DELEGATION OF FINANCIAL POWERS RULES, 1978

Definitions:

Head of Department: Any authority specified in Schedule-I and

includes such other authority, as Departments may specified, as Head of
Department, provided he is the head of an identifiable organisation and
minimum of his grade not lower than the Deputy Secretary.

Head of Office: Head of Office is an authority normally a gazetted

officer declared as such under Rule 14 of Delegation of Financial Powers
Rules, 1978.

Subordinate Authority: Subordinate authority is the Department of

Central Government or any other authority who is subordinate to President.

State the limitations on the powers of Expenditure?

(i) No expenditure should be incurred except on the legitimate object of

public expenditure;

(ii) A subordinate authority can incur an expenditure or sanction advance

of public money only if he is authorised by any provision of law or any
rule or any order issued by President of India or by any other competent
authority;

(iii) A subordinate authority cannot exercise the powers in pre-para to

sanction any new expenditure involving introduction of a new policy or
principle which is likely to lead to an increased expenditure in future
unless the entire expenditure is scrutinised and approved by Ministry of
Finance;

(iv) All financial powers not specifically delegated to any other authority is
vested with Ministry of Finance. These powers are called residuary
powers.

What do you mean primary units of appropriation – give five examples?

– Very Important

Primary units of appropriation means a sub-head or standard object

against which a provision for expenditure exists.
 Main demands for grants are included in the budget. After passage of
Appropriation Act, Ministry of Finance withdraws this money from
Consolidated Fund of India and distribute among the Departments as per
their Demands for grants, as approved by Parliament. This is distributed
under various sub-head/standard objects against which a provision for
expenditure exists and where such expenditure is accounted for. In other
words each Sub Head against which a provision for expenditure exists, is
called primary units of appropriation. This includes provision for both charged
and voted expenditure. There are 27 sub-heads. Ministry of Finance is
competent to add/delete or modify or recast the entire set of primary unit of
appropriation.

A few examples of primary units of appropriation are:

(i) Salaries, wages, Dearness Allowances, Over Time Allowance,

Domestic Travel Expenditure, Publication, Major Work, Write off Losses,
Motor Vehicles, Foreign Travel Expenses, Office Expenses, Advertisement
etc;

(ii) After 1995, the Primary Units of appropriation has been modified.
Earlier these were, 3 heads – Major Had, Minor Head and Sub-head. At
present there are 6 tier of classification namely – Major Head, Sub-major
Head, Minor Head, Sub Head, Detailed Head and Object Head. Now, the
expenditure appears in the Object Head, instead of Sub-Head.

After 1995, the entire set has been classified under seven groups:

(a) Personnel Service;

(b) Administrative Expenses;

(c) Contractual Services;

(d) Grants;

(e) Other Expenses;

(f) Acquisition of Capital Assets; and

(g) Accounting adjustments.

What are the restriction on appropriation and re-appropriation? – Very
Important (PQ)

The restrictions are three fold:

(A) Omnibus restrictions (Totally in-admissible);

(B) Permissible only with the approval of Finance Ministry;

(C) Which are within the powers of Department.

(A) Totally in-admissible:

(i) Any expenditure not sanctioned by the competent authority;

(ii) To meet a votable expenditure from charged expenditure and vice-

versa;

(iii) To meet an expenditure of one grant of charged expenditure to another

grant of charged expenditure;

(iv) An expenditure on new service or new instrument of service which has

not been contemplated in the budget;

(v) From capital sector to Revenue sector;

(vi) To meet an expenditure from and to travel abroad of scientist;

(vii) Funds from salary cannot be re-appropriated to any other head;

(viii) To meet an expenditure on public work which did not receive

administrative approval or expenditure sanction or technical sanction.

(ix) No re-appropriations is permissible from the funds allotted to externally

aided projects for non-externally aided projects;

(x) To meet an expenditure on public work not provided in the budget but
costing 50 lacks and above;

(xi) Any order for re-appropriation which has the effect of increasing the
budget provision under a sub-head by more than 25% of budget
estimate are 5 crore, whichever is more, should be reported to
Parliament.
 However, the Department has powers for augmenting the provisions of
the heads relating to medical expenses, pension charges, wages and
salaries.

(B) Appropriation/re-appropriation only with the approval of Ministry

of Finance

(i) Plan to Non-plan;

(ii) For and from Secret Service Expenses;

(iii) From any provision made for new service or new instrument of service;

(iv) To augment secretarial expenditure;

(v) From Capital outlay to loan outlay and vice versa;

(vi) From Major Work to other units;

(vii) To augment the Salaries, Wages, Office Expenses and other charges
taken together. However, Ministry of Information & Broadcasting is
competent to appropriate “Allowance to Artists” within the group;

(viii) To increase the provision under Travel Expenses exceeding 10% of the
existing provision;

(ix) To meet an expenditure relating to public work costing 10 lacks and

above but less than 50 lacks;

(x) To meet an expenditure on work in excess of 15% of the limit of the

budget provision subject to the savings being available under the same
work head;

(xi) No diversion of fund for travel expenditure even from Secretarial

Expenditure. Similarly no diversion of funds from other heads to
Secretarial expenditure.

(C) Which are within the Powers of Departments:

(i) From Non-plan to plan if no foreign exchange is involved;

(ii) From plan to plan, if no foreign exchange is involved;

(iii) Increase in travel expenditure upto 10% of the total provision by re-
appropriation from other heads;
(iv) An expenditure on public work less than Rupees10 lacks, even if it is
not included in the budget.

Creation of Posts:

General Condition:

(i) No post can be created in the Secretariat office of the Department in

the scale of pay or ate of pay, unless there is already a post in the
Secretariat, approved by President;

(ii) No post can be created under the Administrator or Head of Department

unless there exists in the same or any other non-secretariat office a
post which is of similar character in a scale approved by President;

(iii) No permanent post can be created without the concurrence of Ministry

of Finance and unless savings are established in the succeeding years;

(iv) No temporary post can be created unless funds are made3 available by
valid appropriation;

(v) The powers to create a permanent post can be exercised to create

similar supernumerary post;

(vi) The powers can be used to create the post of Officer on Special Duty
(OSD);

(vii) The powers to create a post cannot be used to upgrade a post because
upgradaton is technically abolition of a post and creation of another
post;

(viii) The powers cannot be exercised to add such post to any service or
Cadre unless such service or Cadre is under such authority
(Exceptions: Central Secretariat Clerical Service and CSSS);

(ix) Standard scales should be observed wherever laid down. (Examples:

Personal Staff of Ministers, Stenographers, Group ‘D’ officials etc.);

(x) Retrospective creation of post is permissible only with the approval of

Finance Minister;

(xi) Internal Work Study Unit/Staff Inspection Units should always be

consulted when additional post are created due to increase in work or
re-organisation of staff.
Write short note on Supernumerary posts.

Supernumerary post is always a permanent post, over and above the

sanctioned strength. It is always a shadow post. No duties are involved. It
does not lead to working strength. It does not involve additional expenditure.
This permanent post is created to accommodate a permanent official who
was left without lien and has to be accommodated against a permanent post.
Though it is a permanent post it is created for a specified period. If the
permanent official for whom supernumerary post has been created is
adjusted against another permanent post, the supernumerary post stands
abolished. The administrative authority should maintain a record of
supernumerary posts with details of individuals and progressive abolition of
such posts.

Write short note on Officer on Special Duty (OSD).

The post of OSD can be created if it is equated to any sanctioned post

having comparable nature of duties. Though the officer is designation as
OSD, the post will be in the grade of any of the sanctioned post like, Under
Secretary, Deputy Secretary, Director or Joint Secretary etc. Nevertheless if
a post of OSD is to be created on a special scale, then the approval of
Department of Expenditure is essential in the event of such a OSD post is
created on a different scale of pay, the Department cannot show this as a
precedent to create another post of OD in the special scale.

Powers of Subordinate authority and Powers of Delegation and Re-

delegation

The department may confer its powers to Head of Department or to any

other subordinate authority subject to the condition that no powers can be re-
delegated with regards to:

(i) Creation of post;

(ii) Write of losses;

(iii) Re-appropriation of funds exceeding 10% of the original budget

provision for either of the primary units.

The Head of Department can authorise a gazetted officer to exercise all

or any of the powers conferred on him through an order in writing. However,
he will be personally responsible for the correctness, regularity and propriety
of decisions.
 Similarly, the Department or Head of Department can declare any
gazetted officer subordinate to them as Head of Office provided not more
than one gazetted officer shall be declared as such in respect of same office,
unless such an office is strictly separate from the other.

Insurance of Government Property: Government property whether

movable or immovable should not be insured. No authority shall undertake
any expenditure on liability in connection with the insurance of such property
without the concurrence of Ministry of Finance. However, following are the
exceptions:

(i) The Department may incur expenditure on the insurance of any material
or equipment which has taken as loan or aid from foreign Government or
international bodies or other organisations abroad, if the insurance is a
condition within the terms of contract;

(ii) Where the booking of goods by rail or road, and enhanced risk rate in
the nature of insurance has been provided;

(iii) An expenditure not exceeding Rs.20,000/- (Annual premium limit) in

each case can be incurred on costly, extremely delicate, highly sensitive and
sophisticated equipment of fragile nature, purchased abroad which are not
easily replaceable and for which the insurance is considered desirable in
public interest.

In all these cases, the Department will effect insurance only with the
National Insurance company.

Write off Losses: Write off losses i.e. remission of disallowances by

audit and writing off overpayment.

The Department or any other subordinate authority to whom the power

have been specially delegated, can waive the recovery of an amount
disallowed by audit or otherwise found to have been overpaid subject to the
following conditions:

(i) If the amount was drawn by the Government servant under a

reasonable belief that he was entitled to it;

(ii) The recovery would be impossible or the recovery would cost undue
hardship.
Notwithstanding the above, the authority has no powers in the following
cases:

(a) Recovery relates to gazetted Officer;

(b) Where the amount to be recovered does not exceed two months pay;

(c) Where the overdrawal was disallowed after one year from the date of
payment;

(d) The overpayment was in the nature of pay and overdrawal was caused
by the delay in notifying the promotion or reversion.

Powers regarding Schemes & Project

Rule – 18: Schemes & Projects from Planned Expenditure

(i) The Department can sanction a plan project, the outlay of which is less
than 25 crore, provided the scheme has been approved by Ministry of
Finance. The scheme is appraised by the Ministry and approved by Minister
in charge.

(ii) Any plan project involving 25 crore and above but less than 100 crore,
appraised by Standing Finance Committee and approved by Minister in
charge;

(iii) Any project involving an investment of 100 crore and above but less
than 300 crore, should be appraised by Expenditure Finance Committee to be
chaired by Secretary of the Administrative Ministry and to be approved by
Minister-in-charge of the Administrative Ministry, if the investment is less than
150 crore and Minister-in-charge of the Administrative Ministry and Finance
Minister, if the investment is 150 crore and above but less than 300 crore;

(iv) Any plan project involving an investment of Rs.300 crore and above,
should be appraised by Expenditure Finance Committee to be chaired by
Secretary Expenditure, if financial returns are not quantifiable and by Public
Investment Board, otherwise. After appraisal by the respective agencies
these schemes should be approved by Cabinet or Cabinet Committee on
Economic Affairs.
Following are the composition of Committees:

(i) Standing Finance Committee: Secretary Administrative Ministry –

Chairman, Financial Advisor – Member Secretary, Joint Secretary/Director of
the concerned Division, representative of Planning commission and any other
agencies as special invitees.

(ii) Expenditure Finance Committee: Chaired by Secretary of the

Administrative Ministry comprises, Financial Advisor, Joint Secretary of the
Division, representatives of Planning Commission, representatives of
Department of Expenditure as Members and representatives of other
agencies as special invitees.

(iii) Expenditure Finance Committee : Headed by Secretary, Department

of Expenditure, consists of Secretary Administrative Ministry, Joint Secretary
(Administration), Financial Advisor, Planning Commission representative as
members and representative of other agencies as special invitees.

Public Investment Board: The composition of Public Investment Board is

Secretary, Department of Expenditure – Chairman, Secretary Planning
Commission, secretary Industrial Promotion & Policy, Secretary Heavy
Industry, Secretary Department of Public Enterprises, Secretary Environment
& Forests and Secretary of the Administrative Ministry as Members.
Financial Advisor will be Member Secretary.

The Powers in respect of Non-Planned Expenditure:

(i) Upto 20 crore – Ministry appraises and approval by Minister-in-charge;

(ii) Beyond 20 crore and upto 50 crores – appraised by Standing Finance

Committee (Same composition as plan projects) and approved by Minister-in-
charge;

(iii) Beyond 50 crores but less than 75 crores, appraised by Standing

Finance Committee with a representative from Department of Expenditure
and approved by Minister-in-charge of the Administrative Ministry;

(iv) 75 crores and above but less than 150 crores appraisal by Committee
on Non-plan expenditure and the approval by Minister-in-charge;

(v) 150 crores and above but less than 300 crores – appraised by
Committee on non-plan expenditure and approved by Minister-in-charge of
the Administrative Ministry and Finance Minister.
(vi) Rs.300 crores and above – to be appraised by Committee on non-plan
expenditure and approved by Cabinet Committee on Economic
Affairs/Cabinet.

(vii) The Committee on non-plan expenditure should examine all proposals

for new autonomous organisation irrespective of outlay;

(viii) The committee on non-planned expenditure comprises Secretary

Expenditure as Chairman, Secretary of the Administrative Ministry, Secretary
Planning Commission, Secretary Industrial Policy & Promotion, Secretary
Heavy Industry, Secretary Department of Public Enterprises and other
agencies involved in appraisal. Financial Advisor is the Member Secretary.

Sale or Dismantlement of Government Buildings:

The Department has full powers to sanction sale or dismantlement of

public building, provided these powers are exercised with the concurrence of
Financial Advisor and subject to the following conditions:

(i) The proposed building is not required by any other Department;

(ii) The structure is too dangerous and the repairs are too uneconomical;

(iii) The sale or dismantlement should be done only through public auction
through CPWD, if any and if not through PWD of the state.