - II - Cash Account

Receipts Expenditure

Date Particulars Amount Date Particulars Amount

NOTE. - To be closed annually to balance. The transactions will not be numerous. A few pages of the ledger (rule
only for the Cash Account) may be left for each account, so that the account may be carried on for several years without
opening a fresh Ledger Account.
 FORM 3
Stock Disposal Register

SI. No. Date of Name of the No. of entries in Amounts How GO's Official Designation
entry Fund or Trust Stock Register disposed of disposed of initials of Officer
 FORM 4
Balance Sheet of Securities held under Act VI of 1890
Particulars 3 ½ per cent Loan (A pair of columns for each Total
of 1865 different kind of security
No. Value held) No. Value
Opening Balance (from last year) ……
Securities received …… ……
Stock Certificates received …… ……

GRAND TOTAL

Deduct -
Sent to the PDO Reserve Bank of India for
conversion into stock …… ……

BALANCE

Deduct -
Returned or sold …… ……

BALANCE

Add -
Sent for conversion out of which stock
certificates have not been received ……
CLOSING BALANCE

Certified that the above closing balance has been compared with the Securities in Treasurer's possession and has been
found to be agree both as to number and value.
 FORM 5
Register of properties other than Securities held under Act of 1890

SI. No. Particulars of vesting order Name of Administrators Property held

No. Date endowment of property Description Value Annual income
if known
1 2 3 4 5 6 7 8

Description Title Deeds held Initials of Treasurer

Date of Where Date of To whom Authority for or Assistant-in- Remarks
receipt deposited return returned return Charge
9 10 11 12 13 14 15 16
 FORM 6
List and Abstract Account of Properties held under Act VI of 1890

PART - I - List of properties, other than Securities

Particulars of Property held

SI. vesting order Name of Administrators Remarks
No. No. Date endowment of property Description Value Annual income
if known
1 2 3 4 5 6 7 8 9

PART - II - List and Abstract Account of Securities

Cash Receipts Cash expenditure

whose behalf

Particulars of
endowment

Persons in

Balance in
Securities
Securities
Case No.

Remarks
Name of

Payments*
Total cash
Interest or
Total of

Receipts*

Receipts
dividend
realised

cash
held

Other
Cash

1 2 3 4 5 6 7 8 9 10 11

* Enter details in these columns

 No. of Case in

1
Form No.

2
Serial No.

3
Date of entry

To what fund or
trust the
4
investment
belongs

To whom interest
5

is to be remitted
FORM 7

Amount of
6
Treasurer's Stock Register of

investment
Rs. P

Amount of half-
7

yearly interest
Rs. P

(Pair of columns
8

for noting interest

Rs. P

payment order
9

Remarks
per cent loan of
 FORM 8
Register of Clean Government Promissory Notes and Stock Certificates held
by the Treasurer of Charitable Endowments for India

Particulars A pair of
In Receipts Disposals columns for Remarks
SI. No. Date of conversion No. Amounts No. Amounts noting interest
entry of for half-year
ending
1 2 3 4 5 6 7 8 9
 APPENDIX - 13

[ See Rule 289 ]

DESTRUCTION OF OFFICE RECORDS CONNECTED WITH ACCOUNTS

The destruction of records (including correspondence) connected with accounts shall be governed by the following
Rules and such other subsidiary rules consistent therewith as may be prescribed by Government in this behalf with the
concurrence of the Comptroller and Auditor-General.

1. The following shall on no account be destroyed :-

(i) Records connected with expenditure, which is within the period of limitation fixed by law.
(ii) Records connected with expenditure on projects, schemes or works not completed, although beyond the
period of limitation.
(iii) Records connected with claims to service and personal matters affecting persons in the service except
as indicated in the Annexure to this Appendix.
(iv) Orders and sanctions of a permanent character, until revised.
(v) Records in respect of which an audit objection is outstanding.
 2. The following shall be preserved for not less than the period specified against them :-
SI. Description of records
No. Main-Head Sub-Head Retention Period Remarks
(1) (2) (3) (4) (5)
1. Payments and (i) Expenditure Sanctions 2 years, or one year after
recoveries. not covered by completion of audit,
Paragraph 1 above whichever is later.
(including sanctions
relating to grants-in-aid)
(ii) Cash Books maintained 10 years.
by the Drawing and
Disbursing Officers
under Central
Government Account
(Receipts and
Payments) Rules, 1983.
(iii) Contingent expenditure. 3 years, or one year after
completion of audit,
whichever is later.

(iv) Arrear claims (including 3 years, or 1 year after

sanction for completion of audit,
investigation, where whichever is later.
necessary).

Papers relating to :
(v) GPF Membership. 1 year. Subject to:
(vi) GPF Nomination. 1 year - after final settlement
of GPF Account. (a) Original nomination being
(vii) Adjustment of missing 1 year. placed in Vol. II of the
credits in GPF Service Book of Group ‘D’
Accounts. Government servants;
(viii) Final withdrawal from 1 year. and
 GPF, e.g., for house (b) Nomination in original or
building, higher an authenticated copy
technical education of thereof being placed in
children, etc. Vol. II of the Service
(ix) GPF annual statements. Book/Personal File in
(x) T.A./Transfer T.A. case of other Government
claims servants.
1 year.
3 years, or 1 year after Subject to an authenticated
completion of audit, copy of the sanction being
whichever is later. placed on the personal file.
2. Budget Estimates / 3 years. The retention period here
Revised Estimates. related to the Budget /
Revised Estimates as
compiled by the Budget /
Accounts Section for the
Department as a whole.
3. Service Books of:
(a) Officials entitled to 3 years after issue of final
retirement / pension/gratuity payment
terminal benefits. order.

(b) Other employees. 3 years after they have

ceased to be in service.
4. Leave Account of:
(a) Officials entitled to 3 years after issue of final
retirement / pension/gratuity payment
terminal benefits. order.
(b) Other employees. 3 years after they have
ceased to be in service.
5. Service records. (a) Nomination relating to 1 year - after settlement of Subject to the nomination in
family pension and DCR benefits. original or an authenticated
gratuity. copy thereof (where original is
 kept with the audit as the case
may be being placed in Vol. II
of the Service Book/Personal
File.
(b) Civil List 3 years.
Gradation/Seniority list-
(i) in the case of
Departments preparing
and bringing out the
compilation.
(ii) In the case of other 1 year after issue of relevant
Departments (i.e., those compilation.
supplying information
for such compilation)
(c) Alteration in the date of 3 years. Subject to suitable entry being
birth. made in the appropriate
service record and an
authenticated copy of the
order being kept in Vol. II of
Service Book/Personal File.

(d) Admission of previous 3 years; or 1 year after - do –

service not supported by completion of audit,
authenticated service whichever is later.
record, e.g., through
collateral evidence.
(e) Verification of service. 5 years. Subject to a suitable record
being kept somewhere, e.g.,
in the Service Book or History
Sheet.
6. Expenditure (a) In respect of lower To be weeded out at the end
statements. formations. of financial year.
 (b) In respect of Department To be weeded out after the
itself. Appropriation Accounts for
the year have been finalized.

(c) Register of monthly To be weeded out after the

expenditure (Form GFR 9) Appropriation Accounts for
the year have been finalized.
7. Surety Bonds 3 years after the Bond ceases
executed in favour of to be enforceable.
a temporary or a
retiring Government
servant.
8. (a) Pay Bill register. 35 years
(b) Office copies of 35 years
Establishment pay
bills and related
schedules (in
respect of period
for which pay bill
register is not
maintained).
(c) Schedules to the 3 years, or one year after the
Establishment pay completion of audit,
bills for the period whichever is later.
for which pay bill
register is
maintained.
(d) Acquaintance Roll. 3 years, or one year after the
completion of audit,
whichever is later.
9. Muster Rolls. Such period as may be
prescribed in this behalf in the
departmental regulations
 subject to a minimum of three
financial years of payment
excluding the financial year of
payment
10. Bill Register 5 years.
maintained in Form
TR-28-A
11. Paid cheques 5 years The counterfoils of paid
returned by the Bank cheques should be preserved
to the for the same period as
Audit/Accounts prescribed for preservation of
Office. paid cheques, viz., 5 years.
However, in cases where the
counterfoils are required to be
preserved in connection with
settlement of some enquiry,
etc., these should not be
destroyed unless otherwise
advised by the authorities
conducting the enquiry. The
other instructions contained in
this Appendix will continue to
be applicable in this case
before the counterfoils which
are more than five years old
are actually destroyed.
12. Files, papers and 5 years after the
documents relating contract/agreement is fulfilled
to contracts, or terminated. In cases where
agreements, etc. audit objections have been
raised, however, the relevant
files and documents shall not,
under any circumstances, be
 allowed to be destroyed till
such time as the objections
have been cleared to the
satisfaction of the audit
authorities or have been
reviewed by the Public
Accounts Committee.
13. Sub-vouchers 3 years after the expiry of the
relating to the Secret financial year in which the
Service Expenditure. expenditure was incurred,
subject to completion of
administrative audit and issue
of audit certificate by the
nominated Controlling Officer.
INSTRUCTIONS

1. The retention period specified in Column (4), in the case of a file, is to be reckoned form the year in which the
file is closed (i.e., action thereon has been completed) and not necessarily from the year in which it is recorded.
2. In the case of records other than files, e.g., registers, the prescribed retention period will be counted from the
year in which it has ceased to be current.
3. In exceptional cases, a record may be retained for a period longer than that specified in the schedule, if it has
certain special features or such a course is warranted by the peculiar needs of the department. In no case,
however, will a record be retained for a period shorter than that prescribed in the schedule.
4. If a record is required in connection with the disposal of another record, the former will not be weeded out until
after all the issues raised in the latter have been finally decided, even though the retention period marked on
the former may have expired in the meantime. In fact, the retention periods initially marked on such records
should be consciously reviewed and, where necessary, revised suitably.

NOTES.-
(1) Before any pay bills/pay registers are destroyed, the service of the Government servants concerned
should be verified in accordance with Rule 257 (1).
(2) The periods of preservation of account records in Public Works Offices are prescribed separately by
Government.
(3) Where a minimum period after which any record may be destroyed has been prescribed, the Head of a
Department or any other authority empowered by him to do so, may order in writing the destruction of
such record in their own and subordinate offices on the expiry of that period counting from the last day of
the latest financial year covered by the record.
(4) Heads of Departments shall be competent to sanction the destruction of such other records in their own
and subordinate offices as may be considered useless, but a list of such records as property appertain
to the accounts audited by the Indian Audit and Accounts Departments shall be forwarded to the Audit
Officer and or the Accounts Officers, as the case may be, for his concurrence in their destruction before
the destruction is ordered by the Head of Department.
(5) Full details shall be maintained permanently, in each office, of all records destroyed from time to time.
 ANNEXURE TO APPENDIX – 13
Destruction of records referred to in Para. 1 (iii) of this Appendix

SI. Description of records

No. Retention period Remarks
Main Head Sub-Head
(1) (2) (3) (4) (5)

1. Creation & Classification (i) Continuance / revival of 1 year Subject to particulars of

of posts. posts. sanctions being noted in
Establishment/Sanction
Register.

(ii) Conversion of temporary 10 years - do –

posts.
(iii) Creation of posts. 10 years - do –

(iv) Revision of scales of pay. Permane nt in the case of - do –

Departments issuing orders
and Departments concerned;
other Departments need keep
only the standing orders,
weeding out superseded ones
as and when they become
obsolete.
(v) Upgrading of posts. 10 years. - do -

2. Review for determining Establishment / Sanction Permanent. Where, for any reason the
suitability of employees Register. register is re-written, the old
for continuance in volume will be kept for 3
service. years.
 Subject to:

3. Arbitration and litigation 3 years (a) the file not being closed
cases. until the award/judgment
becomes final in all
respects by limitation or
final decision in
appeal/revision; and
(b) cases involving
important issues or
containing material of a
high precedent /
reference value being
retained for an
appropriately longer
period either initially or
at the time of review.

4. Notices under Section 1 year If such a notice is followed

80 of Civil Procedure up by a civil suit, it would
Code. become arbitration /
litigation case and would,
therefore, need to be
retained for 3 years.

5. Recruitment. Condonation of break in 5 years. Subject to a suitable entry

service. being made in the
appropriate service record
and an authenticated copy
of the order being kept in
Vol. II of Service Book /
Personal File.
6. Advance. (i) Car Advance Rules
(ii) Conveyance Advance
Rules.
(iii) Cycle Advance Rules Permanent in the case of
(iv) Festival Advance Departments issuing the
Rules rules, orders and
(v) GPF Advance Rules instructions; other
(vi) House Building Departments need keep
Advance Rules only the standing rules,
(vii) Motor Cycle / Scooter etc., weeding out the
Advance Rules superseded ones as and
(viii) Pay Advance Rules when they become
(ix) T. A. Advance Rules obsolete.
(x) Travel Concession
Rules
(xi) Other Advance Rules
(xii) Grant of car Advance
(xiii) Grant of conveyance
allowance Subject to :
(xiv) Grant of cycle (i) suitable entries being
advance made in pay bill register;
(xv) Grant of festival and
advance (ii) in case of motor
(xvi) Grant of GPF advance 1 year car/motor cycle / scooter
(xvii) Grant of house and house building
building advance advances.
(xviii) Grant of motor (a) copies of sanction being
cycle/scooter advance placed on personal files;
(xix) Grant of pay advance and
(xx) Grant of T. A. (b) mortgage deeds and
advance other agreements
(xxi) Grant of LTC advance executed being kept
(xxii) Grant of other separately in safe
 advances custody for the period
they are valid.
7. Surety Bonds executed 3 years after the Bond ceases
in favor of a temporary to be enforceable.
or a retiring Government
servant.
8. Pension / retirement. (i) Rules and Orders Permanent in the case of
(general aspects.) Departments issuing the rules,
orders and instructions; other
Departments need keep only
the standing rules and orders
weeding out the superseded
ones as and when they
become obsolete.

(ii) In respect of Groups 'A',

'B', 'C' and 'D'
Government servants.
(a) Pre-verification of 3 years
pension cases.
Till one year after the last
(b) Invalid pension beneficiary of the family
(c) Family pension pension ceases to be entitled
(d) Other pensions to receive or 5 years
whichever is later.

(e) Gratuity 5 years

(f) Commutation of pension 15 years

Note – The principle to be adopted in respect of files having financial implications and hence liable to be called by audit for
inspection is that such files should be retained for a period of five years after they have been recorded. If, at any time during
the period of five years, an audit objection having reference to the transaction dealt with in that fi le arises, is received, the file
will not be destroyed until after the audit objection has been settled to the satisfaction of the audit. Also, if local audit does
not take place within the period of five years, the Head of the Office should ascertain from the audit authorities whether they
have any objection to the files relating to the earlier years, due for weeding out by the application of the five year formula,
being destroyed or retained for a further period for scrutiny by the audit party and, if so, for what period.

While records may be reviewed and weeded out at periodical intervals in the light of the retention periods prescribed
to avoid their build-up, the attempt should be to make a continuous and conscious effort throughout the year to weed out
unnecessary records. In other words, the working rules should be “weed as you go”.

INSTRUCTIONS:

1. The retention period specified in Column (4) in the case of a file, is to be reckoned from the year in which the file is
closed (i.e., action thereon has been completed) and not necessarily from the year in which it is recorded.
2. In the case of records other than files, e.g., registers, the prescribed retention period will be counted from the year
in which it has ceased to be current.
3. In exceptional cases, a record may be retained for a period longer than that specified in the Schedule, if it has
certain special features or such a course is warranted by the peculiar needs of the Department. In no case,
however, will a record be retained for a period shorter than that prescribed in the schedule.
4. If a record is required in connection with the disposal of another record, the former will not be weeded out until
after all the issues raised on the latter have been finally decided, even though the retention period marked on the
former may have expired in the meantime. In fact, the retention periods initially marked on such records should be
consciously “reviewed and where necessary revised suitably”.
 APPENDIX - 14
[ See Rule 57 and Rule 63 ]

“CHECK AGAINST PROVISION OF FUNDS”

The pre-check to be applied to all payments by the departmentalized

Accounts Officers includes a check against provision of funds also. It is an
important part of the functions of the Accounts Office to see that no payment is
made in excess of the budget allotment. In order to exercise an effective check in
this behalf, a separate register (DDO-wise Bill Passing-cum-Expenditure Control
Register –Form CAM –9) should be maintained in the Accounts Officer for each
Drawing Officer and by sub -heads and units of appropriation so as to ensure at the
time of passing each bill that the amount of the bill under check is covered by
Budget allotment. If the amount of any bill leads to excess over the Budget
allotment or is not covered by an advance from the Contingency Fund, the
Accounts Officer should decline payment under advice to the authority controlling
the grant so that the latter could arrange for additional funds. An Appropriation
Audit Register (Form CAM – 62) shall be maintained.

NOTE. – In cases where payment of a bill/claim would lead to excess over

the provision under any unit of appropriation the payment may be made by the
Pay and Accounts Office only on receipt of an assurance in writing from the
Ministry/Head of Department controlling the grant that the expenditure involved is
not on a New Service, or New Instrument of Service; that necessary funds to
accommodate the expenditure will be provided for in time by issue of re-
appropriation order, etc., that a note to the effect has been kept for further action,
and that the grant as a whole (i.e., separately under Revenue and Capital
Sections) is not likely to be exceeded. This applies in respect of any new item of
expenditure, provision for which does not exist in the Budget (as distinct from
expenditure on “New Service” or “New Instrument Service” not provided in the
Budget) as well as in cases where the existing provisions is not sufficient to cover
the payments.

If such a conti ngency in regard to inevitable payment of a bill should arise

towards the close of financial year and the grant as a whole is likely to get
exceeded thereby, order of the FA on behalf of the Chief Accounting Authority
would have to be sought.

In case the additional funds required are to be made available merely by

reallocation (and not by re-appropriation) of savings, if any, under the same sub-
head of appropriation, the related claim will be passed for payment only after
additional funds therefor are allocated in writing by the Controlling Officer.

166
 APPENDIX - 15
[ See Rule 204 (vii) (b) ]

FORMULA FOR PRICE VARIATION CLAUSE

The formula for Price Variation should ordinarily include a fixed element, a material
element and a labour element. The figures representing the material element and
the labour element should reflect the corresponding proportion of input costs, while
the fixed element may range from 10 to 25%. That portion of the price represented
by the fixed element, will not be subject to variation. The portions of the price
represented by the material element and labour element alone will attract Price
variation. The formula for Price variation will thus be :

M1 L1
P1 = P 0 F+a + b - P0
M0 L0

Where P1 is the adjustment amount payable to the supplier (a minus figure

will indicate a reduction in the Contract Price)
P0 is the Contract Price at the base level.
F is the Fixed element not subject to Price variation.
a is the assigned percentage to the material element in the Contract price.
b is the assigned percentage to the labour element in the Contract Price.
L0 and L1 are the wage indices at the base month and year and at the
month and year of calculation respectively.
M0 and M1 are the material indices at the base month and year and at the
month and year of calculation respectively.

If more than one major item of material is involved, the material element
can be broken up into two or three components such as Mx, My & Mz. Where
price variation clause has to be provided for services (with insignificant inputs of
materials) as for example in getting Technical assistance normally paid in the form
of per diem rates, the price variation formula should have only two elements viz. a
high fixed element and a labour element. The fixed element can in such cases be
50% or more, depending on the markup by the supplier of the Perdiem rate vis-à-
vis the wage rates.

167
 APPENDIX - 16
[ See Rule 248 (1). ]

Rates of Guarantee Fee prevalent in July, 2004

Type of Borrowing Rate of Fee

(Per Annum)
1. Borrowing under the market borrowing programme 0.25 %
approved by the RBI

2. Borrowing under inter corporate transfers envisaged 0.25 %

in the Annual Plan

3. Other Domestic Borrowings :

(i) Pubic Sector including the cooperative sector. 1.00 %
(ii) Other sectors 2.50 %

4. External borrowings 1.20 %

FORMS

FORM GFR 1
Deleted

FORM GFR 2
Deleted

FORM GFR 3
Deleted

168
 FORM GFR 4
[ See Rule 59 (4) ]

Application for an Additional Appropriation, year …………………………. for District Department

Budget Head Original Appropriation as Additional

modified by competent Expenditure appropriation Expenditure during the past three
authority applied for years
Major and Amount up Necessary 20 . 20 . 20 . 20 . 20 . 20 .
Minor Heads Account to the for remaining
of Account month of month
and Primary
unit of Rs. Rs. Rs. Rs. Rs. Rs. Rs.
Appropriation
1 2 3 4 5 6 7 8

No…………………………………., dated …………………………….. 20.

Explanation of insufficiency of grant, recommendations and proposals for re-appropriation by -
(1) Disbursing Officer :
(2) Controlling Officer :
(3) Head of Department :
(4) Secretary to Government in Administrative Department.
No…………………………………, dated ……………………………… 20.

Order of sanction with details Additional appropriation of Rs. …………………….

of source of appropriation Sanctioned.
The amount will be met by re-appropriation form
……………………………………………………………

Signature ……………………………………………….
Designation …………………………………………….
 FORM GFR 5
[ See Paragraph 4 of Appendix - 2 ]

[ REVENUE RECEIPTS ]

Ministry / Department / Union Territory :

Major Head :
(In thousands of Rupees)

First Month Last Month

Seven Eight Five Four Total

ACCOUNTS
Third
Last year

Second
Last year

Last year

Current Budget
Year Revised

Ensuing
Year Budget

Accounts Current year Ensuing

7 months Minor Accounts Year
Last Current Heads Third Second Last Budget Revised Budget
year year Last Last Year Estimate Estimate Estimate
Year Year

Explanation for increase / decrease (Minor Headwise)

Signature ………………………
Designation ……………………
Date ……………………………
170
 FORM GFR 5 - A
[ See Paragraph 4 of Appendix - 2 ]

Estimates of Foreign Grants concerning the

Ministry / Department ………………..

( In thousands of Rupees )

Name of Date of Particul- Total Receipt Amounts to be provided in

the aid ars of assistance Major Current Current Ensuing Manner
grant or agree- assista- expected Head year BE year year of
country / ment nce to RE BE utilizat-
body be ion of
received 6 aid*
1 2 3 4 5 7 8 9

Signature …………………………….
Designation ………………………….
Date ………………………………….

* A brief note may be added indicating the project on which aid is to be utilized. In
the case of material and equipment, the relevant grant and expenditure Heads of
Account under which (i) utilization of material by Central Government Departments
/ Projects, (ii) transfer of material to States, Union Territories and other Bodies
will be adjusted and also whether the utilization on transfer will be on Plan (State /
UT / Centrally Sponsored or Central) or Non-Plan Schemes should also be
indicated. In cases where the aid material is proposed to be sold the Receipt Major
Head under which the proceeds will be credited should be indicated.

NOTE : Cash grants and assistance in the form of material and equipment should
be indicated separately in Columns 3 to 8.

171
 FORM GFR 5 - B
[ See Paragraph 4 of Appendix - 2 ]

ESTIMATES OF INTEREST RECEIPTS AND

LOAN REPAYMENTS
Ministry / Department ……………………………….
( In thousands of Rupees )
Interest Receipts Loan Repayments
BE RE BE BE RE BE
Current Current Ensuing Current Current Current
Year Year Year Year Year Year
1. State Governments*.
2. Union Territory Governments*.
3. Interest on Capital Outlay in
departmental commercial
undertakings.
4. Foreign Governments*.
5. Industrial/Commercial/Finan-
cial undertakings
(undertaking-wise details to
be given) :
(a) Public Sector
Undertakings.
(b) Private Sector
Undertakings.

6. Statutory Bodies (Port Trusts,

Municipalities, KVIC,
Tea/Coffee Boards, etc.)
7. Railways / P&T Reserve
Funds.
8. Other parties (Co-operatives,
Educational Institutions,
displaced persons and other
individual loanees except
Governments servants)*
9. Government servants.

Total

* Estimates for each State / Union Territory / Foreign Government Statutory Body
or Institution should be separately appended to the Annexure.

No.
Ministry / Department ……………………………
Date the ……………………………………………
Forwarded in duplicate to the Ministry of Finance, Budget Division.
Signature …………………………………………..
Designation…………………………………………
172
 FORM GFR 6
[ See Rule 53 and Rule 58. (1) ]

Office of ………………………………………
Grant No ……………………………………..

Liability Register for the year …………………………..

SI. No. Designation Month Serial Nature of No. & date Agency on Permissible Total
of of number in Liability of indent or which Estimated excess over Liability
Disbursing Report Liability connected indent is Cost the (Cols.
Officer Statement letter placed estimated 8+9)
cost, in any
1 2 3 4 5 6 7 8 9 10
Probable month and year Balance commitments
in which the expenditure Record of Payment [Col. 10 minus Col. 14(b)]
will be accounted for in
the departmental Initials of (a) (b) (a) (b)* Initials of
expenditure statement the Branch the Branch Remarks
Month and Amount of Officer Year(s) in Officer
year expenditure Month Amount Amount which it is
to be and year likely to be
incurred discharged
11 12 13 14 15 16 17 18 19

NOTE :- Cols. 2, 3 and 4 will be operated upon only in the Register of Liabilities maintained by the Controlling Officers in
respect of the case reported by their Disbursing Officers.

* If the balance of commitment is to be discharged during more than one financial year, the year-wise break-up of the amount should be indicated.
 FORM GFR 6 - A
[See Rule 53 ]

Office of ……………………………………
Grant No. ………………………………….

Liability Statement for the month of …………………………..

Part - I - Statement of Liabilities incurred during the month of report

Sl. No. Nature of No. and Agency Permissible Probable month in

liability date of on which excess over which the expenditure
indent or indent is the Total will be accounted for
connected placed or estimated liability in the departmental
letter demand Estimated cost, if any (Col. 5 + expenditure statement Remarks
is made cost Col. 6) Month Expenditure
likely to be
incurred
1 2 3 4 5 6 7 8 9 10
 Part - II - Payments made against Liabilities and Liabilities cancelled or finally paid off

Record of payment Balance commitment

(a) (b) (a) (b)
Month in which Serial No. Month and year Amount Amount Year(s) in which Remarks
Liability was the balance of
reported Commitments is
likely to be
discharged.
1 2 3 4 5 6 7

NOTE 1- In Col. 2, the number to be entered will be the serial number of the liability in the Liability Statement in which is
was first reported.

NOTE 2 - In the Remarks column, the following information should also be given :-
(i) If payment against a liability is likely to be made, not in the month originally indicated, but in some other month, the
latter should be indicated. If change in the month of payment is the only information to be given in respect of a
liability, the Columns to be used will be 1, 2 and 5.
(ii) Similarly, if the whole or part of a liability has been cancelled or otherwise extinguished, the fact may be mentioned
and brief reasons given.

* If the balance of commitments is to be discharged during more than one financial year, the year-wise break-up of the
amount should be indicated.
 Part - III - Progressive amount of outstanding commitments

Balance commitments
Month in which liability was Serial No. (a) (b)*
reported Amount Year(s) in which the balance of
commitments is likely to be discharged
1 2 3 4

Total

NOTE. 1 - This is a list of liabilities which are pending, that is, those which have not been paid off or otherwise
extinguished or cancelled.

NOTE. 2 - In Column 2, the number to be entered will be the serial number of the liability in the Liability Statement in
which it was first reported.

* If the balance of commitments is to be discharged during more than one financial year, the year-wise break-up of the
amount should be indicated.
 FORM GFR 7
[ See Paragraph 9 of Appendix - 3 ]

Statement of proposals for pre-Budget discussion

Demand No.
(in crores of Rupees)
Part A-Non-Plan items
Sl. Description as Actuals Actuals B.E. Actuals upto R.E. B.E
No. shown in the -------------------- (current September (of (current (next
Exp.Bud.Vol.2(SBE) For the last two year) current year) year) year)
Preceding yeas
1 2 3 4 5 6 7 8

Note: Salary component under any particular item may be indicated separately within
brackets.

Part B-Plan Items

Sl. Description as Actuals Actuals B.E. Actuals upto R.E. B.E
No. shown in the -------------------- (current September (of (current (next
Exp.Bud.Vol.2(SBE) For the last two year) current year) year) year)
Preceding yeas
1 2 3 4 5 6 7 8
Note: Salary component under any particular items may be indicated separately within
brackets.

Part C-Object headwise summary of Non-Plan estimates

Sl. Object head Actuals Actuals B.E. Actuals upto R.E. B.E
No. -------------------- (current September (of (current (next
For the last two year) current year) year) year)
Preceding yeas
1 2 3 4 5 6 7 8

178
 FORM GFR 8
Deleted

FORM GFR 9
[ See Rule 52 (4) (ii) (a) and Rule 52 (5) (iii)]

Register showing expenses by Heads of Account

Office of …………………………………… Head of Account………………………..

Major Head……………………………….
Minor Head……………………………….
Sub-Head ………………………………...
Month
Year
( Unit of Appropriation )

Allotment Sub-Head of Grants

SI. No. Voucher No./Token No. &
Date/Serial No. in Bill
Register*

1. Deduction, Net
2. if any amount
3. of the bill
4.
Add adjustment communicated by PAO

Total for the month

Total from 1st April Balance of the
appropriation

NOTE 1. - If an allotment is changed, necessary correction in the register should

be made in red ink.

NOTE 2. - Allotment of expenditure under 'Charged' portion should be indicated

distinctly.

NOTE 3. - This account should be despatched on the 3 rd of the following month.

*Serial No. in Bill Register to be entered only in respect of bills passed by Cheque Drawing DDOs
under their cheque-drawing powers.

Date ………………………………….. Signature ……………………………

179
 Designation ………………………….

180
 FORM GFR 10
[ See Rule 52 (4) (iii) (a) ]

Broadsheet for watching receipt of account from Disbursing Officers

Office of ………………………………….
Major Head………………………………
Minor Head ………………………………
Sub-Head ………………………………..

Serial No. Names of Disbursing District Date of receipt of account

Officers April May March

NOTE 1. - Districts are to be arranged according to alphabetical order.

NOTE 2. - Dates of receipts should be noted in monthly columns. Reminder should be sent if not received by the 7th of the
month.
 FORM GFR 11
[ See Rule 52 (4) (iv) ]

Compilation Sheet

Major Head …………………………………

Minor Head ………………………………….
Sub-Head ……………………………………

Month Serial No. of the Disbursing Officers Total for Remarks

each officer

Total expenditure ……………………………

Add Adjustment communicated by

Accounts Officer and not reckoned by
DDOs …………………………………………

Grand Total ………………………………….

Add Total up to previous month

………………………………………………..

Progressive Total up -to-date

………………………………………………..
 FORM GFR 12
[ See Rule 52 (4) (vi) ]

Name of Office……….
Grant No………..
Appropriation
Financial Year…………..
Consolidated Accounts
Units of appropriation Grants sanctioned Grants distributed Proportionate Grant Actual Expenditure
(Part -III of Demands for from April to date
Grants) April
1 2 3 4 5
(i) Salaries … … Charged Voted Charged Voted Charged Voted Charged Voted
(ii) Total of all units of
appropriation

Units of appropriation Actual Expenditure

(Part -III of Demands for 5 6 7
Grants) Progressive June Progressive
May expenditure up to expenditure
1 end of May
(i) Salaries … … Charged Voted Charged Voted Charged Voted Charged Voted
(ii) Total of all units of
appropriation

NOTE 1. - Subsequent charges, if any, under Column 2 are to be made in red ink.
NOTE 2. - Figures under Column 4 may be entered in pencil for facility of updating from month to month.

NOTE 3. - Wherever variations between actual expenditure and proportion grant are large, suitable explanations should
be given in a "Remarks" column.
 FORM GFR 13
[ See Rule 52 (8) ]

Broadsheet for watching receipt of the returns from the Heads of Departments
under a Department of the Central Government

SI. Grant Date of receipt of returns

No. No.
April May June July August Sep. Oct. Nov. Dec. Jan. Feb. March

NOTE 1. - Dates of receipt should be noted in monthly columns. Reminders should be sent if returns are not received by
the prescribed date.

NOTE 2. -Returns relating to the Secretariat proper should also be maintained in the above form.
 FORM GFR 14
Deleted

FORM GFR 15
Deleted

FORM GFR 16
Deleted

FORM GFR 17
[ See Rule 196 (iii) ]

Report of surplus, Obsolete and Unserviceable Stores for Disposal

Book Value / Condition and Mode of disposal Remarks

Item Particulars of Quantity / Original purchase year of (sale, public
No. stores Weight price purchase auction or
otherwise)
1 2 3 4 5 6 7

Signature ……………………………………………
Designation …………………………………………
Date ………………………………………………….
 FORM GFR 18
[ See Rule 201 ]

Sale Account

Item Particulars Quantity / Name and Highest Highest Earnest Date on which Whether the Auctioneer's
No. of Stores Weight full address bid bid money the complete articles were Commission
of accepted rejected realized amount is actually handed and
purchaser on the realized and over on the spot. If acknowledg
spot credited into not, the actual date ement for its
treasury of handing over of payment
the articles with
quantities
1 2 3 4 5 6 7 8 9 10

Signature ………………………………………
Designation ……………………………………
Date …………………………………………….
 FORM GFR 19
Deleted

FORM GFR 19- A

[ See Rule 212 (1) ]

Form of Utilization Certificate

SI. No. Letter No. Amount Certified that out of Rs. ……………. of
and date. grants-in-aid sanctioned during the year
……….. in favour of …………. Under this
Ministry / Department Letter No. given in
the margin and Rs………….. on account of
unspent balance of the previous year, a sum
of Rs. ………….. has been utilized for the
Total purpose of …………. For which it was
sanctioned and that the balance of Rs……..
remaining unitilized at the end of the year
has been surrendered to Government (vide
No……………., dated ………….) / will be
adjusted towards the grants-in-aid payable
during the next year ………………

2. Certified that I have satisfied myself that the conditions on which the grants-in-
aid was sanctioned have been duly fulfilled / are being fulfilled and that I have
exercised the following checks to see that the money was actually utilized for the
purpose for which it was sanctioned.

Kinds of checks exercised

1.
2.
3.
4.
5.

Signature ……………………………….
Designation ……………………………..
Date ……………………………………..

188
 FORM GFR 19- B
[ See Rule 226 (2) ]

Form of Utilization Certificate

(1) Certified that out of the Loan of Rs. ……………. SANCTIONED under
……………………, dated ……………………….., in favour of …………………..
during the year …………………. an amount of Rs. …………….. has been utilized
for the purpose for which it was sanctioned, and that the balance of Rs. ………..
remaining unutilized at the end of the year ……………… has been surrendered to
the Government (vide No. ………………., dated …………… ) / will be adjusted
towards the loan payable during the next financial year.

(2) Certified that I have satisfied myself that the conditions on which the
loan was sanctioned have been duly fulfilled / are being fulfilled and that I have
exercised the following checks to see that the money was actually spent for the
purpose for which the loan was made.

Kinds of checks exercised

1.
2.
3.
4.

Signature…………………………….
Designation ………………………….
Date …………………………………..

189
 FORM GFR 20
[ See Rule 232 ]

Statement of aggregate balance of loan(s) outstanding

as on 31s t March, 20… and details of defaults

PAO / Pr. AO Ministry of ………………………………………. Major Head………………………..

Sub-Major Details of defaults Amount of default

Head Earliest
Name of Aggregate Original letter Amount of Principal Interest date to
SI. No. Minor Head the outstanding No(s). and Date(s) loan(s) which the
of Account borrower balance of loan(s) sanctioning the sanctioned default
loan(s) pertains
Rs. Rs. Rs.
1 2 3 4 5 6 7 8 9

NOTE. - Statements may be prepared on separate sheets for each Major Head, with Minor Head-wise break-up.
Parties having aggregate outstanding balances of less than Rs. 5 lakhs each and which are not defaulters may be
grouped together with a common descriptive head such as "Regional Engineering Colleges", etc., if possible or "parties
with small outstanding balance" under Column 3.
FORM GFR 21
Deleted

FORM GFR 22
Deleted

FORM GFR 22-A

Deleted

FORM GFR 22-B

Deleted

FORM GFR 23
Deleted

FORM GFR 23-A

Deleted

FORM GFR 24
Deleted

FORM GFR 25
Deleted

FORM GFR 25-A

Deleted

FORM GFR 26
Deleted

FORM GFR 27
Deleted

FORM GFR 27-A

Deleted
191
 FORM GFR 28
Deleted

FORM GFR 29
Deleted

FORM GFR 30
[ See Rule 275. (3) ]

Form of Cash Security Bond

KNOW ALL MEN BY THESE PRESENTS THAT I, A.B ……………………

am held and firmly bound unto the President of India, his successors and assigns
(hereinafter referred to as “Government”) in the sum of Rs.…………… (Rupees
………………… to be paid to the Government for which payment, well and truly to
be made, I bind myself, my heirs, executors, administrators and legal
representatives by these presents. Signed and dated this …………………… day of
…………………… two thousand and ……………………

2. WHEREAS the above bounden A.B was on the ……………………… day

of …………………… 20 ………………… appointed to and now holds the office of
……………………… in the office of …………………AND WHEREAS the said A.B.
……………………… by virtue of holding such office is bound to collect ……………
(here describe the nature of Cashier’s / Storekeeper’s / Sub -storekeeper’s /
Subordinate’s duties) and to keep and render true and faithful accounts of his
dealings with all property and money which may come into his hands or
possession or under his control, such accounts to be kept in the form and manner
that may, from time to time, be prescribed by duly constituted authority, and also to
prepare and submit such returns, accounts and other documents as may from time
to time be required of him.

3. AND WHEREAS the said A.B. ……………… has, in pursuance of Rule

270 of the General Financial Rules, 1963, delivered to and deposited with
…………………………… the above -mentioned ……………………………… sum of
Rupees………………… (Rupees. ………………………) in cash as Security for the
due and faithful performance by the said A.B. ……………………… of the duties of
his office and of any other office requiring security to which he may be appointed
at any time and of other duties which may be required of him while holding any
such office as aforesaid and for the purpose of securing and indemnifying the
Government against all loss, injury, damage, costs or expenses which the
Government may, in any way, suffer, sustain or pay, by reason of the misconduct,
neglect, oversight or any other act of omission of the said A.B. ………………… or
of any person or persons acting under him for whom he may be responsible.

192
 4. AND WHEREAS the said A.B. …………………… has entered into the
above Bond in the sum of ……………… conditioned for the due performance by
him the said A.B. ………………… of the duties of the said office and of other
duties appertaining thereto or which may lawfully be required of him and to
indemnify the Government against loss from or by reason of the acts or defaults of
the said A.B. ……………… and of all and every other person and persons
aforesaid.

5. NOW THE CONDITION OF THE ABOVE WRITTEN BOND is such that if

the said A.B. …………………… has whilst he has held the said office of
…………………… as aforesaid, always duly performed and fulfilled the duties of
his said office and if he shall, whilst he shall hold the said office or any other office
requiring Security to which he may be appointed, or in which he may act, always
duly perform and fulfil all and every duties thereof respectively and other duties
which may from time to time be required of him while holding any such office as
aforesaid, and shall duly pay into the Government Treasury at ………………… all
such moneys and securities for moneys as are payable or deliverable to
Government and shall come into his possession or control by reason of the said
office and if the said A.B. ……………… his heirs, executors, administrators or
legal representatives, shall pay or cause to be paid unto the Government the
amount of any loss or defalcation in the accounts of the said ……………………
within 24 hours after the amount of such loss and/or defalcation shall have been
demanded from the said A.B………………… by the ……………… such demand to
be in writing and left at the office or last known place of residence of the said
A.B……………………… and shall also at all times indemnify and save keep
harmless the Government from all and every loss, damage, actions, suits,
proceedings, costs, charges or expenses which has been or shall or may at any
time or times hereafter during he service or employment of the said A.B……………
in such office as aforesaid, or any such offices aforesaid be sustained, incurred,
suffered brought, sued or commenced or paid by the Government by reason of
any act, embezzlement, defalcation, mismanagement, neglect, failure misconduct,
default, disobedience, omission or insolvency of the said A.B…………………… or
of any person or persons acting under him or for whom he may be responsible,
them this obligation shall be void and of no effect, otherwise, the same shall be
and remain in full force. PROVIDED ALWAYS and it is hereby declared and
agreed by and between the parties hereto that the said sum of Rs….………
(Rupees ………………) so delivered and deposited as aforesaid shall be and
remain with the ………………… for the time being as such Security as aforesaid
with full power to the …………………for the time being as occasion shall require,
to apply the said sum of Rupees …………………… or any part thereof, in and
towards the indemnity of the Government or otherwise as a foresaid.

6. And it is hereby further agreed that in the event of the death of the said
A.B. ………………… or on the final termination of the service of the said
A.B…………………… whether as …………………as aforesaid, or otherwise or in
the event of the said A.B……………ceasing to hold any office requiring Security
the said sum or Rs…………………, (Rupees…………………) shall be retained by
Government for …………………… months after the said A.B……………… has
193
either died while holding the said office or has quitted the said office or has ceased
to hold any office requiring Security and the said sum or so much thereof as shall
then remain in deposit and shall not have been applied or appropriated as
aforesaid shall, on the expiration of the said period of …………………… months
be returned to the said A.B………………… or his heirs and legal representative,
as the case may be, without interest and this Bond shall remain with the
…………………… for recovering any loss, injury, damage, costs or expenses that
may have been sustained, incurred or paid by the Government owing to any act,
neglect or default of the said A.B………………………, or any such other person or
persons as aforesaid and which may not have been discovered until after his
death or the termination of his said service, or ceasing to hold any office for which
the Security was required.

PROVIDED ALWAYS that the return at any time of the said security shall
not be deemed to affect or prejudice the right of the Government to take
proceedings upon or under this Bond against the said A.B…………… or against
his heirs, executors, administrators or legal representatives after his death, in case
any breach of conditions of this Bond shall be discovered after the return of the
said security and the responsibility of the said A.B…………… or his estate, as the
case may be, shall at all times continue, and the Government shall be fully
indemnified against all such loss or damage as aforesaid at any time.

7. PROVIDED FURTHER, that nothing herein contained nor the security

here given shall be deemed to limit the liability of the said A.B………………………
in respect of matters aforesaid to the forfeiture of the said sum of Rs………………
(Rupees …………………) or any part or parts thereof and that should the said sum
be insufficient to indemnify the Government in full for any loss or damage
sustained by them in respect of matters aforesaid or any of them the said
A.B……………………… shall pay to the Government on demand such further sum
as shall be deemed by the ………………………… to the necessary, in addition to
the said sum of Rs……………(Rupees……………………) to cover loss or damage
as aforesaid and that the Government shall be entitled to recover such further sum
payable aforesaid in any manner open to them.

8. The Stamp Duty, if any, on this Bond shall be borne by the Government.

(1) Singed by the above bounden

in the presence of …………………………
(2) Singed for and on behalf of the President of India by
………………… the ……………… being the person directed or
authorized by him in that behalf in the presence
of………………………

194
 FORM GFR 31
[ See Rule 275. (3) ]

Form of Security Bond (Fidelity Bond deposited as security)

KNOW ALL MEN BY these presents that I, A.B……………………… of

……………………… and held and firmly bound unto the President of India, his
successors and assigns (hereinafter referred to as “Government”) in the sum of
Rs………………(Rupees…………………) to be paid to the Government for which
payment, well and truly to be made, I bind myself, my heirs, executors,
administrators, and legal representatives by these presents. Singed and dated this
……………………… day of ……………………20

2. WHEREAS the above bounden A.B…………………… was on the day of

………………… 20…………………… appointed to and now holds the office of
……………in the office of ……………AND WHEREAS the said A.B………… by
virtue of holding such office is bound to collect ……………………… (here describe
the nature of cashier’s /Storekeeper’s/Sub-storekeeper’s/sub-ordinate duties)
………………… and to keep and render true and faithful accounts of his dealings
with all property and money which may come into his hands or possession under
his control such accounts to be kept in the form and manner that may, from time to
time, be prescribed by duly constituted authority, and also to prepare and submit
such returns, accounts and other documents as may from time to time be required
of him.

3. AND WHEREAS the said A.B…………………has, in pursuance of Rule

270 of the General Financial Rules, 1963, delivered to and deposited with
……………… a Fidelity Bond issued by ……………Company for the sum of
Rs………………… (Rupees ………………) as Security for the due and faithful
performance by the said A.B………………… of the duties of his said office and of
any other office requiring security to which he may be appointed at any time and of
other duties which may be required of him while holding any office as aforesaid
and for the purpose of securing and indemnifying the Government against all loss,
injury, damage, costs, or expenses which the Government may, in any way, suffer,
sustain or pay by reason of misconduct, neglect, oversight or any other act of
omission of the said A.B……………………… or of any person or persons acting
under him or for whom he may be responsible.

4. AND WHEREAS the said A.B……………………… has entered into the

above Bond in the sum of ……………………… conditioned for the due
performance by him the said A.B…………………… of the duties of the said office
and of other duties appertaining thereto or which may lawfully be required of him
and to indemnify the Government against loss from or by reason of the acts or
defaults of the said A.B………………… and of all and every person and persons
aforesaid.

5. NOW THE CONDITION of the above written Bond is such that of the said
A.B…………………… has whilst he has held the said office of ……………………

195
as aforesaid always duly performed and fulfilled the duties of his said office and if
he shall, whilst he shall hold the said office or any other office requiring security to
which he may be appointed, or in which he may act, always duly perform and fulfil
all and every duties thereof respectively and other duties which may from time to
time be required of him while holding any such office as aforesaid, and shall duly
pay into the Government Treasury at ………………………… all such money and
securities for money as are payable or deliverable to Government and shall come
into his possession or control by reason of the said office and shall duly account
for and deliver up all moneys, papers and other property which shall come into his
possession or control by reason of the said office and if the said A.B………………
his heirs, executors, administrators or legal representatives shall pay or cause to
be paid unto the Government the amount of any loss and /or defalcation in the
accounts of the said …………………… within 24 hours after the amount of such
loss and /or defalcation shall have been demanded from the said A.B……………
by the ………………… such demand to be in writing and left at the office or last
known place of residence of the said A.B………………… and shall also at all times
indemnify and save, and keep harmless the Government from all and every loss,
injury, damage, actions, suits, proceedings, costs, charges and expenses which
has been or shall or may at any time or times hereafter during the service or
employment of the said A.B……………………… in such office as aforesaid, or any
such offices aforesaid, be sustained, incurred, suffered brought, sued or
commenced or paid by the Government by reason of any act, embezzlement,
defalcation, mismanagement, neglect, failure, misconduct, default, disobedience,
omission, or insolvency of the said A.B……………………… or of any person or
persons acting under him or for whom he may be responsible, then the above
written Bond shall be void and of no effect, otherwise the same shall be and
remain in full force.

6. PROVIDED ALWAYS and it is hereby declared and agreed by and

between the parties hereto that the said Fidelity Bond No……………… delivered
and deposited as aforesaid shall be and remain at the disposal of the said officer
for the time being or the Government as and for part and additional security over
and above the above written Bond to the Government, for the indemnity and other
purposes aforesaid with full power to the Government or an officer duly authorized
in that behalf to obtain and receive payment of the sum or sums of money
recoverable or to be received, upon or by virtue of the said Fidelity Bond or a
sufficient portion thereof and all benefits and advantages thereof and to apply the
same in and towards the indemnity as aforesaid of the Government.

7. AND it is hereby further agreed and declared by and between the parties
hereto that the said A.B……………………… shall keep the said Fidelity Bond
issued by the said company in full force by payment of the premia and as when
they fall due and by otherwise conforming to the rules of the said company relating
thereto.

8. PROVIDED ALWAYS that cancellation or lapse at any time of the said

Fidelity Bond shall not be deemed to affect or prejudice the right of the
Government to take proceedings upon or under this said Bond against the said
196
……………………… in case any breach of the condition of this Bond shall be
discovered after the cancellation or lapse of the said Fidelity Bond but he
responsibility of the A.B. ………………………… shall at all times continue and but
the Government shall be fully indemnified against all such loss or damage as
aforesaid at any time.

9. PROVIDED FURTHER that nothing herein contained nor in the Fidelity

Bond so deposited shall be deemed to limit the liability of the said A.B……………
in respect of matters aforesaid to the forfeiture of the said sum of Rupees
…………………… or part or parts thereof and that if the said sum be found
insufficient to indemnify the Government in full for any loss or damage sustained
by them in respect of matters aforesaid or any of them the said
A.B………………… shall pay to Government on demand such further sum as shall
be deemed by ………………………… to be necessary in addition to the said
Fidelity Bond of Rs………………………… to cover such loss or damage as
aforesaid and that the Government shall be entitled to recover such further sum
payable as aforesaid in any manner open to them.

10. The stamp duty, if any, on this Bond shall be borne by the Government.

Signature

1. Signed and delivered by the abovenamed

A.B…………….. in the presence of …………………..
2. Signed for and on behalf of the President of India by ……………… the
……………… being the person directed or authorized by him in that
behalf in the presence of ……………………

FORM GFR 32
[ See Rule 223 (2) (ii) ]

Form of written undertaking to be executed by an Undertaking /

Corporation wholly owned by the Central Government at the
time of sanctioning of a loan

Memorandum of written undertaking given on the ……………… day of

…………………… two thousand and ……………………… by a company
incorporated under the Indian Companies Act, 1913 /the Companies Act, 1956,
having its registered office …………………… a body corporate incorporate under
the same name and style and by under ……………… (Act No…………… of
……………) having its office at ……………………a society registered under the
Societies Registration Act (21 of 1860) having its office at………………
(hereinafter called ‘the Company / Corporation’ which expression shall include its
successors and assigns) to the President of India (hereinafter called ‘the
President’ which expression shall include his successors and assigns).
197
 WHEREAS the said Company / Corporation, etc., applied to the President
for a loan of Rs…………………… (Rupees………………………) only.

AND WHEREAS the President has agreed to lend an amount of Rs………

(Rupees………………………… only) to the said Company / Corporation, etc., on
the terms and conditions prescribed in the Government of India, Ministry of
……………………… (Department of ………………………) Letter / Office
Memorandum No……………………, dated…………………… (annexed).

Now IT IS HEREBY AGREED by the said Company / Corporation, etc.,

that, in consideration of the sum of Rs……………… (Rupees………………… only)
lent by the President to the Company / Corporation etc., the Company /
Corporation, etc., hereby agree in accordance with the said terms and conditions –

(i) To repay the loan in …………………… annual equal instalments the

first instalment repayable from the …………………… anniversary of
the date of drawal;
(ii) To pay interest at the rate or …………% per annum on the principal
payable on each anniversary; and
(iii) In case of default in the payment of the instalment of the loan in
accordance with (i) above and / or interest in accordance with (ii)
above, pay interest at penal rate of ……………………% per annum
on such overdue payments.

IT IS HEREBY FURTHER AGREED AND DECLARED that the said

Company / Corporation, etc., shall not, without the written consent of the
President, encumber or alienate, create, any mortgage lien or charge by way of
hypothecation, pledge otherwise, or create other encumbrances of any kind
whatsoever any part of its land or buildings or other structure, and / or plant,
machinery or any other fixed assets owned by them.

AND IT IS HEREBY AGREED that the said principal amount lent by the
President as aforesaid shall be used by the Company / Corporation, etc., only for
the purpose or purposes for which the aforesaid amount was sanctioned and for
no other purpose whatsoever.

IN WITNESS WHEREOF these presents have been executed by the said

Company / Corporation the day and year first above written.

THE PRESIDENT of India has agreed to bear the stamp duty, if any,
chargeable on this document.
Signed for and on behalf of…………………..
Company / Corporation, etc., by
Shri. ..………… (Name and Designation) in the presence of
1. ……………………………… Seal of the Company / Corporation
2. ………………………………

198
 FORM GFR 33
[ see Rule 255 (1) ]

Certificate of transfer of charge

Certified that I /we have in the forenoon / afternoon of this day respectively
made over and received charge of the Office………………………… in pursuance
or Order No……………………… dated ………………………………

Received Officer ………………………… Relieving Officer …………………………

Signature ………………………………… Signature …………………………………
(Name in Block Letters) (Name in Block Letters)
Designation……………………………… Designation…………………………………
Station …………………………………… Station ………………………………………
Date ……………………………………… Date …………………………………………

(For use in Audit Office / PAO only)

Noted in A/R at page …………………………

SO/AAO/AO/PAO
Noted in A/R at page……………………………
SO/AAO/AO/PAO

Forwarded …………………………………………………………………………………
NOTE :- Separate certificate (as per Form appended) also to be used
where transfer / assumption of charge involves responsibilities for Cash, Stores
etc.

FORM GFR 33 (APPENDIX)

[ See Rule 255 (1) ]

Certificate of transfer of charge in respect of transfer / assumption of

responsibilities for Cash, Stores, etc.

Certified that I/we have in the forenoon / afternoon of this day ……………
[date to be indicated] respectively made over and assumed charge and
responsibility of the following :-
Cash Rs…………………………………
Permanent advance Rs…………………
Others……………………………………

Relieved Officer…………………………..
Reliving Officer……………………………

199
 FORM GFR 33-A
“Ministry / Department of ………………………….

Joining Report

I hereby report myself for duty this day…………………… forenoon /

afternoon after availing of leave from ……………… to ……………………
sanctioned vide Ministry / Department of ……………………… Order
No……………, dated ………………………

Signature ……………………………
(Name in Block Letters)
Designation………………………….”

FORM GFR 34
[ See Rule 275. (3) ]

GENERAL INSURANCE CORPORATION OF INDIA

AND ITS SUBSIDIARIES

Fidelity Guarantee Policy

POLICY No.

IN CONSIDERATION OF the first premium shown in the First Schedule and

subject to the terms and conditions contained herein or endorsed herein which are
to be deemed conditions precedent to any liability on the part of the Life Insurance
Corporation of India (hereinafter called “Corporation”) so far as they relate to
anything to be done or complied with by the Employer, the Corporation agrees and
binds itself to make good and reimburse to the Employer all such direct pecuniary
loss not exceeding the amount of guarantee, as the Employer shall sustain by any
act or acts of dishonesty, default or negligence committed by the employed / any
of the employed (a) during the currency of this insurance and (b) during the
uninterrupted continuance of employment of such employed and (c) in connection
with his occupation and duties AND DISCOVERED during the currency of this
insurance or within a reasonable time thereafter or within twelve months after
determination of such employment whichever event shall first happen.

The proposal for this insurance made by or on behalf of the Employer

together with any correspondence relative thereto shall be incorporated herein and
be the basis of this contract and of every renewal.
200
 THE FIRST SCHEDULE

Name
The Employer Business THE PRESIDENT OF INDIA
Address

The Employed : through

The amount of Guarantee Rs.
Occupation and duties:
The first premium Rs.
The renewal date The ………day of ……… in each year.

The currency of this insurance: The period or periods from the date written
against the respective names of the Employed to the then next renewal date and
any year thereafter in respect to which the Corporation shall agree to accept and
Employer or Employed shall pay the annual premium specified in the Second
Schedule hereto.

THE SECOND SCHEDULE

Period Name Occupation Amount of Annual Actual
of Risk and duties Guarantee Premium Premium
Rs. Rs. P. Rs. P.

In witness whereof this Bond has been signed at ……………… this day of
…………………… 20
For1 ……………………………
Prepared by …………………………
Examined by…………………………

N.B.- For your own protection it is incumbent upon you to read you policy and its
conditions to ascertain that it is made out in accordance with your intentions.

CONDITIONS

In this policy the expression shall bear the respective meanings

attached to them I the First Schedule hereto

1
The name of the Company to be inserted in ink at the time of execution of this form.
201
 1. The Corporation shall not be liable to make any payment hereunder if
the nature of the business of the Employer of the duties or conditions of service
shall be changed or the remuneration or any of the Employed reduced without the
sanction of the Corporation or if the precautions and checks for securing accuracy
of accounts shall not be duly observed.

2. Notice in writing shall be given to the Corporation’s office as soon as

possible after any act or acts of dishonesty, default or negligence on the part of
any of the employed or of reasonable cause of suspicion thereof or any improper
conduct shall have come to the knowledge of the Employer or of any
representatives of the employer to whom is entrusted the duty of superintendence
over any of the Employed and no amount shall be payable under this policy in
respect of that Employed by reason of any act committed after such knowledge
shall have come to the Employer or his said representatives. Within three months
after such notice the Employer shall deliver to the Corporation full details of his
claim and shall furnish proof of the correctness of such claim. All books of
accounts of the Employer or any Accountant’s report thereon shall be open to the
inspection of the Corporation and the Employer shall give all information and
assistance to enable the Corporation to sue for and obtain reimbursement by any
one of the Employed or by his estate of any moneys which the Corporation shall
have paid or become liable to pay under this Policy. Provided always that the
Corporation shall not be entitled to the disclosure of any record or information in
respect of which the Employer is entitled to claim privilege in a Court of Law under
Sections 123 and 124 of the Indian Evidence Act.

3. Any moneys of any one of the Employed in respect of whom a claim is

made in the hands of the Employer and any money which but for any act of fraud
or dishonesty committed by such one of Employed would have been due to that
Employed from the Employer shall be deducted from the amount otherwise
payable under the Policy. Provided that the Employee is entitled under the law to
make such deduction. Provided further that in cases in which the loss to the
Employer is in excess of the maximum amount payable under the policy, the
moneys aforesaid will be applied in the first place to make good the amount of
such excess and the balance, if any, shall be deducted as herein provided. The
Employer and the Corporation shall share any other recovery (excluding insurance
and reinsurance and any counter security taken by Corporation) made by either on
account of any loss in the proportions that the amount of the loss borne by each
bears to the total amount of the loss.

4. Notwithstanding anything herein contained to the contrary it is also

agreed that the Corporation guarantees to the Employer that the Employed shall
honestly and faithfully account to the Employer for all moneys or valuables or
properly which they shall receive or be entrusted with on account of the Employer
either in their personal or individual capacity or as member of group working
conjointly with other members and that the Corporation will make good and
reimburse to the Employer such loss not exceeding the amount of guarantee as
the Employer may sustain by any act or acts of default or dishonesty or negligence
202
of the Employed in the capacity and employment aforesaid and that when
individual liability cannot be brought home to the Employed the amount to be
made good shall be that which falls to the share of the Employed calculating from
the total number of men forming such group, i.e., the total loss divided by the total
number of men employed on the particular work.

5. The Corporation also agrees that during the period in which the
guarantee shall be in force the particulars contained in the Second Schedule shall
be with the consent of Employer and on previous notice to an on payment to the
Corporation of any additional proportionate premium that may become payable in
consequence of any change in the employed by reason of promotion or otherwise
be varied as circumstances may require and such additional persona as may be
taken into the employment of the employer referred to in the Schedule hereof
during such period shall with such consent aforesaid and on previous notice to and
on payment to the Corporation of a further proportionate premium at the rate for
the time being applicable be added to and included in the said Schedule and the
expression Employed used throughout this policy shall as from the respective date
on which the names shall be included in the said schedule be deemed to include
all persons whether previously named in the said Schedule or subsequently added
thereto as aforesaid.

6. If any question or difference shall arise between the parties hereto or

their respective representatives touching these presents or the construction hereof
or as to the rights, duties or obligations of any persons hereunder or as to any
other matter in anywise arising out of or connected with the subject-matter of these
presents, the same shall be referred to a single Arbitrator to be named by the
Government of India. The Arbitrator so named shall be an officer of Government
and shall have all the powers conferred on Arbitrators under the Indian Arbitration
Act. The costs of the reference and award shall be in the discretion of the
Arbitrator. The making of an award in such reference shall be a condition
precedent to any liability of the Corporation or any right of action against the
Corporation in respect of such difference. If the Corporation shall disclaim liability
for any claim hereunder and such claim shall not within twelve calendar months
from the date of such disclaimer have been referred to arbitration under the
provision herein contained then the claim shall for all purpose be deemed to have
been abandoned and shall not thereafter be recoverable hereunder.

7. The expression “Government of India” for the purpose of Clause 6

above shall mean the Secretary to the Government of India in the Administrative
Ministry / Head of Department under which the employed is working.

203
204
 FORM GFR 35
[ See Rule 190. (2) (iii) ]

ACCESSION REGISTER

Date Access- Author Title Vol. Place and Year of Pages Source Class Book Cost Bill Withdrawn Remarks
ion Publisher Publication No. No. No. date
Number and
date
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15)
 FORM GFR 36
[ See Rule 220. (1) (viii) ]

Notice to Borrower about the Due Date for repayment of

loan and interest thereon

No………………………
Office of the Controller of Accounts, Ministry / Department of ………………
New Delhi, dated the ……….

To
……………………………
……………………………

Subject :- Repayment of loan and payment of interest thereon.

Dear Sir,
According to the terms of the loan of Rs………………… sanctioned to you,
vide the Ministry / Department ………………………… Letter No……………………,
dated………………………… the annual repayment instalment and / or interest
thereon, detailed below, will become due on…………………………

(i) Repayment ……………………… Rs……………………………

(in words and figures)
(ii) Interest …………………………… Rs……………………………
(in words and figures)

2. Please arrange the payment by the due date. It should be noted that the
amount of interest has been calculated on the assumption that payment will be
arranged promptly; otherwise it will be revised upwards in accordance with the
terms of the loan.

3. The amounts due should be tendered, on or before the due date at the
…………………… (New Delhi Head Office / Main Office of the Public Sector Bank
(PSB) accredited to the Ministry / Department in cash or by cheque or draft drawn
on any Scheduled Bank / New Delhi, in favour of the aforesaid PSB Branch. The p
payment should be accompanied by a memorandum or challan, in duplicate,
giving the following details :-

(i) Name of the Ministry / Department………………………………

(ii) Name of the Borrower …………………………………………
(iii) No. and date of loan sanction letter with the loan amount
sanctioned ………………………….
(iv) Amount due for payment, separately for interest and
payment…………………………
(v) Due date of payment……………………………

205
 (vi) The head of the account indicted below, to which the amounts
will be adjusted in Government accounts, should be included
in the challan:

Head of Account
(i) Instalment of Principal.
(ii) Interest.

4. Separate cheque / draft and challans should be submitted for payment of

principal and interest.

5. For outstation loanees, payment of dues together with memorandum /

challans is to be arranged through their Bank to the aforesaid PSB Branch in New
Delhi by the due date.

Yours faithfully

Accounts Officer

FORM GFR 37
Deleted

206
 SI. No

1
Policy No.

2
Name of Policy holder

3
Designation

4
Monthly Premium rate

5
April

6
May

7
8 June

July
9

August
10
FORM GFR 38
[ See Rule 274 (2) ]

September
11
Register of Policy Holder

October
12

November
13
Amount actually recovered

December
14

January
15

February
16

March
17

Remarks
18
 FORM GFR 39
[ See Rule 212 (4)]

Register of Grants to be maintained by the sanctioning Authority

(i) Serial Number.

(ii) Number and date of sanction letter.
(iii) Purpose of grant.
(iv) Conditions, if any, attached to the grant.
(v) Amount sanctioned.
(vi) Amount of the Bill.
(vii) Whether conditions attached to the grant have been accepted by the
grantee without reservation.
(viii) Dated initials of the sanctioning authority.
(ix) Date by which statements of accounts along with utilization certificate, etc.,
are required to be furnished by the grantee.
(x) Date by which utilization certificate is required to be furnished by
sanctioning authority to the Accounts Officer, as the case may be.
(xi) Date by which the statements of accounts, etc., are actually received. (In
case there has been delay in the receipt of these statements, the reasons
therefor as well as efforts made by the sanctioning authority to expedite
submission of such statements may be clearly indicated).
(xii) Date of submission of utilization certificate to PAO (in case there has been
delay in submission of utilization certificate, the reasons therefor may be
clearly indicated).
(xiii) Unspent balance, if any, also indicating whether the unspent balance has
been surrendered by the grantee Institution / Organisation.

208
 FORM GFR - 40
[ See Rule 190. (2) (i) ]

REGISTER OF FIXED ASSETS

Name and description of the Fixed Assets ________________________

Date Particulars of Particulars of supplier Cost of Location of Remarks
Asset the Asset the Asset
Name and Bill No. and
address date
1 2 3 4 5 6 7

NOTE : The items of similar nature but having significant distinctive features (e.g.
study table, office table, computer table, etc.) should be accounted for separately in
stock.

209
 FORM GFR - 41
[ See Rule 190. (2) (ii) ]

STOCK REGISTER OF CONSUMABLES SUCH AS STATIONERY, CHEMICALS,

SPARE PARTS ETC.

Name of Article __________________ Unit of Accounts ___________________

Date Particulars Suppliers Receipt Issue Issue Balance Unit

Invoice No. Voucher Price
and Date No.
1 2 3 4 5 6 7 8

NOTE : User's indent in original shall be treated as issue voucher. Issue voucher
number shall be in consecutive order, fi nancial year wise and it should be noted on
each indent.

210
 FORM GFR - 42
[ See Rule 190. (2) (iv) ]

REGISTER OF ASSETS OF HISTORICAL / ARTISTIC VALUE

Name of Asset _____________________

Date of Source of Cost price, Particulars which Particulars of the Location of Remarks
acquisition acquisition if any make it an asset of custodian of the asset the asset
historic / artistic value

NOTE 1 : The custodian shall take appropriate measures for preservation of the assets.

NOTE 2 : The present value of the asset should be ascertained by obtaining appropriate valuation from an expert agency
and the same is indicated in Column 3, every five years.
 FORM GFR - 43
[ See Rule 249. (2) ]
GOVERNMENT GUARANTEES
Name of Ministry / Department
[ Rs. In crore ]
SI. No Beneficiary Loan Authority for Period of Purpose Class Sector Details of Details of Amount of
[Name of the Holder / Guarantee validity [ MOF ID of Loan Reschedule Securities Loan
PSU etc in Entity [MoF No., & date pledged
whose favour giving approval No. through which
guarantees is Loan & Date] the guarantee
given] was last
extended]
1 2 3 4 5 6 7 8 9 10 11

Extent of Additions Deletions Invoked Outstanding Rate of Guarantee Fee/ Other

Guarantee Principal, Guarantee Commission conditions &
Total Discharged Not interest etc at Fee/ Receivable Received compliance
Principal

Interest

discharged the end of the Commission

period

12 13 14 15 16 17 18 19 20 21 22 23

NOTES - 1 : For the purpose of Column - 8 the sectors are as under :-

(i) Power (ii) Cooperative (iii) Irrigation (iv) Roads & Transport (v) Urban Development & Housing
(vi) Other Infrastructure (vii) Any other.
2 : For the purpose of Column - 7 the classification is indicated in Rule 249 (4).
 FORM GFR 44
[ See Rule 252. ]
Furnishing of data regarding Guarantees to Ministry of Finance

Name of the Ministry / Department :

Name of Public Sector Undertaking / entity :
Year Turnover Profit Sundry Current If audited by In case of
After tax Debtors Ratio CAG, profit after targets set
tax, taking into by BIFR the
account the same for
comments of Turnover
CAG and Profit.
X-2
X-1
X*
Where 'X' is the immediate preceding financial year.

2. In case of proposal seeking extension of guarantee it may specifically be

indicated whether the guarantee fee for the preceding financial has been paid or not.
The amount paid and date of payment should be indicated. In case of default in
payment it may be indicated whether default fee in terms of Rule 247 (2) has been
levied.

213