Government of India

BUDGET MANUAL

MINISTRY OF FINANCE
DEPARTMENT OF ECONOMIC AFFAIRS
BUDGET DIVISION
NEW DELHI

SEPTEMBER, 2010
BUDGET MANUAL

MINISTRY OF FINANCE
DEPARTMENT OF ECONOMIC AFFAIRS
NEW DELHI
 |ÉhÉ¤É àÉÖJÉVÉÉÒÇ ÉÊ´ÉkÉ àÉÆjÉÉÒ, £ÉÉ®iÉ
PRANAB MUKHERJEE FINANCE MINISTER
INDIA

MESSAGE

I am happy to note that the Budget Division of Department of Economic Affairs,

Ministry of Finance, is bringing out a Budget Manual. This is the first time that such a
manual is being brought out for Government of India. The Budget process of our country
predates the independence. Budget was first introduced on 7th April, 1860, two years
after the transfer of Indian administration from East-India Company to British Crown. The
first Finance Member, who presented the Budget, was James Wilson. Mr Liaquat Ali
Khan, Member of the interim Government presented the budget of 1947-48.
After Independece, India’s first Finance Minister Shri R.K. Shanmukham Chetty, presented
the first Budget on 26th November, 1947. Since then, this has evolved over the past six
decades to reflect the strength of our democratic processes in shaping our economy.
It has emerged as a crucial tool for Public Finance Management.

I congratulate the Budget Division for taking this initiative in preparing the Union
Government Budget Manual. This Manual is expected to serve as a comprehensive
reference material not only to the officers involved in the Budget process but other users
and interested stakeholders as well. I am sure this Budget Manual will be a valuable
document in understanding the processes and nuances relating to the Union Government
Budget

(Pranab Mukherjee)
 FOREWORD

The Budget Manual is a comprehensive document which captures the content of the Union
Budget as well as the procedures and activities connected with the preparation of the Annual
Budget. The processes and guidelines have been simplified and put in a logical sequence for
easy comprehension. The Annexes have been added wherever required for providing a more
holistic perspective on related matters.

2. The Budget related instructions and guidelines were till now available in the form of executive
instructions and guidelines etc. including the annual Budget Circulars. These, however, did not
cover many facets of the Budget making process. There was, therefore, a felt need for a
comprehensive Manual to bring together the entire Budget related features and activities. This
Manual unravels the detailed processes involved in the entire gamut of Budget preparation. It is
also expected to bring about greater transparency on the subject.

3. This Manual would provide deeper understanding to the officials of Ministries/Departments

of their roles and responsibilities with respect to preparation of documents and statements included
in the Budget. It is expected to serve as a guidebook for uniform administration of the Budgeting
procedures and practices in the Government of India including the line Ministries and Departments.

4. I would like to place on record the excellent work done by the Budget Division of Department
of Economic Affairs in preparing this Manual. It has evolved as a result of wide consultations
through the two sub-committees appointed for the purpose comprising of past and present Budget
Division officers as well as valuable suggestions and inputs provided by the Under Secretaries
and Deputy Directors of Budget Division. The role of Additional Secretary (Mrs. L.M. Vas) in
conceptualizing and preparing the detailed outline of the Manual and Joint Secretary Budget
(Shri Shaktikanta Das) in heading the sub-committees and providing necessary guidance and
support have been crucial.

5. Finally, this being the first Budget Manual of the Government of India, I would be grateful
for suggestions to bring about further improvements, if any, and also for bringing to our notice any
error, inaccuracy or omission for correction in the next edition.

(Ashok Chawla)
Finance Secretary

New Delhi,
September 1st, 2010
 PREFACE

Budget Manual is a compendium of general provisions and procedures relating to Budget

making to be followed by all offices in the Union Government which are involved in the budgeting
exercise and dealing with matters relating to Budget. This Manual is an attempt to cover the
existing void faced hitherto due to the lack of a comprehensive guidebook on the subject matter
of Budget process in the Central Government. An attempt has been made to incorporate all the
issues related to Budget so as to make it a comprehensive one stop guidance material.
2. The purpose of this Budget Manual is to provide a guidance material and a training tool for
the managerial and supervisory staff and above all to the employees dealing with the Budget and
Budget related issues. It provides a comprehensive outline of the processes of budgeting, and
other related issues along with various legislative and administrative policies, principles and
practices which outline the budgeting system in India. The effort has been to draft this Manual in
the form of a simple and usable document and as far as possible, to comprehensively outline the
procedures and practices in vogue including the detailed check-lists and the mechanisms involved
in its operation. The Manual attempts to outline in a linear fashion the entire chain of events
leading to the presentation of Union Budget and passing of the related Appropriation Bills.
3. Chapter I is introductory in nature and brings out the meaning and importance of Budget,
the important Constitutional provisions related to Budget, the various Budget documents and
their composition and the recommendations of the Estimates Committee on the Form and Contents
of Demands for Grants. Chapter II of the Manual deals with the Organizational aspects bringing
out the roles and responsibilities of the Parliament and the Parliamentary Committees and the
responsibilities of various wings of the Executive in the Budget making process. Chapter III of the
Manual deals in a comprehensive manner with the Structure of Government Accounts and the
classification system. This is very crucial for any budgetary process since the budgetary and
accounting classifications follow a common pattern and their clear understanding is crucial for
any analysis on Budget and the related provisions. A detailed analysis of the three Funds viz. the
Consolidated Fund of India, the Contingency Fund of India and the Public Accounts of India has
also been dealt with in this Chapter.
4. Chapters IV and V are the core of this Manual. Chapter IV brings out the entire chain of
Budget preparation process right from the issue of the Annual Budget Circular. It deals in great
detail with the process of estimations relating to receipts and expenditure and the consequent
compilation of the Statement of Budget Estimates. All the related formats of estimation have
been dealt with briefly in this Chapter in a sequential manner. Chapter IV also deals with the
process of Pre-Budget meetings and the various instructions relating to furnishing of information
by the Ministries/Departments for the preparation of Budget Statements. Chapter V of the Manual
brings out the calendar of Budget activities and timelines including those in the Parliament. This
Chapter also brings out in minutest detail the duties and responsibilities relating to various Budget
documents/statements explaining alongside the process of their compilation. The checklists used
internally for the preparation of various Statements in the Budget documents have been made a
part of this Chapter for easy reference and understanding by all users. This Chapter also brings
out the process of Budget related security arrangements including the system of Lock-in and the
processes and check-lists for the preparation of State Budgets while under President Rule.
5. Chapters VI and VII of the Manual deal with the issues relating to Budget Implementation
and their Reporting and Evaluation respectively. Chapter VI apart from others outlines the role of
Departments in spending and control, cash management and the much in use processes of Re-
appropriations, Supplementary Demands for Grants and the related provisions in the General
Financial Rules and the Delegated Financial Powers Rules. This Chapter also deals with some
common Budget related irregularities which can be avoided by taking precautionary measures.
The last Chapter of the Manual brings out the main Budget related Reporting and Evaluation
processes including the Act provisions, guidelines and instructions relating to FRBM Statements,
Outcome Budget, Mid-term Evaluation of Plan Schemes, Audit Reports of C&AG and the reviews
by the Public Accounts Committee. The Manual also includes a number of Annexes wherever
required for providing a more holistic perspective on the subject matters dealt with in the related
Chapters.

(Shaktikanta Das)
Joint Secretary- Budget
 CONTENTS

Page No.

GLOSSARY OF IMPORTANT BUDGET RELATED TERMS 1-3

Chapter I 4-13
INTRODUCTION 4
MEANING AND IMPORTANCE OF THE BUDGET 4-6
IMPORTANT CONSTITUTIONAL PROVISIONS RELATED TO BUDGET 6-8
BUDGET DOCUMENTS 8-9
RECOMMENDATIONS OF THE ESTIMATES COMMITTEE ON THE FORM AND
CONTENTS OF DEMANDS FOR GRANTS 9-12
SOME OTHER IMPORTANT BUDGET RELATED DOCUMENTS 12-13

Chapter II - Organizational Aspects 14-30

ROLE OF THE PARLIAMENT 14
PRESIDENT’S APPROVAL 14
SUMMARY FOR THE PRESIDENT 14-15
SUMMARY FOR THE CABINET 15
BUDGET PRESENTATION 15
GENERAL DISCUSSIONS 15
CUT- MOTIONS 15-16
GUILLOTINE 16
APPROPRIATION BILL 16
FINANCE BILL 16-17
VOTE ON ACCOUNT 17
ROLE OF THE EXECUTIVE IN THE BUDGET PROCESS 17
MINISTRY OF FINANCE- DEPARTMENT OF ECONOMIC AFFAIRS 17-18
ROLE OF BUDGET DIVISION IN THE DEPARTMENT OF ECONOMIC AFFAIRS (DEA) 18-19
DEPARTMENT OF EXPENDITURE 19-21
OFFICE OF CONTROLLER GENERAL OF ACCOUNTS (CGA) IN THE DEPARTMENT
OF EXPENDITURE 21
ADMINISTRATIVE MINISTRIES 21
ROLE OF FINANCIAL ADVISERS 21-22
BUDGET RELATED CHECKS AT THE END OF FINANCIAL ADVISERS 22-23
PLANNING COMMISSION 23
PLANNING PROCESS 23-25
FINANCE COMMISSION 25
RESERVE BANK OF INDIA 25-26
ACCOUNTABILITY CHECKS ON EXECUTIVE 26
ESTIMATES COMMITTEE 26-27
COMITTEE ON PUBLIC UNDERTAKINGS 27
DEPARTMENT RELATED STANDING COMMITTEES 27-28
RAILWAY CONVENTION COMMITTEE 28
PUBLIC ACCOUNTS COMMITTEE 28
THE ROLE OF COMPTROLLER AND AUDITOR GENERAL OF INDIA 28-30

Chapter III - Structure of Government Accounts 31-39

CONSOLIDATED FUND OF INDIA (PART-I) 31
CONTINGENCY FUND OF INDIA (PART-II) 31-32
PUBLIC ACCOUNT (PART-III) 32
UNION GOVERNMENT ACCOUNTS 32

(i)
 (ii)
Page No.
STEPS IN THE ACCOUNTING PROCESS 32-33
ACCOUNTING SYSTEM 33
CLASSIFICATION OF TRANSACTIONS 33
SIX TIER ACCOUNTING CLASSIFICATION AND WHAT EACH TIER SIGNIFIES 34
CLASSIFICATION SYSTEM 34
LIST OF MAJOR AND MINOR HEADS OF ACCOUNTS 34
CODING PATTERN 34-35
IMPORTANCE OF OBSERVING CORRECTNESS IN CLASSIFICATION
CO-RELATING TRANSACTIONS AS CLASSIFIED IN THE BUDGET/ACCOUNTS
WITH THE FUNCTIONS 35-36
PROCEDURE FOR OPENING NEW HEADS OF ACCOUNTS 36
UNIFORMITY IN STRUCTURE OF ACCOUNTS OF UNION AND STATE GOVERNMENTS 36
ECONOMIC AND FUNCTIONAL CLASSIFICATION OF THE BUDGET 37
FINANCE ACCOUNTS 37-38
APPROPRIATION ACCOUNTS 38-39

Chapter IV -The Budget Process 40-87

BUDGET PREPARATION 40
BUDGET CIRCULAR 40
REVENUE RECEIPTS 40-41
APPENDIX I - REVENUE/CAPITAL RECEIPTS 42
APPENDIX IA - REVENUE RECEIPTS-DIVIDENDS 43
APPENDIX IAA - REVENUE RECEIPTES-DIVIDENDS 44
APPENDIX IB - REVENUE RECEIPTS 45-46
ESTIMATES OF INTEREST RECEIPTS 46
APPENDIX II - ESTIMATES OF INTEREST RECEIPTS AND LOAN REPAYMENTS 47
APPENDIX IIA - ESTIMATES OF LOAN/INTEREST REPAYMENT BY
CENTRAL PSUs/OTHER PARTIES 48
CAPITAL RECEIPTS 49
PUBLIC ACCOUNT 49
APPENDIX III - CAPITAL RECEIPTS 50
ESTIMATES OF EXPENDITURE 51-52
PLAN PROVISIONS FOR NORTH EASTERN REGION AND SIKKIM 52
OTHER INSTRUCTIONS ON PREPARATION OF STATEMENT OF
BUDGET ESTIMATES 53
SANCTION OF ESTIMATES: (FINE TUNED) 53
SUBMISSION OF ESTIMATES FOR PRE BUDGET DISCUSSION 53-54
APPENDIX - IV - EXPENDITURE 55
APPENDIX - IVA - EXPENDITURE/SBE 55
APPENDIX - IVB - STATEMENT OF PROPOSALS FOR PRE BUDGET DISCUSSION 56
PRE-BUDGET MEETINGS 57
PRE BUDGET DISCUSSIONS WITH SECRETARY EXPENDITURE 57-58
GUIDELINES FOR PRE- BUDGET BRIEFS 59
OTHER RELATED ISSUES 60
STATEMENT OF BUDGET ESTIMATES (FINAL) 60
APPENDIX V - EXPENDITURE 61
APPENDIX VA - EXPENDITURE 61
APPENDIX VB - EXPENDITURE 62
APPENDIX VI - EXPENDITURE 62
OTHER INFORMATION REQUIRED TO BE FURNISHED WITH THE
STATEMENT OF BUDGET ESTIMATES 63
APPENDIX VII - LOANS TO GOVT. SERVANTS, ETC. 64
 (iii)
Page No.
NOTES ON DEMANDS 64
APPENDIX VIII - GUIDELINES FOR PREPARATION OF NOTES ON DEMANDS 65
APPENDIX IXA - DETAILED DEMANDS FOR GRANTS 66
APPENDIX IXB - PROJECT WISE PROVISION FOR EXPENDITURE
ON EXTERNALLY AIDED PROJECTS IN THE CENTRAL PLAN 66
APPENDIX IXC - DETAILED DEMANDS FOR GRANTS 67
APPENDIX IXD - DETAILED DEMANDS FOR GRANTS 67
APPENDIX IXE - DETAILED DEMANDS FOR GRANTS 67
APPENDIX IXF - DETAILED DEMANDS FOR GRANTS 68
APPENDIX IXG - DETAILED DEMANDS FOR GRANTS 68
APPENDIX IXH - DETAILED DEMANDS FOR GRANTS 68-69
APPENDIX IX I - DETAILED DEMANDS FOR GRANTS 69
APPENDIX IXJ - DETAILED DEMANDS FOR GRANTS 69
APPENDIX IXK - DETAILED DEMANDS FOR GRANTS 70
SPECIAL INSTRUCTIONS FOR THE COMPOSITE DEMANT FOR CIVIL ‘PENSIONS’ 71
SPECIAL INSTRUCTIONS RELATING TO ESTIMATES TO BE INCLUDED
IN DEMANDS FOR GRANTS CONTROLLED BY BUDGET DIVISION 71-72
MATERIAL FOR STATEMENTS TO BE APPENDED TO DEMANDS FOR GRANTS 72
APPENDIX XA - DETAILED DEMANDS FOR GRANTS 73
APPENDIX XB - EXPENDITURE BUDGET 73
APPENDIX XC - EXPENDITURE BUDGET 74
APPENDIX XD - EXPENDITURE BUDGET 74
APPENDIX XE - EXPENDITURE BUDGET 75
APPENDIX XF - EXPENDITURE BUDGET 75
APPENDIX XG - EXPENDITURE BUDGET 76
APPENDIX XH - EXPENDITURE BUDGET 76
APPENDIX X I - EXPENDITURE BUDGET 77
APPENDIX XJ - GUARANTEES GIVEN BY THE GOVERNMENTS 77
GUARANTEE- CLASS 78
GUARANTEE - SECTORS 78
INTRODUCTORY NOTES FOR EXPENDITURE BUDGET VOLUME 1 79
DETAILED DEMANDS FOR GRANTS 79
MODIFIED EXCHEQUER CONTROL BASED EXPENDITURE MANAGEMENT SYSTEM 79
INSTRUCTIONS ON GENDER BUDGETING/FRBM RULES/PROVISIONS OF
SC & ST/PLAN PROVISIONS FOR NORTH EASTERN REGION AND SIKKIM ETC 79-80
STATEMENT NUMBER 20- GENDER BUDGETING 80
STATEMENT NUMBER 21- SCHEMES FOR DEVELOPMENT OF
SCHEDULED CASTES AND SCHEDULED TRIBES 80
DISCLOSURE STATEMENTS REQUIRED UNDER THE FISCAL RESPONSIBILITY AND
BUDGET MANAGEMENT RULES, 2004 FOR INCLUSION IN THE ENSUING BUDGET 80
APPENDIX XK - TAX REVENUES RAISED BUT NOT REALISED 81
APPENDIX XL - ARREARS OF TAX REVENUES 82
APPENDIX XM - ASSET REGISTER 83
DIRECT TRANSFERS OF CENTRAL ASSISTANCE TO STATES/DISTRICT LEVEL
AUTONOMOUS BODIES 84
APPENDIX XN - STATEMENT SHOWING DIRECT TRANSFER OF CENTRAL
ASSISTANCE TO STATE/DISTRICT LEVEL AUTONOMOUS BODIES 84
GENERAL INSTRUCTIONS 85
APPENDIX XI 86-87
 (iv)
Page No.
Chapter V - Budget Finalization : Duties and Responsibilities
of Budget Division 88-110
BUDGET ACTIVITIES AND TIMELINES: 88-90
BUDEGET IN PARLIAMNT 91-92
RESPONSIBILITIES FOR BUDGET DOCUMENTS: 93
WORKING UPON THE STATEMENT OF BUDGET ESTIMATES (SBE)
WORKSHEET AND THEIR CONTENTS 94-95
CHECK-LIST OF VARIOUS BUDGET DOCUMENTS AND THEIR
RELATED STATEMENTS/ ANNEXURES 96
I. FINANCE MINISTER’S SPEECH 96
II. KEY TO BUDGET DOCUMENTS 96
III. DEMANDS FOR GRANTS 96
IV. EXP BUDGET VOLUME-I 97-102
V. EXP BUDGET VOLUME- II 103
VI. RECEIPTS BUDGET 104-105
VII. ANNUAL FINANCIAL STATEMENT 105-107
VIII. BUDGET AT A GLANCE 107-108
IX. KEY FEATURES OF BUDGET 108
X. FRBM STATMENTS 108
BUDGET PRESS AND SECURITY/LOCK-IN ARRANGEMENTS 109
CHECK LIST FOR THE PREPARATION OF BUDGET OF
A STATE UNDER PRESIDENT’S RULE 109-110

Chapter VI - Budget Implementation 111-125

ROLE OF DEPARTMENTS IN SPENDING AND CONTROL 111
CONTROL OF EXPENDITURE AGAINST BUDGET 111
CASH MANAGEMENT AND EXCHEQUER CONTROL 112-113
RE-APPROPRIATIONS 113-114
SUPPLEMENTARY DEMANDS FOR GRANTS 115
PROCEDURE RELATING TO THE EXAMINATION AND PREPARATION
OF SUPPLEMENTARY DEMANDS 115
PROVISIONS OF GFR RELATING TO SUPPLEMENTARY DEMANDS FOR GRANTS 115
REVISED ESTIMATES 115-119
NEW SERVICE/NEW INSTRUMENT OF SERVICE (NS/NIS) 119-121
EXCESS GRANTS 121
OTHER BUDGET RELATED PROVISIONS OF THE GENERAL FINANCIAL RULES (GFR) 121-123
INTERNAL AUDIT 123
INTERNAL AUDIT PROVISIONS AS PER NEW CHARTER FOR FINANCIAL ADVISERS 123
OTHER BUDGET RELATED PROVISIONS IN THE DELEGATION OF
FINANCIAL POWERS RULES (DFPR) 123-124
COMMON TYPES OF BUDGETARY ERRORS 124-125
SOME OTHER COMMON BUDGET RELATED ISSUES THAT REQUIRES TO
BE WATCHED CLOSELY 125

Chapter VII- Budget Reporting and Evaluation FRBM Reviews

Placed before Parliament 126-127
OUTCOME BUDGET 126
MID-TERM EVALUATION OF INDIVIDUAL SCHEMES BY DIFFERENT DEPARTMENTS 126
C&AG REPORTS 127
PUBLIC ACCOUNTS COMMITTEE 127
 (v)
Page No.
PART - II
ANNEXURES
ANNEXURES
Annexure-I of Chapter - I
Constitutional Provisions on Budget and Budget Related Issues 129-136

Annexure-I of Chapter - II
The Detailed Procedures Relating to the Public Accounts Committee 137-139

Annexure-I of Chapter - II
Constitutional Provisions Relating to the Comptroller & Auditor General of India 140

Annexure-I of Chapter - III

Contingency Fund of India Rules 141-142

Annexure-II of Chapter - III

Division under Public Account-Deposits & Advances, Remittances,
Small Savings,NSSF and Various Other Funds and the Accounting
Guidelines Related to Public Accounts 143-144

Annexure-III of Chapter - III

The Details Relating to the Material of Finance Accounts,
The Procedures for its Compliation and Various Statements Therein 145-148

Annexure-IV of Chapter - III

The Various Stages and the Processes Involved in the Preparation
of Appropriation Accounts 149-153

Annexure-I of Chapter - V
A. Format of letters to Lok Sabha for presenation of Finance Bill and making of
Demands 154-158
B. Other letters to be issued in connection with the presenation of Budget
in the Parliament 159-166
C. Summary to President and letters to Lok Sabha for Appropriation Bill to be issued
before the introduction of the Bill 167-175
D. Summary to President and letters to Rajya Sabha for Appropriation Bill to be issued
after the Bill is passed by Lok Sabha 176-179
E. Summary to President and letters to Lok Sabha for Appropriation Bill to be issued
before the introduction of Bill 180-188
F. Summary to President and letters to Rajya Sabha for Appropriation Bill to be issued
after the Bill is passed by Lok Sabha 189-192

Annexure-I of Chapter - VI
FRBM Related Statements and the Guidelines for their Preparation 193-204

Annexure-II of Chapter - VI
Guidelines for Preparation of Outcome Budget 205-206

Annexure-I of Chapter - VII

Union Audit Reports of C&AG 207-209

Annexure-II of Chapter - VII

Guidelines for Preparation of Outcome Budget 210-214

Annexure-III of Chapter - VII

Union Audit Reports of C&AG 215-216
 GLOSSARY OF IMPORTANT BUDGET RELATED TERMS

Unless there is something averse in the subject or context, the terms defined in this section are used in this Manual
in the sense here explained:
1. ‘Accounts’ or ‘actuals’ of a year. - are the expenditure as is not to be submitted to the
amounts of receipts and disbursements for the vote of the Parliament under the provisions of
financial year beginning on April 1st and ending on the Constitution.
March 31st following, as finally recorded in the
11. ‘Comptroller & Auditor General’(C&AG) -
Accounting authority’s books (as audited by C&AG).
means the Comptroller & Auditor General of
Provisional Accounts refers to the unaudited
India.
accounts compiled by CGA.
12. ‘Competent Authority’- means, in respect of
2. ‘Administrative approval’ of a scheme,
the power to be exercised under any of these
proposal or work. - is the formal acceptance
provisions, the President or such other
thereof by the competent authority for the
authority to which the power is delegated by
purpose of incurring expenditure.
or under the General Financial Rules, 2005,
3. ‘Annual financial statement’ – Also referred Delegation of Financial Powers Rules, 1978
to as Budget means the statement of or any other general or special orders issued
estimated receipts and expenditure of the by the Government of India.
Central Government for each financial year,
13. ‘Consolidated Fund of India- Under Article
laid before the Parliament.
266 (1) of the Constitution all revenues of the
4. ‘Appropriation’ - means the amount Union Government, loans raised by it and all
authorized by the Parliament for expenditure moneys received in repayment of loans form
under different primary unit of appropriation one consolidated fund called the
or part thereof placed at the disposal of a Consolidated Fund of India. No moneys out
disbursing officer. of this Fund can be appropriated except in
accordance with the law and for the purposes
5. ‘Appropriation Accounts’ - are the
and in the manner provided in the
accounts prepared by the Controller General Constitution.
of Accounts for each grant or appropriation in
which is indicated the amount of the 14. ‘Constitution’ - means the Constitution of
grant/appropriation sanctioned and the India.
amount spent under the grant/appropriation
15. ‘Contingency Fund’ – means the
as a whole. Important variations in the
Contingency Fund of India established under
expenditure and allotments, whether voted or
the Contingency Fund of India Act, 1950, in
charged, are briefly explained therein with
terms of Article 267 (1) of the Constitution.
the comments of audit.
Contingency Fund is in the nature of an
6. ‘Budget’ – It is the statement of estimated imprest the corpus of which is ` 500 crore at
receipts and expenditure of the Central present. The Contingency Fund is intended
Government as per its policy for each to provide advances to the executive
financial year and placed before the /Government to meet unforeseen expenditure
Parliament. arising in the course of a year pending its
7. ‘Budget Division’- means Budget Division in authorization by the Parliament. The amounts
the Department of Economic Affairs of the drawn from the Contingency Fund are
Ministry of Finance in the Central recouped after the Parliament approves it
Government. through the Supplementary Demands.

8. ‘Budget Estimates’ - are the detailed 16. ‘Controller General of Accounts’- is the
estimates of receipts and expenditure of a principal Accounts Adviser to the
financial year. Government of India and is responsible for
9. ‘Appropriation’ (Charged) - means sums establishing and maintaining a technically
required to meet charged expenditure as sound management accounting system. He
specified in the Constitution during the prepares a critical analysis of expenditures,
financial year concerned, on the services and revenues, borrowings and the deficit for the
purposes covered by ‘Charged Finance Minister every month. He also
Appropriation.’ It does not include provisions prepares Annual Appropriation Accounts and
for voted expenditure. Union Finance Accounts for presentation to
10. 'Charged Expenditure’ or ‘Charged on the the Parliament after vetting by the C&AG.
Consolidated Fund of India’ - means such

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17. ‘Controlling Officer (budget)’ - means an 27. ‘New Service’ – As appearing in Article
officer entrusted by a Department of the 115(1)(a) of the Constitution, New Service
Central Government with the responsibility of means expenditure arising out of a new
controlling the incurring of expenditure and/or policy decision, not brought to the notice of
the collection of revenue. The term includes Parliament earlier, including a new activity or
the Heads of Department and also the a new form of investment.
Administrators.
28. ‘New Instrument of Service’- means
18. ‘Chief Controller/Controller of Accounts’ - relatively large expenditure arising out of
means the Head of the Accounting important expansion of an existing activity.
Organizations in the Ministries/Departments
29. ‘Parliament- means the Parliament of India
of the Central Government, set up under the
comprising of the two Houses of Lok Sabha
scheme of departmentalization of accounts.
and Rajya Sabha.
19. ‘Department of the Central Government’-
30. ‘Outcome Budget’- is the document
means a Ministry or Department of the
prepared and presented annually to the
Central Government as notified from time to
Parliament, reflecting the purposes and
time and listed in the Allocation of Business
objectives for which funds were provisioned,
Rules. It includes the Planning Commission,
the cost of various programmes and activities
the Department of Parliamentary Affairs, the
proposed for achieving these objectives and
President’s Secretariat, the Vice-President’s
quantitative projection of the work performed
Secretariat, and the Cabinet Secretariat.
and services rendered under each
20. ‘Departmental Estimate’ - is an estimate of programme and activity.
income and expenditure of a department in
31. ‘Primary unit of appropriation’ – means a
respect of any year submitted by the head of
primary unit of appropriation referred to in
a department or other estimating officer to
Rule 8 of the Delegation of Financial Powers
the Finance Ministry as the material on which
Rules, 1978. It is the lowest unit of
to base its estimates.
classification denoting the Objects of
21. ‘Disbursing Officer’. – means a Head of expenditure.
Office and also any other Gazetted Officer so
32. ‘Public Accounts’- means the Public
designated by a Department of the Central
Account of India referred to in Article 266(2)
Government, a Head of Department or an
of the Constitution. The receipts and
Administrator, to draw bills and make
disbursements such as deposits, reserve
payments on behalf of the Central
funds, remittances etc which do not form part
Government. The term shall also include a
of the Consolidated Fund of India are
Head of Department or an Administrator
included in the Public Account of India.
where he himself discharges such function.
Disbursements from the Public Account are
22. ‘Estimating Officer’ - means a departmental not subject to vote by the Parliament, as they
officer responsible for preparing a are not moneys issued out of the
departmental estimate. Consolidated Fund of India.
23. ‘Excess Grant’ – Excess grant means the 33. ‘Public Accounts Committee’ - is a
amount of expenditure over and above the Committee constituted by the Lok Sabha for
provision allowed through the the examination of the reports of the
original/supplementary grant, that requires Comptroller and Auditor General of India
regularization by obtaining excess grant from relating to the appropriation accounts of the
the Parliament under Article 115 of the Central Government, the Finance accounts
Constitution. of the Central Government or such other
accounts or financial matters as are laid
24. ‘Finance Ministry’- means the Ministry of
before it or which the Committee deems
Finance in the Union Government.
necessary to scrutinize.
25. ‘Head of Department’ - means an officer
34. ‘Reappropriation’ - means the transfer, by a
declared as such by Government. (A list of
competent authority, of savings from one unit
Heads of Departments is given in the
of appropriation to meet additional
Delegation of Financial Powers Rules).
expenditure under another unit within the
26. ‘Financial Adviser’- means an officer same grant or charged appropriation.
appointed by Government in a
35. ‘Revised Estimate’ - is an estimate of the
Ministry/Department to look after the matters
probable receipts or expenditure for a
related to financial advice, budget/ accounts,
financial year, framed in the course of that
expenditure control/ audit etc. for and on
year, with reference to the transactions
behalf of Finance Ministry.
already recorded and anticipation for the

2
 remainder of the year in the light of the
orders already issued or
36. ‘Supplementary Demands for Grants’-
means the statement of supplementary
demands laid before the parliament, showing
the estimated amount of further expenditure
necessary in respect of a financial year over
and above the expenditure authorized in the
Annual Financial Statement for that year. The
demand for supplementary may be token,
technical or substantive/cash.
37. Vote on Account’ - means a grant made in
advance by the Parliament, in respect of the
estimated expenditure for a part of new
financial year, pending the completion of the
procedure relating to the voting of the
demand for grants and the passing of the
Appropriation Act.
38. ‘Voted’ expenditure - means expenditure
which is subject to the vote of the Lok Sabha.
It is to be distinguished from ‘charged’
expenditure, which is not subject to voting,
even though can be discussed in the
Parliament.

3
 CHAPTER I

innumerable considerations in the

INTRODUCTION: formulation of budget policies;
‘Budget System’ was introduced in India on ii. Change in the financial year would upset the
7th April, 1860. James Wilson the first Indian Finance collection of data and it might take a long
Member delivered the budget speech expounding the time to return to normalcy in this regard; and
Indian financial policy as an integral whole for the first
time (Principles of Civil Government: Akshaya K. iii. The change would create a large number of
Ghosh). Post independence, the first budget was problems, as extensive amendments to tax
presented on November 26, 1947 by India's first laws and systems, financial procedures
Finance Minister Sri R.K. Shanmugham Chetty. The relating to expenditure authorization and
national independence brought about budgeting other matters would become necessary and
reforms with the Government of India primarily in that process the administrative machinery
through the launching of comprehensive socio- would get diverted to problems of transition
economic development through five year plans, instead of concentrating on improving the tax
divided into Annual Plans. A sound system of sharing collection machinery.
of resources with the States was also established
through the successive Finance Commissions. By
and large the system in place at present has evolved MEANING AND SCOPE OF THE BUDGET:
over a period of time.
Meaning:
The annual exercise of budgeting is a means
for detailing the roadmap for efficient use of public A government budget is defined as a legal
resources. Although the Indian Constitution does not document that is passed by the legislature, and
mention the term ‘Budget’, it provides that the approved by the chief executive-or President. The
President shall in respect of every financial year two basic elements of any budget are the revenues
cause to be laid before both the Houses of and expenses. Unlike a pure economic budget,
Parliament, the House of People (Lok Sabha) and the Government Budget is designed for optimal allocation
Council of States (Rajya Sabha), a statement of the of scarce resources taking into account larger socio-
estimated receipts and expenditure of the political considerations.
Government for that year. This statement known as The main objective of Government financial
the ‘Annual Financial Statement’ is the main fiscal or management is to determine how well the financial
budgetary document of the Government. and resource management responsibilities have been
The financial year for the Union and the State discharged. This is based amongst others, on a
comparison of accomplishments against the fiscal
Governments in India is from April to March. Each
policies and the time bound Government
financial year is, therefore, spread over two calendar
programmes. These fiscal policies and programmes
years. The period of financial year as from April to
determine the Budget of the Government, through
March was introduced in India from 1867. Prior to
which the amounts of revenue to be raised and the
that, the financial year in India used to commence on allocation of sums for the respective Government
1st May and ended on 30th April (L.K. Jha programmes and purposes are set. Budgeting
Committee’s Report of the Committee On Change in therefore, involves determining for a future time
Financial Year). period on what is to be done and achieved, the
L.K. Jha Committee was appointed in May, manner in which it is to be done and the resources
1984 to look into the issue of financial year. The required for the same. It requires the broad objectives
Committee while recommending the commencement of the Government to be broken down into detailed
work plans for each programme and sub-programme,
of financial year from January mainly with reference
activity and projects for each unit of the Government
to the impact of South West monsoon on the
organization.
economy, had mentioned in their Report that if for
any reason, a changeover to the calendar year is not The Union Budget of India, also referred as
acceptable despite its many advantages, then on the General Budget, is presented each year on the
balance, it might be best to live with the existing last working day of February by the Finance Minister
financial year and avoid the problems of transition. of India to the Parliament. Article 112 of the
Constitution of India stipulates that Government
Government of India did not favour any
change in the financial year for some of the reasons should lay before the Parliament an Annual Financial
which are brought out below,- Statement popularly referred to as ‘Budget’. The
Union Budget is currently presented through 14
i. The advantages arising out of the change documents, some of which are mandated by the
would only be marginal in view of the Constitution while others are Explanatory documents.

4
 Budget preparation in India is an iterative 6. Estimates to be on Departmental Basis:
process between the Ministry of Finance/Planning Each Department prepares estimates for
Commission and the spending Ministries. It is a receipts and expenditure separately.
combination of top down approach with the Ministry Generally one Demand or Grant is allocated
of Finance and the Planning Commission issuing in respect of each Ministry/Department. In
guidelines or communicating instructions to spending case of certain large Departments/Ministries
Ministries, and a bottom-up approach, wherein the more than one Demands for Grants is
spending Ministries present requests for budget allocated in terms of General Financial
allocation. Some of the salient features of Union Rules.
Budget are as follows-
Scope:
1. Budget is prepared on Cash Basis:
The Budget is presented to the Parliament in
Whatever is expected to be actually received
such form as the Finance Ministry may decide after
or paid under proper sanction during a
considering the suggestions, if any, made by the
financial year (including arrears of the past Estimates Committee. Broadly the Budget documents
years) should be budgeted in that year. depict information relating to receipts and
2. Rule of Lapse: All appropriations granted by expenditure for three years i.e.-
the Parliament expire at the end of financial i. Through Budget Estimates (BE) of receipts
year and no deduction of unspent budget can and expenditure in respect of Budget year
be appropriated for meeting the demands in (current financial year);
the next financial year. Thus, all unutilized
funds within the year ‘lapse’ at the end of the ii. For the year preceding the Budget year
(current year) through Revised Estimates
financial year.
(RE); and
3. Realistic Estimation: It is essential that the
iii. Actuals of the second year proceeding the
provisions in the budget should be restricted
Budget year.
to the amount required for actual
expenditure. The Finance Ministry is Budget thus sets forth the receipts and the
interested in seeing that the Departments do expenditure of the Government for three consecutive
not obtain more/less money than what they years. The Annual Financial Statement shows the
really need. If a Department is allotted funds receipts and expenditure of Government in three
which it does not need, it will deprive some separate parts under which Government accounts
other Department from getting the required are maintained viz. (i) Consolidated Fund of India (ii)
resources. Contingency Fund of India and the (iii) Public
Account.
4. Budget to be on Gross/Net Basis: Budget
As per Constitutional provisions (Article 112)
is prepared both on the gross basis and net
the Annual Financial Statement has to distinguish
basis. The gross figures of receipts and
expenditure on revenue account from other
expenditure of the Government are reflected expenditure. It, therefore, comprises of (i) Revenue
separately for voting by Parliament and the budget and (ii) Capital Budget. Broad break-up of
Departments/Ministries are normally not expenditure on Plan and Non Plan i.e. expenditure
permitted to utilize the receipts or deduct which is part of normal activities of the Government
expenditure in their budget proposals. Net or maintenance expenditure, sectoral allocation of
basis of budgeting is done in case of some Plan Outlays, details of resources transferred to
Grants e.g. Defence Ordnance Factories, States and Union Territory Governments are also
and Department of Posts wherein the reflected in the budget documents.
departmental receipts are allowed to be
The expenditure of certain categories,
utilized and outlays on gross as well as net
charged on the Consolidated Fund of India and not
basis are reflected.
being subject to the Vote of Parliament are also
5. Form of Estimates to Correspond to indicated separately in the Budget. The Demands for
Accounts: It is essential that the form in the Grants show separately the revenue and capital, and
budget estimates correspond to that of the charged and voted expenditure. Similarly,
Government accounts as it is from these estimates of receipts are classified in the tax and
accounts, that the performance of the non-tax receipts and also those which are on revenue
Government is judged and the estimation for account and others which are on capital account.
subsequent year made. If these are prepared
The Union Budget is presented to Parliament
in different forms, financial control will also
in two parts i.e. Railway Budget pertaining to Railway
become difficult.
Finance and General Budget which gives an overall

5
picture of financial position of the Government of Sabha to provide for the appropriation out of the
India including the effect of Railway Budget. Consolidated Fund of India to meet the requirements
The three Statements presented to the relating to (a) the grants so made by the House of the
Parliament viz. the Macroeconomic Framework People; and (b) the expenditure charged on the
Statement, the Medium Term Fiscal Policy Statement Consolidated Fund of India but not exceeding in any
and the Fiscal Policy Strategy Statement Under the case the amount shown in the statement previously
FRBM mandate, has further enhanced the scope of laid before Parliament. Further, subject to the
Budget to provide an assessment of the growth provisions of articles 115 and 116, no money shall be
prospects of the economy, indicate the rolling targets withdrawn from the Consolidated Fund of India
for specific fiscal indicators as well as outline the except under appropriation made by law passed in
strategic priorities of the Government in the fiscal accordance with the provisions of this article.
area for the ensuing year.
Article 115- Supplementary, Additional or Excess
Grants.
IMPORTANT CONSTITUTIONAL PROVISIONS If the amount authorized through
RELATED TO BUDGET: appropriations for a particular service is found to be
insufficient for the purposes of that year or when a
Financial business in Parliament consists of
need has arisen during the current financial year for
the Budget comprising of General Budget and
supplementary or additional expenditure upon some
Railway Budget, Demands for Grant, Vote on
new service not contemplated in the annual financial
Account, Supplementary Demands for Grant,
statement for that year, a supplementary demands
Appropriation Bill and the Finance Bill. The salient
for grants proposal shall be made before parliament.
Constitutional provisions that shape and guide the
However, if any money has been spent on any
budgeting systems and process are outlined in brief
service during a financial year in excess of the
as under-
amount granted for that service and for that year,
Article 112- Annual Financial Statement demand for such excess, as the case may be is to be
laid before both the Houses of Parliament for
It provides that in respect of every financial
authorizing (subject to the report of the Public
year the President shall cause to be laid before both
Accounts Committee) the expenditure incurred in
the Houses of Parliament a statement of the
excess.
estimated receipts and expenditure of the
Government of India for that year, referred to as the Article 116- Vote on account, Vote of credit and
“annual financial statement’’. The estimates of Exceptional Grant.
expenditure shall show separately expenditure
charged upon the Consolidated Fund of India; and The House of the People shall have power
other expenditure (voted) proposed to be made from relating to
the Consolidated Fund of India. The statement shall (a) Vote on Account- to make any grant in
also distinguish expenditure on revenue account from advance in respect of the estimated expenditure for a
other (capital) expenditure. part of any financial year pending the completion of
the parliamentary procedure.
Article 113- Procedure in Parliament with respect
to Estimates. (b) Vote of Credit- to make a grant for
It provides that estimates relating to meeting an unexpected demand upon the resources
expenditure charged upon the Consolidated Fund of of India when on account of the magnitude or the
India shall not be submitted to the vote of Parliament, indefinite character of the service the demand cannot
even though these can be discussed in either House be stated with the details ordinarily given in an annual
of Parliament. The estimates relating to the ‘voted’ financial statement;
portion shall be submitted in the form of demands for (c) Exceptional Grant- to make provision for
grants, and the House of the People shall have an exceptional grant that does not form part of the
power to assent, refuse or reduce the amount current service of any financial year;
specified therein. No demand for a grant shall be
made except on the recommendation of the Parliament shall have power to authorize by
President. law the withdrawal of moneys from the Consolidated
Fund of India for the above purposes.
Article 114- Appropriation Bills.
Article 117- Special provisions as to Financial
After the passing of the demands under
Bills.
Article 113, Appropriation Bill is introduced in the Lok

6
 A Bill or amendment making provision for any such States as Parliament may determine to be in
of the matters specified in sub-clauses (a) to (f) of need of assistance, and different sums may be fixed
clause (1) of article 110 shall not be introduced or for different States. Provided, that after a Finance
moved except on the recommendation of the Commission has been constituted no order shall be
President and a Bill making such provision shall not made under this clause by the President except after
be introduced in the Council of States. considering the recommendations of the Finance
Commission.
Article 265- Taxes not to be imposed save by
Article 280- Finance Commission.
authority of law.
The President shall, within two years from
No tax shall be levied or collected except by
the commencement of this Constitution and
authority of law. thereafter at the expiration of every fifth year or at
Article 266- Consolidated Funds and Public such earlier time as the President considers
Accounts of India and of the States. necessary, by order constitute a Finance
Commission. It shall be the duty of the Commission
Subject to the provisions of article 267 and to to make recommendations to the President relating
the provisions of this Chapter with respect to the to—
assignment of the whole or part of the net proceeds
of certain taxes and duties to States, all revenues (a) the distribution between the Union and
received by the Government of India , all loans raised the States of the net proceeds of taxes which are to
and all moneys received by that Government in be, or may be, divided between them under this
repayment of loans shall form one consolidated fund Chapter and the allocation between the States of the
to be entitled “the Consolidated Fund of India”, and respective shares of such proceeds;
all revenues received by the Government of a State, (b) the principles which should govern the
all loans raised and all moneys received by that grants-in-aid of the revenues of the States out of the
Government in repayment of loans shall form one Consolidated Fund of India;
consolidated fund to be entitled “the Consolidated
Fund of the State”. (bb) the measures needed to augment the
Consolidated Fund of a State to supplement the
All other public moneys received by or on resources of the Panchayats in the State on the basis
behalf of the Government of India or the Government of the recommendations made by the Finance
of a State shall be credited to the public account of Commission of the State;
India or the public account of the State, as the case
may be. (c) the measures needed to augment the
Consolidated Fund of a State to supplement the
No moneys out of the Consolidated Fund of resources of the Municipalities in the State on the
India or the Consolidated Fund of a State shall be basis of the recommendations made by the Finance
appropriated except in accordance with law and for Commission of the State;
the purposes and in the manner provided in this
Constitution. (d) any other matter referred to the
Commission by the President in the interests of
Article 267- Contingency Fund. sound finance.
Parliament may by law establish a The Commission shall determine their
Contingency Fund in the nature of an imprest to be procedure and shall have such powers in the
entitled “the Contingency Fund of India” into which performance of their functions as Parliament may by
shall be paid from time to time such sums as may be law confer on them.
determined by such law, and the said Fund shall be
placed at the disposal of the President to enable Article 281- Recommendations of the Finance
advances to be made by him out of such Fund for the Commission.
purposes of meeting unforeseen expenditure pending
authorization of such expenditure by Parliament by T he Pres id en t sha l l caus e eve r y
law. under article 115 or article 116. r ec om me nd a ti on mad e b y the F ina nce
Co mmiss ion und er th e pro vis io ns o f th is
Similarly, the Legislature of a State may by Co ns titu tion toge ther w i th an e xplana tory
law establish a Contingency Fund in the nature of an memora ndu m as to the ac tion take n ther eon
imprest to be entitled “the Contingency Fund of the to be laid be f or e each H o use o f Pa r l ia men t .
State”.
Article 292- Borrowing by the Government of
Article 275- Grants from the Union to certain India.
States.
The executive power of the Union extends to
Such sums as Parliament may by law borrowing upon the security of the Consolidated Fund
provide shall be charged on the Consolidated Fund of of India within such limits, if any, as may from time to
India in each year as grants-in-aid of the revenues of time be fixed by Parliament by law and to the giving

7
of guarantees within such limits, if any, as may be so signed by him that it is a Money Bill, shall be
fixed. endorsed on every Money Bill when it is transmitted
to the Council of States under article 109, and when it
Article 150- Form of accounts of the Union and of
is presented to the President for assent under article
the States.
111.
The accounts of the Union and of the States
The detailed original text of the above and
shall be kept in such form as the President may, on
other Budget related Constitutional provisions are at
the advice of the Comptroller and Auditor-General of
Appendix-I to Chapter-1.
India, prescribe.
BUDGET DOCUMENTS:
Article 151- Audit reports.
The major work undertaken in the Budget
The reports of the Comptroller and Auditor-
Division relates to the ‘Scrutiny of Receipt and
General of India relating to the accounts of the Union
Expenditure Estimates’ in the process of preparation
shall be submitted to the President, who shall cause
of Budget Estimates, Revised Estimates and the
them to be laid before each House of Parliament.
related Statements, Annexes of various budget
Article 109- Special procedure in respect of documents. The detailed estimates of receipts and
Money Bills. expenditure are prepared by the Ministries/
Departments in the prescribed forms and furnished to
A Money Bill shall not be introduced in the the concerned Sections in the Budget Division. These
Council of States. After a Money Bill has been estimates are scrutinized in detail and further
passed by the House of the People it shall be consolidated as part of process of compilation of the
transmitted to the Council of States for its Budget and related documents, which are briefly
recommendations and the Council of States shall described below.
within a period of fourteen days from the date of its
receipt of the Bill return the Bill to the House of the (a) Annual Financial Statement
People with its recommendations and the House of
Under Article 112 of the Constitution of India, a
the People may thereupon either accept or reject all
statement of the estimated receipts and expenditure of the
or any of the recommendations of the Council of
Government of India in respect of every financial year is laid
States.
before Parliament; this is called the ‘Annual Financial
Article 110- Definition of “Money Bills’’. Statement’. The Annual Financial Statement of a year gives
the budget estimate for that year, the budget estimate and
A Bill shall be deemed to be a Money Bill if it the revised estimate for the preceding year and the figures
contains only provisions dealing with all or any of the of Accounts of the second preceding year. It shows the net
following matters, (a) the imposition, abolition, amount of total expenditure under different Major Heads,
remission, alteration or regulation of any tax; (b) the after excluding the recoveries taken in reduction of
regulation of the borrowing of money or the giving of expenditure. The form of Annual Financial Statement is
any guarantee by the Government of India, or the prescribed by the Ministry of Finance.
amendment of the law with respect to any financial
obligations undertaken or to be undertaken by the Government of India have their departmental
Government of India; (c) the custody of the commercial undertakings (e.g. Railways, Posts,
Consolidated Fund or the Contingency Fund of India, Telecom), whose transactions are reflected in the
Annual Budgets of the Central Government. Similarly,
the payment of moneys into or the withdrawal of
Government of India has set up Public Sector
moneys from any such Fund; (d) the appropriation of Undertakings by contributing to their share capitals
moneys out of the Consolidated Fund of India; (e) the by debit to the Consolidated Fund of India. The
declaring of any expenditure to be expenditure proposed contribution to their share capital and /or
charged on the Consolidated Fund of India or the loans proposed to be given to them in any financial
increasing of the amount of any such expenditure; (f) year is reflected in the Annual Budget of that year.
the receipt of money on account of the Consolidated Similarly, dividends and repayment of loans
Fund of India or the public account of India or the (including interest) expected from them in any
custody or issue of such money or the audit of the financial year are included in the Annual Financial
accounts of the Union or of a State; or (g) any matter Statement of that year.
incidental to any of the matters specified in sub- The estimated expenditure included in the
clauses (a) to (f). Annual Financial Statement shows separately-
If any question arises whether a Bill is a (i) The sums required to meet expenditure
Money Bill or not, the decision of the Speaker of the described in the Constitution of India
House of the People thereon shall be final, and the as expenditure charged upon the
certificate of the Speaker of the House of the People Consolidated Fund of India; and

8
 (ii) The sums required to meet other expenditure included in the Demands for grants are
expenditure proposed to be made from for gross amounts. The receipts and recoveries taken
the Consolidated Fund of India. in reduction of expenditure are shown by way of
below the line entries.
The Annual Financial Statement also exhibits
the estimated receipts and expenditure under the The estimates of expenditure in the
Public Accounts and net transactions under the Demands for Grants contain those amounts for which
Contingency Fund. The expenditure on Revenue the vote of Lok Sabha is required separately, and is
account is distinguished in the Annual Financial called ‘voted’ expenditure. The estimate for ‘charged’
Statement from that for other expenditure including expenditure under any head for which vote of the Lok
expenditure on Capital account, Loans by Sabha is not required, are also indicated in the
Government and for Repayment of loans, Treasury Demands for Grants. When there is no estimate for
Bills and Ways and Means Advances. expenditure under any head requiring vote of Lok
Sabha, then it is not called a Demand, but it is called
The Annual Financial Statement also ‘Appropriation’ and included as such in the list of
includes the following statements- Demands.
Statement I: Consolidated Fund of India: Keeping in view the need for clarity, the serial
(i) Revenue Account- Receipts; number of Demands for Grants and their coverage
(ii) Revenue Account- Disbursements; are decided by the Ministry of Finance in the Budget
Division. The estimates in the Demands for Grants
(iii) Capital Account- Receipts; are shown by Major Heads, and the break-up under
(iv) Capital Account- Disbursements; each Major Head shows the estimates under
‘charged’ and ‘voted’, ‘Revenue’ and ‘Capital’ and
Statement IA: Disbursements Charged on the ‘Plan’ and ‘Non-Plan’. The Demands for Grants are
Consolidated Fund of India: submitted to the Parliament along with the Annual
This statement includes details of the Financial Statement.
disbursements ‘Charged’ on the Consolidated Fund RECOMMENDATIONS OF THE ESTIMATES
of India. COMMITTEE ON THE FORM AND CONTENTS OF
Statement II: Contingency Fund of India: DEMANDS FOR GRANTS:

This statement provides details on the Net The salient recommendations of the
position relating to the transactions under the Estimates Committee relating to Demands for Grants
Contingency Fund of India. in their 24th Report (1972-73) are:

Statement III: Public Account of India (i) The provisions relating to a service
on Revenue Account as well as on
(i) Receipts Capital Account (including Grants in
(ii) Disbursements aid to States and UTs) may be
included in one Demand including
Statement on Receipts and expenditure of Union loans and advances relating to that
Territories without Legislature: service, subject to the condition that
This is a statement giving budgetary details there should be no reappropriation of
of tax and non tax revenues of Union Territories funds between Revenue and Capital;
without legislature along with the budgeted (ii) There should be separate Demands
expenditure provisions against Revenue, Capital and for Grants for organizations like
Loans and Advances heads.
Indian Council of Agricultural
(b) Demands for Grants Research and Council of Scientific
and Industrial Research etc. which
The estimates of expenditure from the are mainly financed by Government
Consolidated Fund included in the Budget involving substantial amounts;
Statements and required to be voted by the Lok
Sabha are submitted in the form of Demands for (iii) The provision for Secretariat proper
Grants. Normally a separate demand is required to of the Ministry/Department may
be presented for each Department or the major continue to be shown in a separate
services under the control of a Ministry/Department. Demand but where due to
Each demand normally includes the total provisions unavoidable reasons the expenditure
required for a service, i.e. provisions on account of on Secretariat is included in a
revenue expenditure, capital expenditure, grants to composite Demand, the expenditure
States and Union Territories and also loans and on the Secretariat should be
advances relating to that service. Estimates of mentioned clearly and pointedly as

9
 distinct from expenditure on activities Governments in excess of certain limits, details of
of the Ministries/Departments; number of staff for which provision is made and a
schedule listing important items of Non plan
(iv) In the Demands for Grants, stress is
expenditure. A schedule giving details of works
laid on major programmes and
costing ` 10 lakhs or more individually is also added
activities of the Department
in the Detailed Demands of the concerned
highlighting those aspects of the
Ministries/Departments.
Budget which are important, for an
appreciation of the resource (c) Receipts Budget
allocation at the national level. The Estimates of receipts included in the “Annual
information about the activities are Financial Statement” are further explained and
covered by way of Notes; analyzed in the “Receipts Budget”. The document
gives details of revenue receipts and capital receipts
(v) An Annexure is appended to the
and explains the estimates. Trends of revenue
Demands for Grants listing items of
receipts and capital receipts over the years and
‘New Service’/New Instruments of
details of External Assistance received are also
Service’ for which provision is
included.
included in the Budget Estimates in
pursuance to the recommendations Receipts Budget has two parts-
made by the Public Accounts
Committee in their Eleventh Report (i) Part ‘A’- Revenue Receipts: The
(Third Lok Sabha). Comprehensive estimates of Revenue receipts, both
Notes on ‘New Service’/ ‘New tax revenue and non-tax revenue are
Instruments of Service’ to bring out explained in this part. The tax
the objectives underlying the revenue section includes statements
service/activity, the financial on Corporation tax, Taxes on Income
implications thereof, the time other than Corporation tax, Wealth
schedule for completion and tax, Customs, Union Excise Duties,
commissioning, the contribution Service tax and taxes of Union
expected to be made in the Territories. The non-tax revenue
economic and industrial field etc. details include statements on Interest
may be clearly set out in the Notes to receipts, Dividends and Profits, Other
be included in the Demands for Non Tax Revenue and Non Tax
Grants; and Revenue of Union Territories.

(vi) Full details of subsidy on food (ii) Part ‘B’- Capital Receipts: In this
transactions, such as average cost part, the details of capital receipts
price and sale price, actual price paid which include market loans, external
to the indigenous producer and the assistance, small savings,
country from which it is imported, Government provident funds,
administrative expenditure, freight, accretions to various deposit
incidental and other charges, losses accounts, depreciations and reserve
in transit, handling and storage, per funds of departments like Railways,
quintal subsidy etc should be given Telecom etc. are given.
in the Explanatory Memorandum on The Receipts Budget also contains 12 Annexes
the Budget. containing details as under-
The Detailed Demands for Grants are laid by (i) Annexure 1- State-wise distribution of share
the respective Ministries on the Table of Lok Sabha in Central taxes/duties;
after the Demands for Grant is submitted to the (ii) Annexure 2 -External assistance-receipts
Parliament, well in advance of the date of discussion and repayments country/organization -wise;
fixed for that Ministry’s Demands. These Demands (iii) Annexure 3-Debt position of the Government
show distinctly the programmes/activities/schemes or of India, having statements on- Liabilities of
organization for which provision in a year is ` 1 lakh the Central Government, Assets, Guarantees
or more and in respect of schemes etc. costing ` 10 Given by the Government and Asset
lakhs and above. The Detailed Demands for Grants Register;
show the further break-up by reflecting the ‘Object’ (iv) Annexure 4-Details of current rupee loans of
wise expenditure. Plan and Non Plan provisions are the Central Government;
also shown distinctly. These Demands also include (v) Annexure 4A- Special securities converted
schedules listing grants to bodies other than State into marketable securities;

10
 (vi) Annexure 5- Trends in Receipts; (iv) Non plan Subsidies-Other Subsidies;
(vii) Annexure 6-Trends in expenditure; (v) Departmental Commercial Undertakings;
(viii) Annexure 7- Analysis of Tax and Non Tax (vi) Non Plan Capital Outlay;
Revenue Receipts included in Annex 5; (vii) Non Plan Grants and Loans to Public
(ix) Annexure 8- National Small Savings Fund; Enterprises;
(x) Annexure 9- Reconciliation between (viii) Non Plan Grants and Loans to State and U.T
estimates of Receipts shown in Annual Governments; and
Financial Statement and Receipts Budget ; (ix) Grants and Loans to Foreign Governments.
(xi) Annexure 10-Tax Revenues raised but not Part III of the Expenditure Budget Volume I describes
realized (principle taxes); Plan Outlay and contains the following
(xii) Annexure 11- Arrears of Non Tax Revenue; statements-
and
(x) Plan Outlay for ensuing financial year;
(xiii) Annexure 12- Revenue foregone under the
Central Tax System (xi) Central Plan Outlay by
Ministries/Departments;
(d) Expenditure Budget Volume -1
(xii) Central Plan Outlay by Heads of
Expenditure Budget Vol. No. 1 deals with the Development;
revenue and capital disbursements and gives the
estimates in respect of “Plan” and “Non-Plan” and (xiii) Plan Investments in Public Enterprises;
explains the variations in the estimates of both. It also
(xiv) Resources of Public Enterprises;
gives analysis of various types of expenditure.
(xv) Central Assistance for State and Union
Expenditure Budget Vol. 1 also contains
Territory Plans;
information in separate Statements and Annexes,
providing information relating to General Expenditure, (xvi) Plan Grants and Loans to State and UT
Non Plan Expenditure, and Plan Outlay. The Governments;
Statements relating to Gender Budgeting and Budget
provisions for schemes for the Welfare of Children, (xvii) Direct Transfer of Central Plan Assistance
position on Guarantees given by Central Government to State/District level Autonomous Bodies/
and outstanding, as at the end of March last are also Implementing Agencies;
shown in this document. The estimates of budgetary (xviii) Estimates for Provision for Externally Aided
expenditure shown in this document exclude the Projects;
transactions of Railways and Telecom except to the
extent of Plan investments made from the General (xix) Gender Budgeting;
Budget. This Statement is prepared in three parts-
(xx) Schemes for Development of Scheduled
(i) Part I- General Castes and Scheduled Tribes;
(ii) Part II- Non Plan Expenditure
(xxi) Budget Provisions for Schemes for the
(iii) Part III- Plan Outlay Welfare of Children.
(Note: The Statements and their numbers are
Part I of the document contains the following:
dynamic in nature and are incorporated /amended as
(i) Summary of Expenditure; per requirements from time to time, by the Ministry of
(ii) Expenditure by Ministries/Departments; Finance).
(iii) Expenditure of Union Territories without The Expenditure Budget Volume I contains in
Legislature; addition to the above statements, six
(iv) Revised Estimates of the current year with Annexes viz.-
brief explanations for variations between
Budget Estimates and Revised Estimates, 1. Budget Provisions by Heads of Account;
both in respect of Plan and Non plan. 2. Reconciliation between expenditure shown
(v) Budget Estimates of ensuing year for both in Demands for Grants, Annual Financial
Plan and Non plan. Statement and Annex 1;

Part II of the Expenditure Budget Volume I briefly 3. Trends in Expenditure;

describes important items of Non plan expenditure 4. Contributions to International Bodies;
and contains the following statements-
5. Grants in aid to private institutions,
(i) Non Plan Expenditure for ensuing financial organizations etc.; and
year;
6. Estimated strength of Establishment and
(ii) Non Plan Expenditure by broad categories;
provision therefore.
(iii) Non Plan Subsidies- Interest Subsidies;

11
 This document indicates the action taken and
(e) Expenditure Budget Volume- 2
action in progress on the announcements made in
To understand the objectives underlying the the last budget. The position reflected is updated to
expenditure proposed in the Demands for Grants, a first week of February of the reporting year.
brief description of the various items of expenditure
on major programmes included in the Demands (k) Fiscal Responsibility and Budget
together with the reasons for variation between the
Management Act related documents:
budget estimates and revised estimates for the
previous year and the budget estimates for the (i) Macro-economic Framework Statement;
current year are given in this volume.
(ii) Medium Term Fiscal Policy Statement
In other words, the Expenditure Budget
Volume- II incorporates the Notes on Demands for (iii) Fiscal Policy Strategy Statement
Grants also with the net provisions for the
scheme/programme. Mandated under Section 2(5), 3(4), 3(3), and
3(2) of the Fiscal Responsibility and Budget
(f) Finance Bill Management Act, these statements reflect interalia,
The Finance Bill is presented in fulfillment of the growth prospects of the economy with specific
the requirement under Article 110 (1) (a) of the underlying assumptions, the strategic priorities of
Constitution, detailing the imposition, abolition, Government in the fiscal area for the ensuing
remission, alteration or regulation of taxes proposed financial year relating to taxation, expenditure,
in the Budget. It is accompanied by a Memorandum lending and investments, administered pricing,
explaining the provisions included in it. borrowing and guarantees, and sets out three-year
Finance Bill is a Money Bill defined in Article rolling targets for four specific fiscal indicators in
110 of the Constitution and as required under Article relation to GDP at market prices namely (i)Revenue
117 of the Constitution, introduction of the Finance Deficit, (ii) Fiscal Deficit, (iii)Tax to GDP Ratio and (iv)
Bill needs the prior recommendation of the President, Total out-standing Debt at the end of the year.
except for reduction or abolition of any tax.
SOME OTHER IMPORTANT BUDGET RELATED
(g) Memorandum Explaining the Provisions in
the Finance Bill DOCUMENTS:
The purpose of this document is to facilitate Detailed Demands for Grants:
understanding of the taxation proposals made in the
Finance Bill, with the provisions and their implications The Detailed Demands for Grants are
explained. prepared by the Ministries/Departments on the basis
(h) Budget at a Glance of the provisions made in the Demands for Grants.
This document shows in brief, receipts and The Detailed Demands for Grants are laid on the
disbursements along with broad details of tax/non-tax Table of the Lok Sabha, after the presentation of the
revenues and other receipts and Plan and Non-Plan Budget but before discussion on Demands for Grants
expenditure, including allocation of Plan outlays by commences. These Detailed Demands show further
sectors as well as by Ministries/Departments and break-up by objects of expenditure, provisions of
details of resources transferred by the Central programmes/organizations for which the provision is
Government to State and Union Territory rupees one lakh or more individually. The Detailed
Governments. This document also shows the Demands also show actual expenditure by sub-heads
revenue deficit, the gross primary deficit and the during the previous year separately, for Plan and Non
gross fiscal deficit of the Central Government.
Plan. The estimates are followed by details of
(i) Highlights of Budget recoveries taken in reduction of expenditure in the
The key features of the Budget indicates, accounts. In both the Demands for Grants and the
inter alia, the prominent achievements in various Detailed Demands for Grants, totals are struck
sectors of the economy, new initiatives announced in Major Head wise and Section wise (Revenue
the Budget, allocation of funds made in important and Capital Sections), with reference to-
areas, and a summary of tax proposals.
(i) Total provision;
(j) Status of Implementation of Announcements
(ii) Charged provision; and
made in Finance Minister’s Budget Speech
(iii) Voted provision.

12
Economic Survey:
Economic Survey of any year gives a
detailed analysis of the economic situation of the
country and is presented to Parliament a few days
before presentation of the Annual Budget for the
ensuing year. It includes a Statement about the
position of budgetary transactions of the Central and
State Governments, and their overall surplus/deficit
positions in the current year and the past trends.

In the Economic Survey, along with an

analysis of the economic situation of the country,
detailed analysis is given of the trends in the current
year in agriculture, industry, infrastructure,
employment, money supply, imports, exports, prices,
foreign exchange reserves, balance of payment etc
as compared to selected earlier years. This
document is helpful for a better appreciation of the
proposals for resource mobilization and budgetary
allocation for the ensuing year, and is therefore
presented to the Parliament ahead of the
presentation of the Budget for the ensuing year.

13
 CHAPTER II

ORGANIZATIONAL ASPECTS

ROLES AND RESPONSIBILITIES OF THE LEGISLATURE AND EXECUTIVE:

ROLE OF THE PARLIAMENT: is presented separately to the Parliament and dealt
with separately, although the receipts and
In India the Parliamentary control over public
expenditure of the Railways form part of the
finances becomes operative primarily through the
Consolidated Fund of India and the figures relating to
approval of the Annual Budget. This enormous
the receipts and expenditure of the Railways are
responsibility of spending public funds falls upon the
included in the ‘Annual Financial Statement’.
Government as well as the Parliament. While the
Government is responsible for planning how public The Parliamentary procedures relating to the
money should be spent, the Parliament’s duty as the budgetary process are indicated in the following
people’s representative body is, to observe and paragraphs.
scrutinize the Government’s proposals and policies.
For such Legislative control over the financial
procedures, Articles 265, 266 and 112 of the Indian PRESIDENT’S APPROVAL:
Constitution clearly vests “the power over the purse
in the hands of chosen representatives” by providing According to Article 204(1) of Rules of
that “no tax shall be levied or collected except by Procedure and Conduct of Business in Lok Sabha,
authority of law, no expenditure can be incurred the Budget is presented to the Parliament on such
except with the authorization of the Legislature; and date as is fixed by the President. According to
President shall, in respect of every financial year, parliamentary custom, the Budget is presented at
cause to be laid before Parliament, “Annual Financial 11.00 am (Earlier it was 5.00 pm.) on the last working
Statement”. Thus, the Indian government is day of February i.e. about a month before the
accountable to the Parliament in its financial commencement of the financial year except in the
management. With the constitutional supremacy of year when General Elections to Lok Sabha are held.
the bicameral Parliament, especially of Lok Sabha In an election year, the Budget may be presented
(House of People), every single financial act is twice, first to secure a Vote on Account for a few
processed and passed by the representatives of the months and later in full.
people. However, proposals for the formulation of President’s approval of the date on which the
budget levying taxes, determining government budget is to be presented is obtained for the
accounts and expenditures, are prepared by the preparation of Budget by Secretary General, Lok
Government’s Ministries and consolidated in the Sabha Secretariat after the Speaker agrees to the
Ministry of Finance. date suggested by the Government before the
The Annual Financial Statement, presented commencement of the Budget Session. After the
before both the Houses of Indian Parliament, President’s approval has been obtained, Members
constitutes the Budget of the Union Government. are informed of the date and time of the presentation
This statement takes into account a period of one of budget through Lok Sabha/Rajya Sabha Bulletin
financial year, which commences on April 1st each Part-II.
year. The statement embodies the estimated receipts
and expenditure of the Government of India for the
financial year. The Budget is conceptually divided SUMMARY FOR THE PRESIDENT:
into two sections, i.e. budget for current expenditures, Before presentation of the Budget,
known as the budget on revenue account, and a President’s recommendation is obtained under Article
capital budget for infrastructure/investment 117 (1) and 117 (3) for introduction and consideration
expenditure on economic and social development in Lok Sabha of the :
etc. The estimates of expenditure included in the (a) Appropriation Bill (General)
Budget and required to be voted by Lok Sabha are (b) Finance Bill (along with
presented in the form of Demands for Grants. These recommendation under Article
Demands are arranged Ministry-wise and a separate 274)
Demand for each of the major services is presented. President’s approval for the Budget is
Each Demand contains first a statement for the total obtained through “Summary for the President” along
grant and then a statement of the detailed estimates with the documents on (i) Annual Financial
divided into items. The Budget of the Indian Railways Statement, (ii) Finance Bill (iii) Demands for Grants
and (iv) Statements required under the FRBM Act.

14
The ‘Summary for the President’ also includes the GENERAL DISCUSSIONS:
direct and indirect tax proposals and miscellaneous
financial provisions as proposed through the Finance In consultation with the Ministry of Finance,
Bill. The summary note is approved by the Finance the Ministry of Parliamentary Affairs fixes the dates
Minister and Prime Minister before being taken for for General Discussions on the Budget. As per the
the President’s approval, normally on the morning of Parliamentary Procedures, the General Discussions
the Budget Day itself. on Budget is held on a day appointed by the
Speaker, subsequent to the day of presentation of
SUMMARY FOR THE CABINET: the Budget and for such period of time as the
Speaker may decide. The House is at liberty to
Immediately before the presentation of the discuss the budget as a whole or any question of
Budget in the Parliament, the Finance Minister briefs principle involved therein, but no motion can be
the Cabinet on the budget proposals and the Finance moved at the time of General Discussion nor the
Bill. Budget Division prepares a ‘Summary For The budget is submitted to the vote of the House after the
Cabinet’ outlining in brief the Revised Estimates General Discussion. The Finance Minister has a right
proposals, the Budget proposals for the ensuing year to reply at the end of the discussions. The scope of
including the Plan and Non Plan provisions, the discussion at this stage is confined to general
estimated Receipts and the brief on the compliance examination of budget, policy of taxation as
with the relevant provisions of the FRBM Act and expressed in the Budget speech of the Finance
Rules. The ‘Summary for the Cabinet’ also includes Minister and general schemes and structure etc.
the direct and indirect tax proposals and Specific points or grievances can be discussed on
miscellaneous financial provisions as proposed the floor of the House when it takes up relevant
through the Finance Bill. The summary note is Demands for Grants or the Finance Bill.
approved by the Finance Minister before being taken
to the Cabinet. Immediately after the briefing of the Heads of Divisions are requested to depute
Cabinet by the Finance Minister, the Budget is taken Officers not below the rank of Under Secretaries to
up for presentation in the Parliament. cover general discussions on the ‘Motion of Thanks’
on General Budget and Finance Bill in both the
BUDGET PRESENTATION: Houses of Parliament. They shall immediately report
While presenting the Budget on the important points to their Heads of Divisions/Heads of
scheduled day in the Lok Sabha (at 11.00 hours), the Departments for preparing ‘Notes’ thereon. It should
Finance Minister makes a speech giving inter alia be ensured that such Notes are prepared promptly
details of the proposals for the new financial year and submitted to the Finance Minister and should in
regarding taxation, borrowings and expenditure plans no case be deferred to the following day if the
of the Government. The Budget Speech is largely a discussion is not concluded on that day. “Gist of
policy document whereby the Finance Minister states Points” raised during the day are required to be
the salient features of the financial administration of submitted to the Finance Minister. A specimen of the
the year ending and the year commencing. The main form to be used for submitting ‘Notes’ is part of
purpose however is to focus attention on the policies Annexure I of the Handbook of Parliamentary
and programmes of the Government and how far Procedure, issued by Ministry of Finance. The
they had been already implemented and are Parliament Cell arranges to send copies of verbatim
proposed to be implemented during the forthcoming record of Proceedings of both the Houses to the
budget year. residence of Secretaries and Ministers on the
following day.
The Budget is laid on the Table of the Rajya
Sabha soon after the Finance Minister has completed CUT- MOTIONS:
his budget speech in the Lok Sabha. No discussion After the General Discussion, the Demands
takes place on the day the Budget is presented. Sets for Grants of individual Ministries/Departments are
of Budget papers are supplied to Members after the taken up in the Lok Sabha for discussion according to
budget has been presented. Five copies of the a time table as decided at the meeting of Business
Finance Minister’s speech Part ‘A’ are supplied to the Advisory Committee of the House and voted upon.
Secretary General, Lok Sabha from the Official When a Demand is taken up for discussion, any
Gallery as soon as the Finance Minister starts Member may seek reduction in the amount of the
reading the same. Prior to 1964, ‘Economic Survey’ Demand by moving any of the following types of Cut
which is essentially a part of Budget Documents was Motions, a notice for which should have been given
circulated to the members along with the budget by him earlier-
documents. However, in 1964, it was decided to
delink it from budget documents for circulation to the (a) Disapproval of Policy Cut: by moving “that
members so that they are informed of the current the amount of the Demand be reduced to Re.
economic situation and outlook for the coming year in 1”, thus representing disapproval of the
advance of presentation of the General Budget. policy underlying the demand. The Member
giving notice of ‘Disapproval of Policy Cut’
indicates in precise terms the particulars of
the policy which he proposes to discuss. The

15
 discussion is confined to the specific points Consolidated Fund. Therefore, after the Demands for
mentioned in the notice and it is open to the Grants are voted and passed by Lok Sabha, an
member to advocate an alternative policy. Appropriation Bill is introduced in the Lok Sabha
seeking to “authorize payment and appropriation of
(b) Economy Cut: by moving “that the amount the sums so voted, as well as those required for
of the demand be reduced by a specified meeting the charged expenditure from and out of the
amount” representing the economy that can Consolidated Fund of India for the services during the
be effected. The Member giving notice of financial year”. After the Bill has been considered and
‘Economy Cut’ may indicate either a lump passed by the Lok Sabha, it is transmitted to the
sum reduction in the Demand or omission or Rajya Sabha for consideration and return.
reduction of an item. He, briefly and precisely Appropriation Bill for withdrawal from the
indicates the particular matter on which Consolidated Fund of India is introduced in the Lok
discussion is sought to be raised and his Sabha with the prior approval of the President. For its
speech has to be confined to that matter as introduction, consideration and passing on the same
to how economy can be effected; and day, a special permission has to be sought from the
(c) Token Cut: by moving “that the amount of Speaker.
the demand be reduced by ` 100” in order to The scope of debate on an Appropriation Bill
ventilate a specific grievance, which is in the relating to Demands for Grants for the financial year
sphere of the responsibility of the after remaining demands have been guillotined is
Government of India. The discussion is restricted to important matters or administrative policy
limited to a particular grievance specified in implied in the grants covered by the Bill which have
the motion. not already been raised while relevant Demands for
Advance copies of Cut Motions relating to the Grants were discussed in the House.
Ministry of Finance when received are sent to the FINANCE BILL:
Financial Adviser for preparation of briefs thereon for
the Finance Minister’s use. Normally, Notes on each Finance Bill is introduced by the Finance
and every Cut Motions are not required to be Minister immediately after the Annual Statement of
prepared. It is for the Financial Adviser to select such estimated receipts and expenditure of the Central
Motions which are important and prepare Notes Government is presented in the Lok Sabha. Being a
thereon for the Minister’s use. Cut motions are Money Bill, it is introduced in the Lok Sabha with the
generally replied by the Minister concerned. President’s recommendation under clause (1) of
Article 117. After passing of the Appropriation Bill,
GUILLOTINE: Finance Bill is considered and passed by the
On the last day of the days allotted for Parliament as a Money Bill. In the case of Finance
discussion on the Demands for Grants, at the time Bill, the procedure in Rajya Sabha is the same as in
fixed in advance, the Speaker puts all the outstanding the case of other Money Bills.
Demands for Grants to the vote of the House. This As the Finance Bill is a Secret Bill, copies
process is known as ‘Guillotine’ and is a device for thereof are not circulated to the Members 2 days in
bringing the debate on financial proposals to an end advance of its introduction as required under
within a specified time with the result that several Direction 19 of ‘Directions by the Speaker’. Copies of
Demands have to be voted by the House without the Bill are printed in the Budget Press along with
discussions. When time for applying the guillotine is other secret documents for circulation to the
reached, the Member or the Minister who is in Members. Introduction of the Finance Bill cannot be
possession of the House is asked by the Speaker to opposed. Under the provisions of the Provisional
resume his seat. Cut Motions which have been Collection of Taxes Act, 1931, this Bill is required to
moved are immediately put to vote and disposed off. be passed by both the Houses and receive assent of
The Ministry of Parliamentary Affairs ensures that the President within 75 days of its introduction. The
Ministers concerned with the Ministries/Departments Speaker has held that the Finance Bill should not
whose Demands for Grants are guillotined are contain amendments to both direct and indirect tax
present in the House so that they are available to laws if they are of a permanent nature and are not
provide material/answer on points which may be consequential upon or incidental to the taxation
raised by Members. proposals, for that, a separate Bill i.e. Taxation Laws
APPROPRIATION BILL: Amendment Bill should be brought forward.

Voting of Grants by the Lok Sabha does not The provisions of the Bill relating to
by itself authorize the issue of money out of the imposition of customs and central excise duties come
Consolidated Fund of India. The Constitution lays into force immediately on the expiry of the day on
down that “no money shall be withdrawn from the which the Bill is introduced by virtue of declaration
Consolidated Fund of India except under under the Provisional Collection of Taxes Act, 1931,
Appropriation made by law”. This Act is the sole contained in the Bill to the effect that it is expedient in
authority for the appropriation of money from the the public interest that the provisions of certain
clauses of the Bill shall have immediate effect. Such

16
a provision has the force of law and it will have effect estimating authorities according to their assessment
for 75 days or till the date of enactment of the of requirements for the ensuing year, keeping in view
Finance Bill, whichever is earlier. the actuals of the past years, trends of expenditure in
the current year, arrears of previous years and the
Although there is no bar to the introduction of
decisions already taken by the Government.
more than one Finance Bill containing taxation
proposals in a year yet if a second Finance Bill For framing the detailed estimates, the
containing supplementary taxation proposals is estimating authorities are expected to assess their
introduced, it has to be preceded by Demands for receipts and expenditure requirements with good
Grants and the connected Appropriation Bill. In other care. They are required to be judicious to avoid any
words, the sequence in regard to Budget, as provided extravagance in making provisions and under
in Articles 112 to 115 of the Constitution has to be estimation of receipts, since these may lead to
followed. avoidable tax burden or exclusion of some important
items of expenditure for which provision could have
VOTE ON ACCOUNT:
been otherwise made. Under estimation of
Since the whole process beginning with the expenditure or over estimation of receipts may
presentation of the budget and ending with similarly result in undesirable deficit increase.
discussion and voting on the Demands for Grants
From the detailed estimates the Demands for
require sufficiently long time, a provision has been
Grants are prepared and then the figures of receipts
made in the Constitution which empowers Lok Sabha
and net figures of estimated expenditure (after the
to make any grant in advance in respect of the
deduction of estimated recoveries) are grouped
estimated expenditure for a part of the financial year
under each Major Head of account for including in the
pending completion of procedure for the voting of the
‘Annual Financial Statement’. Before the Annual
Demands. The purpose of ‘Vote on Account’ is to
Financial Statement is finalised, new tax proposals if
keep Government functioning, pending the voting of
any are formulated and their effects included in the
final supply. As a convention, Vote on Account is
Statement.
treated as a formal affair and passed by Lok Sabha
without any discussion. Generally Demands for The Annual Financial Statement of receipts
Grants ‘On Account’ are voted by Lok Sabha and expenditure of the Government is required to be
immediately after general discussion on the budget is placed before the Parliament which, in each case,
over and before the detailed discussion on the confers specific authority for raising revenue through
Demands are taken up. Budget Division in the taxation and incurring expenditure. In this regard, no
Ministry of Finance is required to ensure that “Book tax can be levied or collected except by authority of
for Demands for Grants on Account” is supplied to law while, similarly, no moneys can be appropriated
the Lok Sabha Secretariat well in time for circulation from the Consolidated Fund except in accordance
to the Members. with law and for the purposes and in the manner
provided in the Constitution. The roles of the different
ROLE OF THE EXECUTIVE IN THE BUDGET
Ministries/Departments and organizations in the
PROCESS:
budget preparation process are briefly as under.
The executive authority of the Union
MINISTRY OF FINANCE- DEPARTMENT OF
Government is vested in the President of India who
ECONOMIC AFFAIRS:
exercises this authority either directly or through
officers in accordance with Constitutional provisions. The finances of Government have
However, the President has been placed under a firm traditionally been controlled by the Ministry of
Constitutional obligation to act in accordance with the Finance. With the phenomenal growth and the
advice tendered by the Council of Ministers headed complexity of Government activities, several powers
by the Prime Minister, which is collectively have been delegated to Administrative Ministries, but
responsible to the Parliament. Each Minister holding the Ministry of Finance continues to have the overall
a portfolio for formulating departmental policies is responsibility of co-ordination and control.
individually responsible (as part of collective
responsibility) to oversee the implementation and The Finance Minister, assisted inter alia by
ensure the efficient working of the administrative the Budget Division of the Department of Economic
machinery under his charge. Affairs of the Ministry of Finance, has the
responsibility for producing the Budget, in the form of
To enable Budget Division in the Ministry of the Annual Financial Statement and such
Finance prepare the budget for the financial year, its supplementary budgets as may be needed during a
own estimating authorities and those of other year for the Government of India (other than for the
Departments/Ministries are required to prepare their railways), as well as the other budget documents.
detailed estimates. The estimates are prepared The Budget Division in the DEA is responsible for
separately for Plan and Non plan expenditure. The issuing all instructions and guidelines for the
detailed estimates of expenditure are prepared by the preparation of budget estimates and for monitoring
the timely receipt of the same from all the Ministries

17
concerned. The railway budget is prepared The functions of the Budget Division, as
separately and presented to the Parliament a few included in the Government of India (Allocation of
days in advance of the general budget. The railway Business Rules), 1961 are:
budget figures (net) are, however, also incorporated
in the general budget to give an overall picture of the i. Ways and Means.
financial position of Government. The Railway
Budget is presented to Parliament by the Minister of ii. Preparation of Central Budget other than
Railways. Railway Budget including supplementary
excess grants and when a proclamation by
The Ministry of Finance has issued detailed
the President as to failure of Constitutional
regulations on budgetary procedures, financial
machinery is in operation in relation to a
management and control to be followed uniformly in
State or a Union Territory, preparation of the
the Government of India. The Secretary Department
Budget of such State or Union Territory.
of Economic Affairs keeps a close watch on the entire
budgeting process and his intervention/guidance is iii. Market Borrowing Programme of Central and
solicited to streamline and smoothen the budget State Governments and Government
preparation/finalization exercise. Guaranteed Institutions.
ROLE OF BUDGET DIVISION IN THE iv. Floatation of Market Loans by Central
DEPARTMENT OF ECONOMIC AFFAIRS (DEA): Government and issue and discharge of
The Budget Division in the DEA has the Treasury bills.
prime responsibility for the preparation and v. Administration of the Public Debt Act, 1944
submission of Annual Budget to the Parliament (other (18 of 1944).
than Railways), as well as the Supplementary
Demands for Grants and the Demands for Excess vi. Fixation of interest rates for Central
Grants. The Budget, Supplementary and Excess Government’s borrowings and lending.
Demands of States and Union Territories under the
vii. Policy regarding Accounting and Audit
President’s Rule are also entrusted upon the Budget
Division. procedures including classification of
transactions.
Besides, Budget Division is also responsible
for dealing with all issues relating to Public Debt, viii. Financial matters relating to Partition,
market loans of the Central Government and the Federal Financial integration and
fixation of terms & conditions of lending by the Reorganisation of States.
Central Government, fixing the administered interest ix. Contingency Fund of India and administration
rates and keeping a watch on the Ways and Means of the Contingency Fund of India Act, 1950
position of the Central Government. The Division
(49 of 1950).
deals with the matters relating to National Savings
Organization and Small Savings Schemes; Duties, x. Monitoring of budgetary position of the
Powers and Condition of Service of the Comptroller Central Government.
and Auditor General of India; Accounting
procedures and Classification; dealing with issues xi. Public Provident Fund Scheme.
relating to National Defence Fund; Railway xii. Finance Commission.
Convention Committee; and the Capital Restructuring
Proposals. The work relating to Treasurer Charitable xiii. Resources of Five Year and Annual Plans.
Endowment is also handled in the Budget Division, in xiv. National Deposit Scheme, Special Deposit
pursuance of ‘The Charitable Endowment Act, 1890’ Schemes, Compulsory Deposit Scheme,
which provides that- where property is held or is to Other Deposit Schemes of the Central
be applied in Trust for charitable purposes, the Government.
Central Government, if it thinks fit, may, on xv. Small Savings, including the administration of
application made, order that the property be vested in the National Savings Institute.
a Treasurer Endowments on such terms as to the
application of the property or the income there of as xvi. Duties and Powers of the Comptroller and
may be agreed on between the Government and the Auditor General.
persons(s) making the application. Presently, this xvii. Laying of Audit Reports before the
appointment is held by a designated Deputy Parliament under article 151 of the
Secretary/Director (Budget). Constitution.
xviii. Financial emergency.

18
 xix. Government guarantees. Charged, Revenue/ Capital and Plan/ Non Plan
xx. Functions of the Treasurer of Charitable sections. In the course of examination, Budget
Endowments for India. Division may find and take needful action wherever
in respect of particular items further explanation or
Budget Related Functions:
clarifications etc are necessary before the estimates
The Budget Division placed in the can be settled.
Department of Economic Affairs in the Ministry of
Finance, functions under the supervision of Joint After the scrutiny of each departmental
Secretary/Addl. Secretary (Budget) and the Finance estimate the Budget Division adopts figures for each
Secretary. In addition to work of routine item included in the estimates and cause the
administrative nature and the vertical assignment of estimates so adopted to be compiled in the form it
responsibilities to each section, all the sections in the appears in the various budget documents.
Division are responsible for budgetary matters Simultaneously, Budget Division communicates to
pertaining to the Demands for Grants and allied
the Ministry/Department, the figures adopted in the
subjects of different Ministries/Departments of
Central Government allocated to them. The prime Budget. After all the Ministry/Department's estimates
responsibility of the Budget Division relates to the are settled and the detailed estimates are completed
‘Scrutiny of Receipt and Expenditure Estimates’ in in all respects, the Budget Division examines the
the process of preparation of Budget Estimates and estimates as a whole in order to assess the
Revised Estimates, and related Statements/ Annexes overall/consolidated position and to carry out such
of various budget documents. changes as may be found necessary, for example to
Although the detailed estimates of receipts meet the FRBM targets of deficits, contemplated
and expenditure are prepared by the Central assistance to States or any other financial
Ministries/Departments in the prescribed forms and factor affecting the estimates etc with the approval
furnished to the concerned Sections in the Budget and as per the directions of higher authorities. At any
Division, the actual preparation of the budget and the stage before the Budget is presented to the
estimates is the responsibility of Budget Division in Parliament, Finance Ministry may make such
the Ministry of Finance. On receipt of the modifications in the estimates as may be
departmental estimates, Budget Division examines necessitated by the emergence of factors affecting
the estimates item by item with due regard to the the estimates so far framed. Such action is required
explanations furnished by the estimating officers, the in order to fulfill its responsibility to present the
recommendations if any of the administrative estimates as correctly as possible. The detailed
departments and the trends of actual processes relating to the budget making exercise
expenditure/receipt during the current year. In are dealt with separately in Chapters IV and V of
respect of the estimates of receipts, the Finance this Manual.
Ministry/Budget Division takes into account the DEPARTMENT OF EXPENDITURE:
special information affecting the estimates for the
forthcoming year, which it may possess and which The Department of Expenditure is concerned
with expenditure related financial policies of the
has not already been taken into account by the
government covering financial rules and regulations
estimating authorities. and delegation of financial powers, financial
sanctions on issues not covered by delegated
In respect of the estimates of expenditure
powers, review of staffing of government
the Budget Division does a close scrutiny of the items establishments, general principles of government
relating to fluctuating and non-recurring charges and accounting, administration of Central Treasury Rules,
will not allow any increase that is not adequately State finances, plan budget, planning and
explained or justified. Similar scrutiny of non- development finance, capital restructuring of public
recurring charges is required to ensure that the sector undertakings etc.
estimates are included only after the completion of The concept of expenditure management
the processes of appraisals and approvals/sanctions implies not only limiting expenditure within bounds
of the competent authorities. The purpose is to dictated by prudence, but also ensuring proper inter-
reduce or eliminate from the estimates of the sectoral allocation and utilization of existing assets
forthcoming year, any provision where there is no both financial and physical, including manpower
reasonable certainty that the amount estimated will resources, for the optimal benefits and impact in
achieving the desired objectives.
be spent. Budget Division also does a detailed
scrutiny and making such corrections as are The role of Department of Expenditure is
necessary in the classification of receipts and towards a more pro-active and positive interface
expenditure under the various Major Heads, Voted/ between the Department and the other

19
Ministries/Agencies of the Government. While the Finance Commission branch administers
estimates of expenditure are furnished to Budget grants part of the Finance Commission award
Division in stages, the estimates for each comprising Non-Plan revenue deficit grants,
Ministry/Department are finalised subsequent to the Calamity Relief Fund (CRF), grants for local bodies,
discussions held by Secretary (E) with the Financial health ,education and other special purpose grants.
Advisers scheduled around October/November each This division also administers the releases from the
year. The Ministries/ Departments are instructed to National Calamity Contingency Fund.
frame the estimates keeping note of the past
performance, the stages of Debt and Liabilities branch monitors the ways
formulation/implementation of various schemes, the and means and resource position of States, and
institutional capacity of the implementing agencies to advises the States to take appropriate action
implement the schemes as scheduled, constraints on whenever they face problems relating to cash
spending by the spending agencies, and most management. If necessary, rescheduling, release of
importantly the quantum of Government assistance funds and other possible measures are planned by
lying with the recipients unutilised etc. with a view to this division to help the States tide over their ways
minimise the scope for surrenders at a later stage. and means difficulties. This branch also handles the
work relating to issuance of consent to States under
Plan Finance Divisions of the Department of Article 293(3) of the Constitution for raising borrowing
Expenditure have been entrusted with the specific for the plan as provided in the Annual Plans of the
budget related responsibilities in addition to other States and is increasingly getting involved with all
functions, as indicated below. issues concerning the debt and liabilities of the
States including pensions.
Plan Finance Divisions:
The Plan Finance Division is concerned with Plan Finance Division – II
management of expenditure in relation to Five Year Plan Finance-II Division is primarily
Plans. The two distinct segments of the Plans viz. concerned with matters relating to the Central Plan.
Central Plans and State Plans are handled in two PF.II Division serves as a window within the Finance
separate division viz. Plan Finance I and II. Ministry, which has an overview of the entire canvas
of development activity of the Central Government,
Plan Finance Division – I both at the project level and sectoral policy level. In
The Division which initially was largely meant respect of development schemes and projects, the
for releasing plan assistance to States has now the focus is on improving the quality of development
responsibility of all major aspects of the State expenditure through better project formulation,
finances, including debt and liabilities management, emphasis on outputs, deliverables, impact
major non-plan schemes and fiscal reforms at State assessment, projectisation (Mission approach) and
level. Hence it is often referred to as State Finance convergence.
Division.
Guidelines for Formulation, Appraisal and
The State Finance Division has three main Approval of Government funded Plan
branches- Plan Finance branch which administers schemes/projects are issued/updated from time to
central assistance for State Plans, Finance time. Accordingly to these guidelines,
Commission branch which implements the award of Ministries/Departments are required to prepare
the Finance Commission as accepted by Feasibility Report (FR) for obtaining ‘in-principle’
Government of India, and State Debts and Liabilities approval of Planning Commission and a Detailed
branch which is concerned with the state debts and Project Report (DPR) for appraisal of the
liabilities and administers central facilities and scheme/project in respect of all Plan
initiatives in this regard. Another branch also exists Schemes/Projects in accordance with the financial
for maintaining state finance data, analysis of trends limits laid down therein.
of State Finances and for administering the Debt
Consolidation and Relief Facility for the States drawn Plan Finance-II is the Secretariat for the
up consequent to recommendations of Twelfth Public Investment Board (PIB). The PIB considers
Finance Commission.
investment proposals of Central Government
Plan Finance branch is primarily concerned Ministries in regard to their Public Sector
with administering Central assistance to State Annual Undertakings. Under the existing guidelines, Central
Plans. The Division works closely with Planning Sector Projects costing `200 crore and above are
Commission in assessment of financial resources for considered by PIB. Secretary (Expenditure) is the
Five Year Plans and Annual Plans of States. This
Division also acts as the disbursement division for Chairman of the PIB and Joint Secretary (Plan
Central assistance to States for their State Plans by Finance-II) acts as the Secretary to the Board. Plan
way of untied Normal Central Assistance (NCA) and Finance-II Division is also the focal point for
assistance for earmarked schemes. The division also delegation of financial powers to Expenditure Finance
advises Finance Minister on policy aspects of block Committees (EFCs) and Standing Finance
and schematic parts of the Central assistance to Committees (SFCs).
State Plans.

20
 Plan Finance-II Division also deals with operations. In certain cases where it is not possible to
financial restructuring of Central PSUs on the open a Pay and Accounts Office, departmental
recommendations of Bureau for Restructuring of authorities at appropriate level are authorized to incur
Public Sector Enterprises (BRPSE). Plan Finance-II expenditure subject to the limits prescribed in the
Division is also entrusted with issues relating to Food, letter of assignments issued from time to time by the
Fertilizer and Petroleum subsidies. concerned Pay and Accounts Office. The Pay and
Accounts Offices maintain line item wise accounts of
OFFICE OF CONTROLLER GENERAL OF
all the transactions involving Consolidated Fund of
ACCOUNTS (CGA) IN THE DEPARTMENT OF
India, Contingency Fund of India and Public Account
EXPENDITURE:
of India. Various subsidiary accounts such as Loan
An organisation functioning under the accounts, Fund accounts etc. are also maintained by
Controller General of Accounts (CGA) has been these units.
created in the Department of Expenditure of the
The annual accounts of the Government,
Ministry of Finance, with the functions of the CGA
comprising the Union Government Finance Accounts
incorporated in the (Allocation of Business) Rules,
and the Appropriation Accounts, are also prepared by
1961. The CGA has the responsibility for establishing
the Controller General of Accounts. These
and maintaining a technically sound accounting
documents are presented before the Parliament after
system in the Departmentalised Accounts Offices.
their statutory audit by the Comptroller and Auditor
He, on behalf of the Ministries and Departments,
General of India. Preparation and submission of
liaises with the Budget Division and the Comptroller
Appropriation Accounts to the Parliament completes
and Auditor General of India in accounting matters
the cycle of budgetary process. Through
and provides necessary directions in accounting
Appropriation Accounts Parliament is informed about
matters to the Ministries/ Departments and issues
the expenditure incurred against the appropriations
general instructions about the system and form of
made by the parliament in the previous financial year.
accounts and procedures for accounting of receipts
All the expenditures are duly audited and excesses or
and payments. In order to maintain the requisite
savings in the expenditure are required to be
technical standard of accounting in the
explained in the Appropriation Accounts. The Finance
Departmentalised Accounts Offices, CGA has the
Accounts show the details of receipts and
powers to inspect the offices, and is expected to
expenditure for all the three funds in the form of
ensure that accounts are maintained accurately,
various statements including liabilities of the
comprehensively, and in a correct manner. He is also
government such as guarantees etc. and loans given
required to ensure that data and information are
to states, union territories and public sector
supplied in time to the concerned Ministries. He also
undertakings. These have been dealt in detail later in
has a coordinating and innovating role in the
this Manual.
introduction of Management Accounting system in
the various Ministries/ Departments. ADMINISTRATIVE MINISTRIES:

Controller General of Accounts (CGA) is the The basic responsibility for the administration
of each Department’s activities is entrusted to the
principal Accounts Adviser to the Government of
Head of the Department concerned, who is guided
India and is responsible for establishing and and controlled by the Administrative Ministry. In
maintaining a technically sound management financial matters each Head of the Department is
accounting system. The accounts of the Civil thus responsible for the collection of revenue and
Ministries are compiled and maintained by the Pay control of expenditure pertaining to his Department,
and Accounts Offices, the basic accounting units. the receipt and disbursement of which are usually
CGA prepares a critical analysis of expenditures, effected at various places and through various
persons/authorities. The Ministries also exercise
revenues, borrowings and the deficit for the Finance
financial control over Public Enterprises set up under
Minister every month. He also prepares annual each of them. The Secretary of each Ministry being
Appropriation Accounts and Union Finance Accounts the Chief Accounting Authority for that Ministry
for presentation to the parliament. discharges this function through and with the
assistance of the Chief Controller of Accounts and
One of the main functions entrusted to CGA the Financial Adviser.
is relating to budgetary control over the expenditure.
The control is exercised through the Pay and ROLE OF FINANCIAL ADVISERS:
Accounts Offices who have the authority to release In view of the volume of expenditure
payments of all claims arising out of Governments particularly in regard to large projects and

21
programmes, the system of ‘Financial Advisers’ has the allied issues of FRBM related tasks, Expenditure
been established at the Union level. This system and Cash Management, Project/ programme
ensures the availability of in-house expert advice to formulation, appraisal, monitoring and evaluation,
administrative ministries and departments. For screening of proposals, leveraging of non-budgetary
speedy and effective discharge of their functions in resources for sectoral development, Non tax receipts,
financial matters which include planning, Tax expenditure etc have all been brought out in the
programming, budgeting, internal control, monitoring Redefined Charter For Financial Advisers, issued by
and evaluation, an Integrated Financial Adviser is the Ministry of Finance, Department of Expenditure.
attached to each Administrative Ministry. The
Integrated Financial Advisers as the representatives BUDGET RELATED CHECKS AT THE END OF
of Ministry of Finance, acts both as internal and FINANCIAL ADVISERS:
external financial advisers in the respective Some of the crucial budget specific tasks
Ministries/Departments. He functions as internal included in the items of work to be handled by the
financial adviser in the exercise of powers delegated Financial Advisers are-
to the Ministries under the Delegation of Financial
Power Rules, and acts as an external financial • To ensure that the schedule for preparation
adviser on behalf of the Ministry of Finance in respect of budget is adhered to by the Ministry and
of matters outside the delegated financial powers of the Budget is drawn up according to the
the Administrative Ministry. The Accounts instructions issued by Finance Ministry from
offices/officers under the Financial Adviser of each time to time (the timelines and other
Ministry also keep a watch over the progress of stipulations indicated in the Budget Circular
expenditure and report to the FA and the have to be closely monitored for adherence);
departmental head concerned immediately if there is
• To scrutinize budget proposals thoroughly
the likelihood of any grant being exceeded. Such
before sending them to Ministry of Finance;
financial surveillance provides an additional control
mechanism to enable timely action by the executive. • To screen the proposals for Supplementary
The Redefined Charter for Financial Advisers Demands for Grants;
issued on 1st June, 2006, enjoins the Financial • To formulate the foreign exchange budget for
Advisers as the nodal points within their respective the Ministry;
Ministries for all activities relating to Plan/Non Plan
Budget and Programme/Project evaluations. The • To keep himself closely associated with the
tasks of the Financial Advisers on the subject of formulation of schemes and important
Budget formulation has been described as follows- expenditure proposals from their initial
stages; and
The Financial Advisers will continue to be
responsible for Budget formulation. The Financial • To associate himself with the evaluation of
Advisers mandate is to bring about more analytical progress/performance in the case of projects
inputs into the budget formulation process, for and other continuing schemes and to see
improved budgeting and facilitating moving from that the results of such evaluation studies are
‘itemized’ to ‘budgetary’ control of expenditure. In the taken into account in the budget formulation.
present system which relies largely on previous
year’s programme allocations and continuing With regard to the Budget estimates, the
commitments, without any real evaluation and Financial Advisers are required to keep the
expenditure analysis, the Financial Advisers would following jurisdiction in purviews before
now increasingly be required to assist the sending the proposals to the Budget Division,
Administrative Ministries /Departments in moving which are also included in the Budget
towards zero based budgeting, and assist in better Circular.
inter se programme prioritization/allocation within the 1. Estimates received by the Financial Adviser
indicated budgetary ceilings, based on analysis of are to be scrutinised in his office in regard to
expenditure profiles of each programme/sub- the correctness of accounts classification, full
programme and information on cost centres/drivers; coverage and reasonableness of the
assessment of output, outcome and performance; estimates and modified (reduced, increased
and status of the projects/programmes. The Chief and/or missing items added) to the extent
Controller of Accounts/Controller of Accounts will necessary in the judgment of the Financial
support them in this function. Such an analysis at the Adviser.
time of initial budget formulation should, over a period
of time, help in hard budget constraints and reduce 2. Estimates of interest and Capital receipts are
reliance on Supplementary. As the Financial to be prepared in accordance with the
Advisers’ internal budgetary exercise becomes more guidelines in the Budget Circular and
rigorous, their involvement in Ministry of Finance’s submitted to the Budget Division in the
budgetary processes will increase. The prescribed form.
responsibilities of the Financial Advisers relating to

22
 3. Expenditure estimates should be base upon release of funds, and included as an annex in
realistic assessment and after a thorough the Detailed Demands for Grants.
review of plans and programmes and
exclusion of discontinued programmes from 12. Statements relating to Gender Budget, Child
the estimates. For new schemes, no Budget, SC/ST Statement and Disclosure
provision should normally be made in the Statements under FRBM Rules should be
Budget without completion of pre-Budget sent immediately after the SBE is finalized.
scrutiny of a project/scheme. Similarly, PLANNING COMMISSION:
provisions for the North East, unless
specifically exempt, should be separately The Government of India has constituted a
indicated. body known as the Planning Commission with the
Prime Minister as its Chairman and other Members
4. It is necessary to take into account the comprising eminent personalities from various fields
economy instructions issued from time to of economics, agriculture, education, industry, social
time by Finance Ministry, including the need sciences and public administration. Socio-economic
to bring down subsidies through development planning attempted by the Commission
improvement of operational efficiency and covers the entire country including the States. The
effective direction of flow of subsidies to planning process takes into account- the required
targeted groups. The estimates must growth rate of the Gross Domestic Product (GDP);
conform and abide by the prescribed cuts the growth rates for various sectors of economy; the
and economy measures. sources of funding; and the methodology of achieving
5. The Financial Advisers should review the the planned goals. The Planning Commission also
Statement of Budget Estimates for the examines and gives its expert advice on various
current year in respect of their Demands for projects and programmes.
Grants and suggest to Budget Division such Planning Commission plays an important role
modifications to them as may be required in the budgetary process and the public finances of
keeping in view the guidelines issued by the country. The Planning Commission, besides
Budget Division. formulating and monitoring development Plans,
6. The estimates finally recommended by the advises the Union Government regarding the
Financial Adviser should be summarised in desirable transfer of resources to the States,
the form of Statement of Budget Estimates essential for development outlays. Planning
(proposed) and eighteen (18) copies thereof Commission not only prepares the Plans but through
forwarded to the Budget Division of the the years over its annual scrutiny, at the time of
Ministry of Finance. considering the annual Plan, of overall position of
resources and their application, it has played an
7. After the pre-Budget meetings are over, important role every year in formulation of the
Financial Advisers are required to prepare Budgets of the Centre and the States.
the Statement of Budget Estimates (Final) as
per the approved ceilings for expenditure and PLANNING PROCESS:
send them to Budget Division along with the The Planning Commission holds extensive
other required statements. discussions with the Central Government and the
8. Broad guidelines for preparation of the Notes States, which submit in advance their own estimates
on Demands as mentioned in the Budget of resources and expenditure for the Plan period.
Circular should be followed. Planning Commission prepares the Five Year Plans
taking into account the resources that would be
9. A statement showing items of new available and the needs for development. (The Five
service/new instrument of service is included Year Plans are approved by the National
in the Demands for Grants. Financial Development Council). The discussions in the
Advisers are required to ensure that these Planning Commission with the Government takes
are sent as soon as SBE (Final) is forwarded place at two levels, viz. (i) officials interest and (ii)
to Budget Division. between Ministers and Planning Commission. At the
official level the discussion takes place in two stages:
10. While preparing the Detailed Demands for
Grants it is important to ensure that the (a) Initially at the official level, the
classification, namely, major head, minor discussions are for determining the position of
head, etc. is as per the heads of account resources. The Adviser (Resources) of the Planning
prescribed in the List of Major and Minor
Commission discusses separately with the Finance
Heads of Accounts.
Commissioner/Finance Secretary of each State, the
11. Monthly Expenditure Plan [MEP] for the position of its resources, Non-Plan commitments,
Ministries selected may be drawn up keeping scope for additional resource mobilisation etc. with a
in view the extant guidelines relating to view to determine the contribution that the State

23
would be able to make towards its Plan. The Thereafter, the Planning Commission
representatives of the Ministry of Finance also take finalizes the draft Five Year Plan for the country,
part in these discussions on projections made by which is placed before the National Development
each State, and which are sent in advance to the Council. After approval by the Council, the Plan is
Planning Commission. Based on the outcome, placed before the Parliament.
agreed minutes of the discussions are drawn up and
Within the framework of the Five Year Plan,
are of vital importance for the formulation of ‘State
each year’s Plan (Annual Plan) is separately
Plan’ and State budget during the Plan period. They
considered and finalized through procedures as
show the anticipated resources from various sources,
mentioned at (i) and (ii) above. The size of the
likely Non Plan commitments with necessary details,
Annual Plans of the Centre and the States are
additional resources required to be mobilised as also
finalized on the basis of these discussions. The
the net resources that would be available for the Five
Centre’s contribution in the shape of loan and grant
Year Plan.
for a State’s Annual Plan is also determined.
Similar discussions also take place between
The Annual Plans of the Centre and the
the Adviser (Resources) of the Planning Commission
State are recast within the ceilings fixed in these
and the representatives of the Ministry of Finance for
discussions and the necessary budget provisions
determining availability of resources for the Central
made as per the Annual Plan thus finalized.
Plan and Centrally Sponsored Schemes to be
implemented by the States, and its likely contribution The detailed procedure as laid down in Appendix 3-
for the ‘State Plans’. Usually the discussions between B of the GFR, 2005, with reference to the Plan
the Adviser (Resources) and the representatives of allocations for Central Government
the Ministry of Finance precede the discussions with Ministries/Departments is as follows-
the Finance Commissioner/Finance Secretaries of The Planning Commission prescribe each
the States. In the discussions with the officials of the year the form and the manner in which proposals are
Ministry of Finance, the Planning Commission also required to be submitted to them for determining the
associates representatives of Life Insurance Plan allocations for the ensuing year. The Financial
Corporation and some other financial institutions Adviser in each Ministry / Department of the Central
since they provide funds in the form of loans for Government will accordingly call for requisite data
certain specified objects, and which are taken as from the estimating authorities, public sector and
resources for the Plan. other enterprises under the control of the Ministry /
Department, etc. The approved Plan allocations will
(ii) Keeping in view the results of the
be communicated by the Planning Commission to the
Resource discussions, the second round of
Central Ministries / Departments, indicating the total
discussion takes place between the team experts of
Plan outlay approved for each scheme / organization
the Planning Commission headed by respective
and the extent to which it is to be met from extra-
Advisers and the representatives of different
budgetary resources and from provisions in the
Administrative Ministries for finalizing the Central
Demands for Grants.
Plan, including Centrally Sponsored Plan Schemes to
be implemented by the States. Thereafter, the draft Subject to such directions as may be issued
Plan of each State Government is discussed by the Finance Ministry from time to time, the
separately with the officials of different Departments Revised Estimates for the current year and Budget
of the State Governments for finalizing the State Estimates of the ensuing year, in respect of Plan
Plans. provisions, are to be sent to the Finance Ministry in
Form GFR 7. For furnishing these estimates,
On the basis of the results of the discussions instructions for preparation and submission of Non-
mentioned above, the final round of discussion takes Plan Expenditure Estimates will apply to the extent
place in the Planning Commission headed by its relevant; in addition, the following points should also
be borne in mind :-
Deputy Chairman separately with each Ministry of the
Central Government and with each State. While the (i) Such part of the approved budgetary
Ministers at the Centre participate in these support for Plan outlay as relates to ‘works
discussions, in the case of the States the Chief expenditure’ and has been accepted by the Ministry
Ministers usually take part in these discussions. In of Urban Development for inclusion in their Demands
these meetings, the size of the Plan of each Ministry for Grants should be excluded by the other Ministries
and of each State are finalized along with the / Departments in reporting the estimates to the
determining of the contribution of the Centre for each Finance Ministry in Form GFR 7.
State Plan.

24
 (ii) In the case of Plan, provisions for equity (b) the principles which should govern the
investments and loans to public sector and other grants-in-aid of the revenues of the States out of the
enterprises, as well as those for grants-in aid, specific Consolidated Fund of India;
schemes, for which the outlay is provided and the
[(bb) the measures needed to augment the
extent for each of them is also to be indicated clearly.
Consolidated Fund of a State to supplement the
(i) Provisions for Plan expenditure on Central resources of the Panchayats in the State on the basis
and Centrally Sponsored Plan Schemes, including of the recommendations made by the Finance
such expenditures in Union Territories, are to be Commission of the State;]
included in the relevant demand of the Administrative
[(c) the measures needed to augment the
Ministry / Department and not in ‘Area’ Demand of
Consolidated Fund of a State to supplement the
the concerned Union Territory.
resources of the Municipalities in the State on the
Based upon the Gross Budgetary Support basis of the recommendations made by the Finance
(GBS) package for the Plan schemes conveyed to Commission of the State;]
the Planning Commission by the Ministry of Finance
[(d)] any other matter referred to the
for that particular year, decisions on the allocation to
Commission by the President in the interests of
various Ministries and Departments is conveyed to
sound finance.
the concerned Ministries/Departments and the
Ministry of Finance, Budget Division for inclusion in (4) The Commission shall determine their
the Budget for the ensuing financial year. procedure and shall have such powers in the
performance of their functions as Parliament may by
FINANCE COMMISSION:
law confer on them.
The financial relations between the Centre
The First Finance Commission was
and the Units came up for review in connection with
constituted under Art. 280 by a Presidential Order
the drafting of a new Constitution for independent
dated 22 November 1951, under the chairmanship of
India. The financial provisions in the Draft
K.C. Neogy, while presently it is the Thirteenth
Constitution were referred by the Constituent
Finance Commission that has been constituted.
Assembly to an Expert Committee of three under the
chairmanship of Nalini Ranjan Sarkar, with V.S. Article 281 of the Constitution further
Sundaram and M.Y. Rangachari as members. The stipulates that “The President shall cause every
Committee recommended a pattern of Union-States recommendation made by the Finance Commission
division of tax resources, which was broadly adopted under the provisions of this Constitution together with
in the Constitution of India. an explanatory memorandum as to the action taken
thereon to be laid before each House of Parliament.”
As per Article 280 of the Constitution of India,
Based on the recommendations of the
(1) The President shall, within two years from Finance Commission from time to time, the budget
the commencement of this Constitution and provisions for a year are made after earmarking the
thereafter at the expiration of every fifth year or at States’ share, to work out the Net Tax Revenues of
such earlier time as the President considers the Union Government from the Gross Tax
necessary, by order constitute a Finance Revenues. While the Central Government provides in
its Budget for the outgo from the Consolidated Fund
Commission which shall consist of a Chairman and
of India on this account, each State reflects its own
four other members to be appointed by the President. share of the net divisible pool as its resources in its
(2) Parliament may by law determine the own budget, on the basis of advance intimation
qualifications which shall be requisite for appointment received from the Central Government.
as members of the Commission and the manner in RESERVE BANK OF INDIA:
which they shall be selected.
The banking system which constitutes the
(3) It shall be the duty of the Commission to core of the financial sector, plays a critical role in
make recommendations to the President as to- transmitting monetary policy impulses to the entire
economic system. Its efficiency and development
(a) the distribution between the Union and therefore, are vital for enhancing growth and
the States of the net proceeds of taxes which are to therefore influencing the financial and budgetary
be, or may be, divided between them under this policies of the Government.
Chapter and the allocation between the States of the
The Reserve Bank of India was established
respective shares of such proceeds; on April 1, 1935 in accordance with the provisions of
the Reserve Bank of India Act, 1934 as the Central
Bank of the Government of India. As the Central

25
Bankers to the Government, it has crucial role in the ACCOUNTABILITY CHECKS ON EXECUTIVE:
Monetary and Credit Policy Measures, Government
Securities Market, Strengthening of Capital, I. THE ROLES AND PROCEDURES RELATED
Technology and Payment System, Development of TO THE STANDING COMMITTEES OF
Commercial and Co-operative Banking, Financial PARLIAMENT:
Institutions and Non-Banking Finance Companies
etc. Given the institutional arrangement however, The Parliamentary control over public
RBI’s primary objective is to maintain monetary expenditure is not limited to the voting of moneys
stability. Based upon the fiscal policies of the required by Government for carrying on the
Government, Reserve Bank of India is responsible to administration of the country but also extends to
ensure monetary stability and manage the ensuring prudent expenditure on Plans and
Government’s borrowing programmes with minimum programmes approved by Parliament for the
disruptions. Co-ordination between the Government achievement of underlying objectives. Even though
and RBI is essential for the structural reforms the Lok Sabha discusses Demands for Grants for a
especially when legal and institutional changes are sufficiently long time yet it is almost impossible to
involved as in the case of FRBM Act. scrutinize expenditure proposals effectively or
From the point of view of Budget, the Public minutely. As per Article 118 of the Constitution, each
Debt Management is the most crucial function House of Parliament may make rules for regulating,
performed by the Reserve Bank of India. As per Rule subject to the provisions of Constitution, its procedure
272 of the General Financial Rules relating to and the conduct of its business. Under these
Public Debt, “The public debt raised by Government provisions and in order to help it to exercise effective
by issue of securities shall be managed by the control over public expenditure, Lok Sabha has set
Reserve Bank. The Reserve Bank shall also manage up three financial Committees viz. Public Accounts
securities created and issued under any other law or Committee, Estimates Committee and the Committee
rule having the force of law, provided such law or rule on Public Undertakings, apart from the Department
provides specifically for their management by the Related Standing Committees which came later on.
Reserve Bank”. The Government Securities market Parliamentary Committees figure prominently in the
plays an important role in that it helps banks and
working of all parliamentary democracies and are
financial institutions by providing collateral that could
increasingly serving as the principal tool of
be utilized for gaining financial support and liquidity
without creating a moral hazard problem. A Middle parliamentary control over Government activities.
office created in the Finance Ministry for Debt The Financial Committees in respect of
Management (DMO) is expected to take over the budgetary process have assumed a position of great
function of Public Debt Management in due course. importance in implementing the principle of
The Reserve Bank, in close co-ordination accountability. The three Financial Committees of
with the Government of India, has been pursuing an Parliament play an important role in enforcing
active internal debt management policy since the parliamentary control over public finance viz., to keep
fiscal year 1992-93. A number of policy initiatives an un-remitting vigil over Government spending and
have been undertaken mainly in the areas of performance, and bring to light inefficiencies, waste
institutional development, instrument development, and indiscretion in the implementation of
market efficiency and transparency. Of late, the programmes and policies approved by Parliament,
regulatory and legal aspects have also been pursued. thereby, making the Executive accountable to the
Despite the high level of Government borrowing Legislature in an effective manner. In addition to
programme, the RBI as debt manager has been these there are the Department Related Standing
successfully completing the market borrowing Committees which is responsible for the
programme over the years while pursuing its interest administration and scrutiny of budgetary proposals
rate objectives, without jeopardizing external balance and Bills of Ministries/Departments. The roles and
by taking recourse to several initiatives in terms of functions of these Committees and some other are
institutions, instruments, incentives and strategies. described in brief in the following paragraphs.

The State Finances activity has also been

brought into a clear focus by RBI in order to attend to ESTIMATES COMMITTEE:
the work of planning and execution of the Market
Borrowing Program of the State Governments in a The Estimates Committee is very important
timely and orderly manner. This includes advising on in the sense that through it the House exercises
the Market Borrowing Programme to respective State control over the administrative machinery not only on
Governments on receipt of the details from the the expenditure sanctioned and incurred by various
Ministry of Finance, attending to the pre-floatation Departments of Government, but also over the
arrangements and convening of State Finance general policies of the administration. As per Rule
Secretaries’ meetings. 310 of the Lok Sabha, there shall be a Committee on
Estimates for the examination of such of the

26
estimates as may seem fit to the Committee or are (d) To exercise such other functions vested in
specifically referred to it by the House or the the Committee on Public Accounts and the
Speaker. The functions of the Committee shall be: Estimates Committee in relation to the public
undertakings specified in the Fourth schedule
(a) To report what economies, improvements in
as are not covered by the clauses (a), (b)
organization, efficiency or administrative
and (c) above as may be allotted to the
reform, consistent with the policy underlying
Committee by the Speaker from time to time.
the estimates may be effected;
Provided that the Committee shall not
(b) To suggest alternative policies in order to
examine and investigate any of the following, namely:
bring about efficiency and economy in
administration; (i) Matters of major Government policy as
distinct from business or commercial
(c) To examine whether the money is well laid
functions of the public undertakings;
out with the limits of the policy implied in the
estimates; and (ii) Matters of day to day administration;
and
(d) To suggest the form in which the estimates
shall be presented to Parliament. (iii) Matters for the consideration of which
machinery is established by any special
Provided that the Committee shall not
statute under which a particular public
exercise its functions in relation to such Public
undertaking is established.
Undertakings as are allotted to the Committee on
Public Undertakings by these rules, or by the
Speaker. DEPARTMENT RELATED STANDING
The Estimates Committee may continue COMMITTEES:
examination of the estimates from time to time In order to strengthen the parliamentary
throughout the financial year and report to the House surveillance of the administration and scrutiny of
as its examination proceeds. It shall not be budgetary proposals and Bills a full fledged
incumbent on the Committee to examine the entire Committee system was introduced in 1993. Since
estimates of any one year. The Demands for Grants then, the Departmentally Related Standing
Committees (DRSCs) of Parliament have been
may be finally voted notwithstanding the fact that the
playing a very significant role in assessing the
Committee has made no report. Government’s policies and programmes. In this
regard, the Speaker, Lok Sabha had issued a new
COMMITTEE ON PUBLIC UNDERTAKINGS:
direction 73 A in September 2004, in order to ensure
The task of exercising parliamentary scrutiny that the Ministries give more attention to the
over the accounts of public corporations is recommendations contained in the Reports of
DSRCs. And, the action so taken reported by the
undertaken by the Committee on Public
Government is laid on the Table of the House in the
Undertakings. As per Rule 312-A of Lok Sabha, there form of Action Taken Statement. This system not only
shall be a Committee on Public Undertakings for the ensures accountability of the executive to the
examination of the working of the Public Parliament but also enables Parliament and the
Undertakings which are in the Fourth Schedule (See people to know about the Government’s final replies
fourth schedule in the Lok Sabha Rules). The to the Committee’s specific recommendations.
functions of the Committee shall be:
The main functions of the Committee, as laid
(a) To examine the reports and the accounts of down in rule 270 of the Rule of Procedure and
the public undertakings specified in the Conduct of Business in the Rajya Sabha are:
Fourth schedule; (i) to consider Demands for Grants of the
(b) To examine the Reports, if any, of the C&AG related Ministries/Departments and report
on the public undertakings; thereon. The report shall not suggest
anything of the nature of cut motions;
(c) To examine, in the context of the autonomy
and efficiency of the public undertakings, (ii) to examine Bills pertaining to the related
whether the affairs of the public undertakings Ministries /Departments referred to the
Committee by the Chairman or the Speaker,
are being managed in accordance with
as the case may be, and report thereon;
sound business principles and prudent
commercial practices; and

27
 (iii) to consider the annual reports of the (3) It shall also be the duty of the Committee:
Ministries/Departments and report thereon;
(a) To examine the Statement of Accounts
and
showing the income and expenditure of State
(iv) to consider national basic long term policy Corporations, trading and manufacturing
documents presented to the Houses, if schemes, concerns and projects together
referred to the Committee by the Chairman with the balance sheets and statements of
or the Speaker, as the case may be, and profit and loss accounts which the President
report thereon. may have required to be prepared or are
prepared under the provisions of the
RAILWAY CONVENTION COMMITTEE:
statutory rules regulating the financing of a
The Railway Convention Committee is the particular corporation, trading or
oldest committee of Parliament which reviews the manufacturing scheme or concern or project
rate of dividend which is payable by the railway and the report of the C&AG thereon;
undertaking to the general revenues as well as other (b) To examine the Statement of Accounts
ancillary matters in connection with the Railway showing the income and expenditure of
Finance vis a vis General Finance. It consists of 18 autonomous and semi autonomous bodies,
Members, 12 from the Lok Sabha and 6 from the the audit of which may be conducted by the
Rajya Sabha. Comptroller & Auditor General of India either
under the directions of the President or by a
PUBLIC ACCOUNTS COMMITTEE: statute of Parliament; and
Having voted large sums of money, (c) To consider the Report of the C&AG in cases
Parliament expects a detailed account of how the where President may have required him to
money has been spent, to satisfy itself that the conduct an audit of any receipts or to
money so voted were directed to intended purpose examine the accounts of stores and stocks.
and were spend prudently and economically. It is (4) If any money has been spent on any
difficult for the Parliament to examine in detail the service during a financial year in excess of the
Accounts which are complex and technical in nature, amount granted by the House for that purpose, the
nor does it have adequate time at its disposal for Committee shall examine with reference to the facts
such a detailed examination. The Parliament of each case the circumstances leading to such an
therefore constitutes the Public Accounts Committee excess and make such recommendation as it may
(PAC) and entrusts it with the detailed examination of deem fit;
those accounts. Provided that the Committee shall not
As per Rule 308 of the Lok Sabha, (1) there exercise its functions in relation to such undertakings
as are allotted to the Committee on Public
shall be a Committee on Public Accounts for the
Undertakings by these rules or by the Speaker.
examination of accounts showing the appropriation of
sums granted by the House for the expenditure of the The Public Accounts Committee consists of
Government of India, the Annual Finance Accounts of members of both the Houses of Parliament, 15 from
the Government of India and such other accounts laid Lok Sabha and 7 from Rajya Sabha, and is in the
before the House as the Committee may think fit. nature of a Joint Committee of Parliament. Members
of the Committee are elected every year from
(2) In scrutinizing the Appropriation Accounts of the amongst the members of respective houses
Government of India and the report of the according to the principle of proportional
Comptroller & Auditor General thereon, it shall be the representation by means of single transferable vote.
duty of the Committee to satisfy itself: As an instrument of legislative surveillance over the
Executive, the PAC has a very effective role to
(a) That the moneys shown in the accounts as perform. The detailed procedures relating to the
having been disbursed were legally available working of the Public Accounts Committee are at
for, and applicable to, the service or purpose Annexure-I of Chapter II.
to which they have been applied or charged; II. THE ROLE OF COMPTROLLER AND
(b) That the expenditure conforms to the AUDITOR GENERAL OF INDIA:
authority which governs it; and The Comptroller and Auditor General of India
(C&AG) plays a crucial role in parliamentary financial
(c) That every re-appropriation has been made control. The Indian Constitution provides for a unitary
in accordance with the provisions made in and independent audit by the C&AG. The audited
this behalf under rules framed by competent Appropriation and Finance Accounts are submitted
authority. along with the audit reports of the C&AG to the

28
President of India. These accounts and reports are selective basis, assisted by the C&AG or his Principal
then caused to be laid before the Parliament. Audit Officers as follows:
The primary function of the C&AG audit is to • Assistance in the selection of subjects;
verify the accounts to ascertain-
• Supply of background information and
1. Whether the moneys shown in the memorandum of important points;
accounts as having been disbursed
were legally available for and · Briefing of the working groups/sub-
applicable to the service or purpose to Committees for a proper understanding of
which they have been applied or the subject;
charged and whether the expenditure
• Briefing of the chairmen of the Committees,
conforms to the authority which
as and when necessary;
governs it, and
• Attendance at the sittings of the Committees
2. Whether the assessment, collection
to assist in their examination of witnesses;
and allocation of revenue have been
properly done. • Vetting of written submissions of the
The Appropriation and Finance Accounts are witnesses for ensuring factual accuracy;
accordingly examined under the directions of the • Factual verification of the reports of the
C&AG and certified as to their correctness subject to Committees;
his observations in the Reports on the Accounts
submitted under Article 151 of the Constitution. The • Assistance at the sittings of the Committees
jurisdiction of the C&AG extends to the audit of devoted to deliberation on and adoption of
Government commercial enterprises, as well as to their reports;
bodies and authorities substantially financed from
Government revenues. The C&AG also examines the • Vetting of the notes of government on action
accounts relating to grants and loans given by the taken on the Committees’ recommendations;
Government to other bodies. There is also an • Factual verification of the follow-up reports of
enabling provision in the Act passed by the Union the committees; and
Parliament in 1971 to take up the audit of any other
bodies or authorities with the approval of, or at the • Attendance to assist the Committees at the
request of, the President. sittings for consideration and adoption of
their follow-up reports.
The C&AG has the complete authority and
discretion to make regulations on the scope of audit, Informal assistance is also given to the
within the ambit of the act approved by the individual members and the Secretariat of the
Parliament. Apart from the traditional forms of audit Committees so as to enable them to have a proper
referred to as appropriation and regularity audit, the understanding of the issues dealt with in the relevant
discretionary forms of audit like the propriety audit audit report. The audit reports as such are not
and efficiency cum performance audit have assumed generally discussed in the Parliament, but the
more significance of late from the viewpoint of recommendations of the Committees are by
‘accountability’, as they look beyond the mere convention considered as the recommendations of
regularity of expenditure to its prudence and the entire Parliament. Even in regard to those issues
economy and a general examination of the efficiency dealt with in the audit reports which have not been
and effectiveness with which an organization is taken up by the Committees for detailed oral or other
discharging its financial responsibilities. The powers examination, notes on remedial action taken by
of C&AG to have access to documents and individual departments of government are required to
information in connection with audit of accounts have be submitted to the Committees, after their vetting by
been enhanced under the Act of 1971, wherein the the Audit Department.
C&AG can call for any document as long as it is
considered relevant to the transactions to which his The Public Undertakings Committee of
auditing duties exist. Further, the Act specifically Parliament, besides considering some of the reports
enjoins that the administration shall afford all facilities of Comptroller and Auditor General, carries out its
for his inspection and comply with his request for own examination of the working of the Public Sector
information in as complete form as possible and with Enterprises.
all reasonable expedition. In the audit of the financial statements of
The audit reports of the CAG, other than commercial departments of the Government or the
those relating to commercial enterprises, are public sector enterprises, Generally Accepted
considered by the Public Accounts Committee. The Auditing Standards (GAAS) as applicable to
Committee on Public Undertakings considers the comparable enterprises in private sector are
audit reports relating to commercial enterprises. observed. The C&AG has, however, the right to issue
These Committees examine the audit reports on a directions to the professional accountants who

29
conduct the primary audit of public sector companies,
indicating to them the manner in which the audit of
such enterprises is to be conducted. The C&AG also
review the performance of such auditors.
The main Constitutional provisions
relating to the C&AG of India are at Annexure I of
Chapter II.

30
 CHAPTER III
STRUCTURE OF GOVERNMENT ACCOUNTS
or of reducing recurring liabilities. It also
In accordance with Constitutional requirements includes receipts of a Capital nature intended
Government accounts are maintained in the following to be applied as set off to Capital
three categories: expenditure; and
Part I Consolidated Fund c. The sections ‘Public Debt’ and ‘Loans and
Advances’, comprise of loans raised and
Part II Contingency Fund
their re-payments such as internal debt,
Part III Public Account external debt and their recoveries.

CONSOLIDATED FUND OF INDIA (Part-I): For Budgeting purposes, the distinction

between Revenue expenditure and Capital
Under Article 266(1) of the Constitution of expenditure is of crucial importance, for which
India, all revenues received by the Government of uniform principles are followed both at the Centre and
India, all loans raised by the Government by issue of in the States. The Capital account also includes loans
treasury bills, loans or Ways and Means advances raised by Government and their repayments and
and all moneys received by the Government in loans and advances paid by the Government and
repayment of loans shall form one consolidated fund
their recoveries.
to be titled the " Consolidated Fund of India".
Divisions Under Consolidated Fund of India-
Revenue Account, Capital Account and Debt, CONTINGENCY FUND OF INDIA (Part-II):
Loans & Advances: Expenditure and Receipts
Therein: Under Article 267 of the Constitution of India, a
‘Contingency Fund’ may be established, by law, by
The Consolidated Fund of India has the Parliament into which shall be paid from time to time
following two divisions- such sums as may be determined by such law, and
the said fund shall be placed at the disposal of the
i. Revenue Account
President, to enable advances to be made by him out
ii. Capital Account of such fund for the purposes of meeting unforeseen
expenditure pending authorization of such
Revenue Account- Expenditure/Receipts: expenditure by Parliament. Contingency Fund is in
The Revenue Account deals with the the nature of an imprest. From the financial year
proceeds of taxation and other receipts classed as 2005-06 the corpus of the Contingency Fund of India
Revenue and expenditure met there from. has been enhanced to `500 crore. This was done
under clause 115 of the (Finance) bill of 2005, by
Capital Account-Expenditure/Receipts: transfer of an additional amount of Rs 450 crore from
the Consolidated Fund of India to the Contingency
The Capital Account deals with expenditure
incurred with the purpose of either increasing the Fund of India. Out of this corpus of ` 500 crore, ` 5
concrete assets of durable nature or of reducing crore is kept at the disposal of Ministry of Railways.
recurring liabilities. It is logical otherwise to meet
Capital expenditure from borrowed funds, the The Central Government established its
liabilities in respect of which are spread over a Contingency Fund under the Contingency Fund of
number of years, as the benefits arising from Capital India Act, 1950 and has also framed the ‘Contingency
expenditure flow over a period of years. Capital Fund of India Rules’ under Section 4 of that Act.
Account also includes various types of Capital These rules prescribe the procedure for obtaining
Receipts. advances from this fund and their subsequent
adjustment.
The Capital Account comprises of the
following sections: The corpus of the Contingency Fund is
a. The section ‘Receipt heads (Capital created by debit to the Consolidated Fund of India,
Account)’ deals with receipts of a Capital and when expenditure is incurred out of an advance
nature which cannot be applied as a set off to from the Contingency Fund, the expenditure is
Capital Expenditure; booked under the same head under the ‘Contingency
Fund’ under which it would have been booked had
b. The section ‘Expenditure heads (Capital the expenditure been incurred from the Consolidated
Account)’ deals with expenditure incurred Fund of India. When such an advance is paid from
with the object either of increasing concrete the Consolidated Fund of India, the corpus of the
assets of a material and permanent character fund gets depleted. Subsequently, with the

31
regularization of expenditure by obtaining vote of policies/procedures have been established in rules
Parliament, the amount of advance is recouped to the and regulations mandated by the Union Government
corpus of the Contingency Fund by debit to the on the advice of the C&AG.
Consolidated Fund of India. The expenditure is then
booked under the same head under the Consolidated The Government Accounts have necessarily
Fund of India, as revenue or capital expenditure, as to comply with the budgetary structure of the country.
the case may be. The Contingency Fund of India can Since budgets in India are on an annual basis,
be enhanced through a Finance Bill when the House governmental transactions are also finalised in the
is in session or through Ordnance if the House is not accounts on an annual basis. However, the
in session, in case the situation so warrants. Government Accounts of each financial year are kept
Withdrawal from the Contingency Fund of India takes open for a certain period in the following year for
place with the approval of Secretary, Department of adjusting transactions which took place in the
Economic Affairs, in terms of the Contingency Fund previous financial year. This is considered necessary
of India Act, 1950. in order to allow certain inter-departmental
adjustments, corrections of misclassifications,
In Government accounts, Contingency Fund clearance of certain transitory heads (Suspense
has a single Major Head to accommodate all Heads), and other relevant adjustments.
transactions of the fund. The Contingency Fund of
STEPS IN THE ACCOUNTING PROCESS:
India Rules is at Annexure I of Chapter III.
In view of the vast size of the country and
PUBLIC ACCOUNT (Part-III): widespread activities of the Government, both at the
Union and the State levels, the task of maintaining
To complete the classification, Part III shows Government Accounts is indeed a formidable one.
transactions relating to Debt (other than those The process involves:
included in Part I), ‘Deposits’, ‘Advances’,
‘Remittances’ and ‘Suspense’. In brief, all other public a. initial recording of accounting transactions,
moneys received by or on behalf of the Government their classification with reference to a
of India are credited to the Public Account of India as function or activity, their correlation with the
empowered vide Article 266(2) of the Constitution of administrative ministry/department, i.e. the
India. Such funds, however, remain merged in the appropriate control centre, and their
cash balance of the Central Government, (with the consolidation;
Reserve Bank of India as the bankers to the
b. their matching with legally approved
Government), till payments are made to those to
appropriations (to enable legislatorial
whom the funds pertain or are utilized for general or
scrutiny); and
specific purposes as in the case of Reserve Funds,
or necessary adjustments are made, for example in c. the analysis and presentation of this data to
the case of inter-Government transactions. The net serve as a management tool to the two
funds in the Public Account are also available for Governments.
financing the expenditure of Government.
One of the most distinctive features of the
The Public Account transactions are grouped system of Government Accounts in India is the
according to sectors and sub-sectors which are minute elaboration of the financial transactions of
further sub-divided into Major Heads of Account and Government. Both receipts and payments are
further down as per the accounting classification differentiated and classified in detail. Further, the
system of Government. The details of various sectors uniform classification of transactions enables
and sub sectors in the Public Account have been financial comparisons between Union and State
brought out in Annexure II of Chapter III. Governments.

UNION GOVERNMENT ACCOUNTS: The following three developments are worth

mentioning in this context:
Accounts, as elsewhere, are a systematic
record of various activities and functions expressed in 1. In view of major public investments by
financial terms and maintained by activity Centres. way of plan outlay, government
The Constitution of India envisages the accounts of accounts were required to reflect clearly
the Union and the States to be kept in such a form as the expenditures incurred on various
schemes, programmes and projects,
the President may on the advice of the C&AG
i.e. to conform with the plan heads of
prescribe. The word ‘Form’ has a comprehensive
expenditure.
meaning so as to include the prescription not only of
the broad form in which the accounts are to be kept 2. The Parliament and State Legislatures
but also the appropriate heads under which certain in addition to the general public,
transactions or classes of transactions have to be became increasingly conscious about
entered. Accordingly accounting principles and Government accountability.

32
 3. The Government, as a policy maker listing of receipts by various types of taxes, and
and as the manager of national expenditures by reference to the spending
finances, is more conscious about the department rather than to its objects or purposes.
use of government accounts as a tool With the phenomenal growth and diversity in the
for obtaining adequate and timely functions of governments involving huge outlays,
inputs for the purposes of evaluation, accounts acquired a new dimension. Accordingly the
remedial action and future policy necessity for a more meaningful classification of
decisions. transactions for presentation of government
operations in terms of functions, programmes and
These developments resulted in the
activities became increasingly apparent. A study
government accounting authorities making the
team subsequently established by the Government of
following responses:
India, with the Deputy Comptroller and Auditor
i. Preparation of aggregate accounts General as Convener investigated the feasibility of
[Finance and Appropriation Accounts] devising a uniform classification for the budget,
with not only adequate financial and accounts and plan, and of presenting the objectives
accounting data but (a) with a critical and purposes of government expenditure clearly in
analysis of the financial performance of terms of functions, programmes and activities.
the Government, (b) highlighting Following the recommendations of the team, the
deviations from the expenditure classification of transactions on a function-cum-
incurred in contravention of approved programme basis was introduced from 1st April,
appropriations, and (c) verifying the 1974.
veracity of explanations offered by the
executing agencies; and While the functional approach to
classification is now well established, the divergence
ii. Greater use of EDP methods for the between plan programmes and accounting
purposes of accelerating the process of classification increased over the years. To bring
availability of final accounts and for about a closer correlation between plan schemes and
quick retrieval of need-based
Accounts Heads, the Government constituted a
information.
committee which included a representative of CAG to
The major information inputs provided by the review the existing classification and rationalise the
accounting authorities to the Government are in the Account Heads where required. As a result of this
form of:- (a) Monthly and Annual Accounts, (b) review in consultation with the CAG, the new
Finance Accounts, and (c) Appropriation Accounts. accounting classification came into force from 1 April
1987. While the basic principles and broad structure
ACCOUNTING SYSTEM:
of accounts were retained, certain new sub-sectors
The government accounts in India are kept were introduced, a new coding pattern was devised
on a cash basis. Therefore, only actual receipts and and other changes initiated so that expenditure on
payments during the financial year are taken into plan programmes could be extracted directly from the
account with no outstanding liabilities or accrued accounts. The list of Major and Minor Heads of
income included. All cash appropriations lapse at the
Accounts of Union and States published by the
close of the financial year.
Government of India gives the relevant details.
Although the government accounts are
maintained on cash basis, a need has been felt for
maintaining the relevant accounts on commercial
basis (on modified accrual accounting principles) in
the case of those Government Departments where
functions are purely or largely of a commercial
nature. For this purpose Performa accounts are kept
on commercial accounting principles for those
commercial units under a Ministry or Department. For
the major government commercial departments-such
as Railways, and Posts & Telecommunications-
detailed capital and revenue accounts are prepared
and presented separately. This enables the public to
see the complete picture inter alia about cost of
services rendered and the return from investments.

CLASSIFICATION OF TRANSACTIONS:

The conventional pattern of classification

followed organisational lines, consisting mainly of the

33
SIX TIER ACCOUNTING CLASSIFICATION AND expenditure section/Capital receipts/expenditure
WHAT EACH TIER SIGNIFIES: section and Loans and Advances section. The
Receipt Major heads are assigned the block 0020 to
1999, Expenditure Major heads on Revenue
The Budget of Government is linked to the
accounts from 2011 to 3999, Expenditure Major
accounts and Government transactions accounted for
heads on Capital accounts from 4001 to 5999 while
under the Consolidated Fund, Contingency Fund and
all Capital receipts are classified under Major head
the Public Account of India.
4000. Major heads under Public debt is from 6001 to
CLASSIFICATION SYSTEM: 6004 and those under loans and advances/inter-state
settlement and Contingency Fund from 6001 to 8000
Each Division in the Consolidated Fund and
and the Major heads under Public Account from 8001
the Public Accounts is divided into sectors, which
to 8999. In the loan section Major heads have been
may in some cases be further divided into sub-
opened with reference to functions and purposes
sectors and then into the six tiers of accounting
instead of the beneficiaries.
classification. The number of classification in the
Detailed Demands for Grants are not allowed to go The Sub Major heads are opened under a
beyond the standard six tiers indicated as under- Major head to record those transactions which are of
1. Major Head- 4 digits (Function); a distinct nature and of sufficient importance to be
recorded exclusively, but at the same time allied to
2. Sub-Major Head- 2 digits (Sub-Function); the function of the Major head.

3. Minor Head- 3 digits (Programme); The Major and Sub-Major heads are sub-
divided into Minor heads. The minor heads
4. Sub-Head- 2 digits (Scheme);
correspond to programmes or broad groups of
5. Detailed Head- 2 digits (Sub-Scheme); programmes. It is output oriented rather than
organization or input oriented. The classification upto
and the Minor Head level are prescribed by the Controller
General of Accounts in consultation with the C&AG
6. Object Head- 2 digits (Object Head or
and is common to the Central and State
Primary Units of Governments.

Appropriation) The complete list of Major and Minor Heads

of Account along with the Correction Slips therein are
LIST OF MAJOR AND MINOR HEADS OF available at the website of the Controller General of
ACCOUNTS: Accounts (CGA) at cga.nic.in.

Based on the classification into Revenue and The detailed coding pattern for the six tier
Capital divisions, the transactions are grouped into classification is explained below.
sectors which are further sub-divided into sub-sectors
and Major Heads of account. The major heads
normally indicate within each sector/sub-sector the CODING PATTERN:
broad functions of a particular department of
Government. Major Head
A Four digit code has been allotted to the
In the four digit codes allotted to the major Major Head, the first digit indicating whether the
heads, the first digit indicates whether the major head Major Head is a Receipt Head or Revenue
is a Receipt head/ Revenue expenditure head/ Expenditure Head, or Capital Expenditure Head or
Loan Head. If the first digit is ‘0’ or ‘1’ the Head of
Capital expenditure head or a Loan head. The last Account will represent Revenue Receipt, ‘2’ or ‘3’ will
three digits are the same for corresponding major represent Revenue Expenditure, ‘4’ or ‘5’ - Capital
heads in Revenue receipts section/Revenue Expenditure, ‘6’ or ‘7’ Loan head, (4000 for Capital

34
Receipt) and ‘8’ will represent Contingency Fund and
Public Account. Sub Head/Detailed Head/Object Head
Adding 2 to the first digit of the Revenue Sub Head represents schemes, the detailed
Receipt will give the number allotted to corresponding head represents Sub-Schemes while the Object
Revenue Expenditure Head, adding another 2 - the Head represents the objects/items (e.g. Pay, DA,
Capital Expenditure Head and another 2 - the Loan HRA, Rewards, Gratuity, etc.) on which the
Head of Account, for example: expenditure is incurred. Each of these levels has
0401 Represents the Receipt Head for Crop been allotted a two digit code. Wherever it is not
Husbandry feasible to break up the objects of expenditure into
such details, the codes provided for aggregates of
2401 the Revenue Expenditure Head for Crop certain items may be used instead for computer
Husbandry processing. For example, where it is not possible to
4401 Capital Outlay on Crop Husbandry indicate Pay, DA, HRA, CCA etc. separately, the
code for salaries may be used for representing the
6401 Loans for Crop Husbandry aggregate of these items. The Object Heads have
been prescribed under Government of India’s Orders
Sub-Major Head below Rule 8 of Delegation of Financial Power Rules.
The power to amend or modify these object heads
A two digit code has been allotted, the code
starting from ‘01’ under each Major Head. Where no and to open new Object Heads rest with Department
sub major head exists it is allotted a code ‘00’. A of Expenditure of Ministry of Finance on the advice of
standard nomenclature ‘General’ has been allotted the Comptroller and Auditor General of India.
code ‘80’ so that even after further sub-major heads The Budget Heads exhibited in estimates of
are introduced the code for ‘General’ will continue to
receipts and expenditure framed by the Government
remain the last one.
or in any appropriation order should conform to the
prescribed rules of classification in accordance with
Minor Heads Rule 74 of the General Financial Rules.
These have been allotted a three digit code,
the codes starting from ‘001’ under each Sub-
Major/Major Head (where there is no Sub Major IMPORTANCE OF OBSERVING CORRECTNESS
Head). Codes from ‘001’ to ‘100’ and few others like IN CLASSIFICATION CO-RELATING
‘750’ to ‘900’ have been reserved for certain standard TRANSACTIONS AS CLASSIFIED IN THE
Minor Heads. For example, Code ‘001’ always BUDGET/ACCOUNTS WITH THE FUNCTIONS:
represents Direction and Administration. Non
Standard Minor Heads have been allotted Codes Keeping in view the form of accounts
from ‘101’ in the Revenue Expenditure series and prescribed under the Constitutional provisions under
‘201’ in the Capital and Loan series, where the the advice of C&AG, the Detailed Demands for
description under capital/loan is the same as in the
Grants presented by the Ministries to Parliament,
Revenue Expenditure Section, the code number for
the Minor Head is the same as the one allotted in the should also adopt the same six tier numeric
Revenue Expenditure Section. Code numbers from codification pattern.
‘900’ are always reserved for Deduct Receipt or
However till 1973-74, Heads of Development
Deduct Expenditure Heads.
were more often not in conformity with Heads of
The Code for ‘Other Expenditure’ is ‘800’ Account. As a result, the Budgets and Accounts till
while the codes for other grants/other schemes etc. 1973-74 did not reflect in a meaningful manner the
where minor head ‘Other Expenditure’ also exists is various developmental activities of the Government
kept as ‘600’. This has been done to ensure that the under the Plan. There was thus dichotomy between
order in which the Minor Heads are codified is not
the Plan documents on the one hand and the Budget
disturbed when new Minor Heads are introduced.
and Accounts on the other. In order to enable the
The coding pattern for Minor Heads has been programmes and activities of all organizations and
designed in such a way that in respect of certain Departments to be identified in the Budget and
Minor Heads having a common nomenclature under accounts, the Administrative Reforms Commission
various Major/Sub-major Heads, as far as possible,
(ARC) recommended a review of the Classification
the same three digit code is adopted.
System of Government transactions in Budget and
Computer Cell of the CGA’s organisation is Accounts to have a closer conformity with the Plan
required to be consulted before any new code is Heads. A Revised Classification Structure was
allotted or existing code (at whatever level) is altered. developed in pursuance of the above

35
recommendations of the ARC prescribing a Sub-Major and Minor Heads of Accounts (and also
classification structure up to Minor Head level. some Sub / Detailed Heads under some of them
authorised to be so opened).
Secondly, the Accounts Heads prescribed for
the classification of accounts in the General Accounts In case of certain post budget developments
were also not always identical with those in Demands wherein expenditure provision is required to be made
for Grants, which were adopted by the Ministry of under these heads which are not already available in
the Budget, the Ministries/Departments are
Finance/Finance Departments of States. This
authorized to open new Sub-Heads/ Detailed Heads
dichotomy and the fact that the Plan Heads still did and/ Object Heads as required by them in
not fully conform to Account Heads, made it difficult consultation with the Budget Division of the Ministry
for the audit to reconcile the two sets of figures and of Finance, subject to certain conditions. Normally, a
give audit certificates in respect of expenditure under new head is allowed to be opened only in cases
different Plan Heads. A Revised Structure of where the Budget provision is available (for
Classification, effective from 1st April, 1987 was Reappropriation to the new head) or has been
therefore prescribed, to resolve this dichotomy and obtained through a Supplementary Demands for
has been functional ever since, with the Grant. However, in exceptional circumstances
Ministries/Departments may be permitted to open the
Ministries/Departments instructed to keep in view the
heads in anticipation of obtaining the budget through
following: Supplementary Demands. In such cases, the new
i. The numbers of tiers of classification should heads can be operated only upon obtaining the
budget through Supplementary Demands for Grants.
not go beyond the standard six tiers;
The Principal Accounts Offices may open
ii. Standardized code numbers allotted to the Sub/Detailed Heads required under the Minor Heads
Major, Sub-Major and the Minor Heads in the falling within the Public Account of India subject to
‘List of Major and Minor Heads of Account for the above stipulations.
the Union and States’ should be followed in UNIFORMITY IN STRUCTURE OF ACCOUNTS OF
the Detailed Demands for Grants; UNION AND STATE GOVERNMENTS:
iii. At the Object Head level also, the Standard Under Article 150 of the Constitution, the
heads and codes prescribed by the Ministry accounts of the Union and the States shall be kept in
of Finance shall be adhered; such form as the President may, on the advice of the
Comptroller & Auditor General of India prescribe. Due
iv. The Codes allotted by the Controller General
to this constitutional provision there is uniformity in
of Accounts shall be followed for sub-heads the structure of the accounts of the Government of
and detailed heads; and India and the State Governments upto the first three
v. The Ministries/Departments should tiers of classification of the Major Heads, Sub-Major
disaggregate each composite item of Heads and the Minor Heads. This uniformity in the
expenditure in the Detailed Demands for accounting classification helps in maintaining the
Grant and show it upto Object head as required inter-relationship between the accounts of
indicated in the standard object heads. the Central Government and the State Governments,
since there is substantial transfer of resources from
(Extracts From Rule 8 (2) of DFPR and the Centre to the States. The standardized code
GOI Decisions therein.) numbers allotted to Major, Sub-Major and the Minor
Heads’ in the ’List of Major and Minor Heads of
Account for the Union and States’ as maintained by
PROCEDURE FOR OPENING NEW HEADS OF the Controller General of Accounts are required to be
ACCOUNTS: followed in the Detailed Demands for Grants.
As per Rule 73 of the General Financial The bottom three tiers viz. the Sub-Head,
Rules (Authority to open a new Head of Account), Detailed Head and the Object Head have been
the List of Major and Minor Heads of Accounts of delegated to the State Governments and
Union and States is maintained by the Ministry of Ministries/Departments to be opened through their
Finance (Department of Expenditure – Controller Budget and as may be needed to suit the
General of Accounts) which is authorised to open a requirement of each State Government or the
new head of account on the advice of the Comptroller Ministry/Department. However, the sub-heads should
and Auditor General of India under the powers not be multiplied unnecessarily and new ones are
flowing from Article 150 of the Constitution. It advised to be opened only when really necessary.
contains General Directions for opening Heads of
Accounts and a complete list of the Sectors, Major,

36
ECONOMIC AND FUNCTIONAL CLASSIFICATION iii. Capital Formation out of the Budgetary
OF THE BUDGET: Resources of Central Government;
Apart from the Accounting Classification iv. Net Capital Formation and Savings of
System, the Budget documents also indicate the the Central Government;
Economic Classification i.e. (i) General Services (1),
(ii) Social Services (2), (iii) Economic Services (3), v. The various measures of Deficit in the
and (iv) Un-allocable (4), i.e. those which cannot be Central Government’s Budgetary
related to specific purposes. The figures (1,2,3 and 4) Transactions; and
indicated against each category are prefixed to the vi. Income Generation by the Central
concerned Major Heads under the Accounting Government.
Classification system to provide for an easy co-
relation between the two systems of classification. FINANCE ACCOUNTS:
An economic classification of Budget is The Finance Accounts is an audited (C&AG
necessary to make it useful for economic analysis Audit) presentation of the general accounts of the
and to determine how these transactions influence Government to Parliament, comprising of the
the behaviour of other sectors of the economy. For accounts of the Central Government as a whole,
this purpose, Government transactions (both receipts including the Ministry of Railways or the respective
and expenditure) are arranged under significant State legislatures in case of the State Governments.
economic categories so that these can be related to It presents the accounts of receipts and outflows of
important categories of transactions influencing the the Central Government for the year together with the
behaviour of other sectors of economy. financial results disclosed by different accounts and
other data coming under examination. These
The methodology adopted by the Central
Statistical Organization in computing National Income accounts include the Revenue and Capital Account,
is used in making economic classification of Budget. Public Debt account and other liabilities and assets
In the Centre, the economic classification of each worked out from the balances in the accounts.
year’s budget is done by the Economic Division of the The Finance Accounts comprises of two
Department of Economic Affairs in the Ministry of parts- Part I and Part II. Part I presents the
Finance. For the purpose of comparison, the figures summarized statements in respect of Revenue,
of accounts of the preceding years, Revised Capital, Debt, Deposit, Suspense and Remittances
Estimates of the current year and Budget Estimates transactions and Contingency Fund, while Part II has
of the ensuing year are re-classified under the detailed statements in respect of these transactions,
relevant economic categories. These re-classified along with other related statements. Part II of the
figures are published by the Reserve Bank of India in Finance Accounts is further subdivided into two
its Reports on Currency and Finance. With the re- sections ‘A’ & ‘B’. While section ‘A’ comprises of
classified figures mentioned above, six sets of detailed accounts and statements relating to Receipts
accounts are prepared, viz. (i) Transactions in and Expenditure on Revenue and Capital accounts,
commodities and services and transfers: Current section “B’ has detailed accounts and statements
Account of Government Administration, (ii) relating to Debt, Deposit, Suspense & Remittances
Transactions in commodities and services and transactions and Contingency Fund.
transfers: Current Account of Departmental
Commercial Undertakings; (iii) Transactions in The Finance Accounts Section in the office of
commodities and services and transfers: Capital Controller General of Accounts issues a circular by
Account of Government Administration and the end of March every year, prescribing the time
Departmental Commercial Undertakings; (iv)
Changes in Financial Assets: Capital Account of schedule for closing of Union Government accounts.
Government Administration and Departmental Circulars are also issued by this section detailing
Commercial Undertakings; (v) Changes in Financial guidelines relating to the preparation of Statement of
Liabilities: Capital Account of Government Central Transactions and other materials for the
Administration and Departmental Commercial Finance Accounts.
Undertaking; and (vi) Cash and Capital Reconciliation
Account of Government Administration and After the preparation of the Finance Accounts
Departmental Commercial Undertakings. From these along with the statements, a certificate is recorded on
six sets of accounts, the following figures of
Finance Accounts by the Controller General of
economic significance are derived, through an
accounting analysis. Accounts, which is countersigned by the Secretary
Expenditure, Ministry of Finance. The Comptroller
i. The Central Government’s Total and Auditor General of India thereafter record the
Expenditure;
audit certificate and present it to Government, for
ii. The Central Government’s Final placing before the Parliament.
Outlays;

37
 After obtaining approval of the President, Budget Volume II, indicating net expenditure and
copies of the publication are supplied to Budget minor head wise details of Major Heads/grants and/or
Division in the Ministry of Finance and the Parliament appropriations in Part II of Demands for Grants.
Secretariat, in advance of their presentation to the
Each Principal Accounts Office is required to
Lok Sabha and Rajya Sabha, with the clear
prepare Head wise Appropriation Accounts for each
stipulation that they are to be treated as ‘Secret’, until
grant/appropriation of the Ministry/Department in the
their presentation to the Parliament.
prescribed form, strictly in accordance with the given
(The details relating to the material of nomenclature/lettering up to sub-head level. That is,
Finance Accounts, the procedures for its it should be prepared in 11 digit codes comprising of
compilation and various Statements therein are at 4 digits for Major Head, 2 digits for Sub-Major Head,
Annexure III of Chapter III). 3 digits for Minor Head and 2 digits for sub-head. If
there is no Sub-Major Head, “00” is taken as the Sub-
APPROPRIATION ACCOUNTS:
Major Head digits for uniformity of coding provisions.
These are accounts of the expenditure, voted Head wise Appropriation Accounts is based
and charged, of the Government for each financial on the Budget Estimates as per Detailed Demands
year compared with the amounts of the voted grants for Grants and the Supplementary Estimates, if any,
and appropriations charged for different purposes as and prepared in thousands of rupees. The ‘Statement
specified in the schedules appended to the of Recoveries’ supporting the account, reflect the
recoveries adjusted in accounts in reduction of
Appropriation Acts. These accounts are
expenditure. The Principal Accounts Offices are
complementary to the above accounts of the annual required to ensure the following:
receipts and disbursements of Government (Finance
Accounts). 1. Major Head totals in the Head wise
Appropriation Accounts and the provisions of
The Appropriation Accounts of the Union recoveries shown as reduction of expenditure are
Government are submitted to Parliament under the strictly in conformity with the Major Head totals
provisions of Article151 of the Constitution, and are shown in the Gross Budget Estimates and the
intended to disclose- recoveries in the Main Demands for Grants
presented to Parliament by Ministry of Finance,
(a) That the expenditure conforms to the respectively. If any discrepancy is observed in the
authority governing it (exceptions are listed); two sets of documents viz. Main Demands for Grants
and and Detailed Demands for Grants, it should invariably
(b) The effects of re-appropriations ordered by be brought to the notice of Administrative
the Ministry/Department. Ministry/Department for issue of necessary
corrigendum by Budget Division, Ministry of Finance.
If any expenditure in a financial year is Corrections which lead to opening of heads of
incurred in excess of the amounts of voted grants or accounts will require prior approval of Budget
charged appropriations, the circumstances leading to Division. Other routine corrections may be made by
it will be disclosed through these accounts. It is the administrative Ministries/Departments with the
disclosed separately under the Revenue and Capital approval of the Financial Adviser of the Ministry.
sections to enable the Parliament to regularize it or 2. Supplementary Demands for Grants
take other suitable action. The regularization of makes provision only up to Major Head level. The
excess expenditure for the year is made through distribution up to sub-head level should therefore, be
‘Excess Grants’ submitted to Parliament under Article furnished as received from Administrative
115 of the Constitution after receiving the Ministries/Departments. This is to verify the
recommendations of the Public Accounts Committee. authenticity of supplementary provisions depicted in
the Grant Statement/Head wise Appropriation
The Union Government Appropriation
Accounts.
Accounts (Civil) are a supplement to the Union
Government Finance Accounts. Since the Finance The Secretary of each Ministry/Department
Accounts are prepared on net basis reflecting the acts as the Chief Accounting Authority under the
gross expenditure minus recoveries, the relationship departmentalized system of accounting and is finally
between the two is arranged by below the line responsible to approve and sign the Head wise
recoveries indicated in the form of Note at the time of Appropriation Accounts of the Grants/Appropriations,
reconciliation. This Note is shown below Expenditure administered by his Ministry/Department. The

38
Financial Adviser/Pr. Chief Controller/Chief
Controller/Controller assist him in the preparation of
these accounts. However, for Ministries with
independent Secretary for different Departments,
each Secretary will function as Chief Accounting
Authority for the respective Department. However,
there are certain exceptions in this regard for
example, the Accounts of Union Territories without
legislature, President and Vice President’s
Secretariats, Lok Sabha and Rajya Sabha
Secretariats, Union Public Service Commission,
Comptroller & Auditor General of India, Supreme
Court of India and Election Commission etc are
signed by separate designated authorities.
(The various stages and the processes involved
in the preparation of Appropriation Accounts is at
Annexure IV of Chapter III).

39
 CHAPTER IV
THE BUDGET PROCESS
framing their Revised Estimates for the current year
and the Budget Estimates for the ensuing financial
BUDGET PREPARATION: year, for further rendition to the Budget Division. This
The Budget Cycle normally starts towards the circular gives detailed instructions on the preparation
end of September of the current year and lasts till of estimates of various types of receipts and
May of the next financial year. On the presumption expenditure, including the formats and statements in
that Budget shall be presented at 11:00 hours on the which the estimates are required to be furnished. The
28th/29th of February of a year (last working Day of Budget Circular also outlines the processes that are
February), the Budget Division prepares a
comprehensive Schedule for carrying out the budget to be followed with reference to various estimating
preparation activities. In the year in which General requirements and the scheduled dates by which the
Elections to the Lok Sabha are held, the interim information in the prescribed formats are required to
Budget is presented to Parliament on any given day be made available to Budget Division.
convenient to Government. After the General The detailed procedures for the preparation of
Elections are over and assumption of office by the each of these Budget estimates are brought out in
new Government, the Regular Budget is presented to the following paragraphs.
Parliament on any date convenient to Government or
as decided by the new Government. The Budget
Schedule is constantly reviewed by the senior officers
to watch the progress since budget span leaves no ESTIMATES OF RECEIPTS:
scope for slippages. The Schedule clearly indicates REVENUE RECEIPTS:
the Division/Organization/ Ministry/Department
responsible for various tasks/activities along with the Estimates of Central taxes and duties
timeframe therein. administered by the Central Board of Direct Taxes
(CBDT) and Central Board of Excise and Customs
Budget for a year is prepared by the Budget (CBEC) as also the estimates of cess collection as
Division in the Ministry of Finance broadly on the levied by Government from time to time are required
basis of detailed estimates of expenditure and to be furnished separately by CBEC and CBDT to
receipts received from various Budget Division as per the prescribed timelines. The
Departments/Ministries of Government of India and details relating to commodity-wise estimates of
its own subordinate estimating authorities. The manufacture/imports, duty rates and foreign
General Financial Rules also prescribe the broad exchange rate assumptions and projected rates form
guidelines, procedures and forms for the preparation the main basis of the estimating indirect tax
of budget estimates of receipts and expenditure by collections. The tax rates decisions and growth
the Ministries. The estimates of expenditure are assumptions are primarily the basis for making Direct
prepared separately for Capital and Revenue as a tax estimates. These estimates are made available to
constitutional requirement and Plan and Non Plan in the Budget Division in the required format through the
keeping with the existing classification system. The Tax Research Unit (TRU) on the CBEC side and Tax
estimates of Plan expenditure are made on the basis Policy Legislation (TPL) Division of CBDT. The
of the approved plan allocations intimated by the format largely requires the estimates to be provided
Planning Commission. under the broad items of taxation along with the
The detailed estimates of expenditure are estimates provided separately for cess and
prepared by the estimating authorities according to surcharge.
their assessments of requirements for the ensuing For the purpose of preparing receipts estimates,
year, keeping in view the actual requirements in the all other items of revenue receipts are divided into the
past, current year’s trends of expenditure, the following categories:
decisions taken by the Government which will have a
bearing on the funding requirements etc. The (i) Taxes, duties and receipts in relation to
following paragraphs bring out broadly the process of Union territories without legislature;
estimation and their collation which leads to the
preparation of Budget Estimates..
(ii) Interest receipts in respect of loans and
BUDGET CIRCULAR: advances sanctioned by Ministries/
The commencement of Budget Process takes Departments to State and Union territory
place with the issue of the Budget Circular , normally Governments, foreign Governments, public
issued in the month of September each year. The sector enterprises and others including
Budget Circular is issued with the purpose of Government servants, interest charged to
providing guidance to Ministries/Departments in

40
 working expenses of departmental
commercial undertakings, etc.;

(iii) Estimates of Revenue receipts adjustable

under Major Head ‘1605 - External Grant
Assistance’ and ‘1606-Aid Material and
Equipment’; and

(iv) All other Revenue receipts including

estimates of cess, but excluding the cess
collected by the Central Board of Excise and
Customs and Central Board of Direct Taxes.
Receipt estimates, except for items at sub-para
(ii) and (iii) above, is to be furnished to the Budget
Division in the form prescribed in Appendix-I of the
Budget Circular. This form is also to be used for
Capital receipts except certain other Capital Receipts
for which specific formats have been prescribed.
Estimates of taxes, duties and other revenue receipts
in relation to Union territory administrations is
required to be furnished to Finance Ministry by
Director of Accounts, Andaman and Nicobar Islands
Administration and Director of Accounts, Daman and
Diu Administration, and for the other Union
Territories, by the concerned Accountants General, in
the same form as prescribed in Appendix-I.

41
Revenue/Capital Receipts
APPENDIX-I
REVENUE/CAPITAL RECEIPTS

Ministry/Department/Union Territory:
Major Head:
(in crores of Rupees)
FIRST MONTHS LAST MONTHS Total
Seven Eight Five Four
ACCOUNTS
Preceding Year-III
ESTIMATES
Current Year Budget
Current Year Revised
Ensuing Year Budget

Accounts 7 months Minor Accounts Current Year Ensuing

Heads Year
Preceding Current Preceding Preceding Preceding Budget Revised Budget
Year Year Year-3 Year-2 Year-1 Estimates Estimates Estimates

A separate note on Minor head-wise explanation for increase/decrease is required to be given with
details for example of types of cess and the Act under which it has been levied, rate of cess, date of last revision,
collecting agency, and actual/budgeted collection.

Signature
Designation
Date
Telephone No.
The estimates are required to be based on past and current trends and policy decisions and other relevant
developments and supported by cogent explanations for any large variations as well as broad particulars wherever
the estimates under a minor head exceed `10 lakhs which is particularly essential for major items like import/export
receipts, licence fees, CGHS contributions, house rent receipts, mint and currency receipts, receipts of
thermal/nuclear power stations, dividends from Government investments etc.
Estimates received by the Financial Adviser are required to be scrutinised with regard to the correctness of
accounts classification, full coverage and reasonableness of the estimates and modified (reduced, increased and/or
missing items added) to the extent necessary in the judgment of the Financial Adviser. Thereafter, the Chief
Controller of Accounts is required to furnish the Receipt estimates as finally approved by the Financial Adviser to
the Budget Division, by the prescribed date. Other details relating modalities to be followed with certain specific
types of Receipts are mentioned in the Budget Circular and should be referred to at the time of preparing the
Receipt Estimates.

Dividend Receipts
For providing the estimates of Dividend Receipts the Ministries/Departments are required to furnish the
following statement as prescribed in Appendix-IA of Budget Circular, indicating company wise details of estimates.

42
 APPENDIX-IA
REVENUE RECEIPTS - DIVIDENDS
Ministry/Department/Union Territory:
Major Head: 0050-Dividends & Profits
(in thousands of Rupees)
ESTIMATES
Current Year Budget
Current Year Revised
Ensuing Year Budget
Accounts 7 months Minor Accounts PAT Equity Equity Current Ensuing
Heads Pre- as on holding Year Year
ceding March 31 of GOI
Year-I of current on
Year March 31
of current
Year

Preceding Current Pre- Pre- Pre- Bud Rev- Budget

Year ceding ceding ceding get ised

* PAT - Profit after Tax.

Minor head wise explanation for increase/decrease is required to be indicated along with the name and estimated amount
against each PSU. Details of interim dividend paid in Preceding Year /payable in Current Year in Respect of each PSU is also
required to be furnished separately.

Signature
Designation
Date
Telephone No.

43
 Estimates of dividend receipts is required to be furnished company-wise along with the details of total paid up
capital, Government equity and profit after tax, in the format prescribed in Appendix I-A. These estimates on
dividend receipts should be in conformity with circulars issued on dividend payout by the Ministry of Finance.
Keeping in view the fact that the explanations furnished with this Statement are also the base material for the
preparation of the Explanatory Notes on the Receipts Budget, adequacy and accuracy of the explanations are very
important.
In addition to the information sought in Appendix-IA of the Budget Circular, the specific information as sought
in Appendix-IAA of the Budget Circular is also required to be furnished for all profit making PSUs.
APPENDIX-IAA
REVENUE RECEIPTS - DIVIDENDS

Ministry/Department/Union Territory:
Major Head: 0050-Dividends & Profits
(in thousands of Rupees)
S. Name Total Government Profit Dividend Paid to Government Total Interim Cash/Free
No. of the Paid Share in After for Preceding Year dividend dividend Reserves
Company Capital Paid capital tax for paid for for curr- as on 31st
as on as on 31st Prece- prece- ent year March, of
31st March of ding ding paid/ Current
March Current Year year to be Year
of current Year (sum of paid in
year column) Current
a+b Year
Interim Dividend Final Dividend
Paid in Preceding paid/to be
Year paid in current
(a) Year (b)

The Loss making PSUs are required to be listed out separately and in case there are no PSUs under the control of
the Ministry/Department, a nil report is required to be sent to the Nodal officer in the Budget Division.

Signature
Designation
Date
Telephone No.

44
Estimates of Revenue Receipts for External Assistance
Estimates of revenue receipts, adjustable under the Major heads ‘1605-External Grant Assistance’ and ‘1606-
Aid Material and Equipment’, representing foreign aid receipts in the form of cash grant and commodity grant
respectively, are required to be furnished by the Ministries/Departments in the following format as prescribed in
Appendix ‘I-B’ of Budget Circular, to the Controller of Aid Accounts and Audit, Department of Economic Affairs. The
Controller of Aid Accounts and Audit is required to process these estimates in accordance with the procedure
separately prescribed and render the consolidated estimates to Budget Division.

Revenue Receipts
APPENDIX-I-B
Estimates of Foreign Grants concerning the Ministry/Department of…………………..
Amounts to be provided in Budget Estimates
(Manner of Utilization
Name of Date of Particulars of Total Receipts Current Current Ensuing of Aid)*
the grantor aid assistance assist- Major Year Year Year
country/ agree- to be ance Head B.E. R.E. B.E.
body ment received expec-
ted
1 2 3 4 5 6 7 8 9

---------------------------------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------------------------------

Signature
Designation
Date
Telephone No.
---------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Cash grants and assistance in the form of material and equipment should be indicated separately in
columns 3 to 8.

45
 A brief note is also required to be added to For the sake of convenience the prescribed form
provide brief description of the project on which the in Appendix II covers both interest receipts as well as
aid is to be utilized. In case of aid received in the loan repayments.
form of materials and equipments the relevant Grant
Details and Heads of Accounts of expenditure 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 whether the utilization on transfer will
be on Plan (State/UT/Centrally Sponsored or Central)
or Non-Plan Schemes should also be indicated. In
those cases where the aid material is proposed to be
sold, the Receipt Major Head under which the
proceeds will be credited must be indicated.

ESTIMATES OF INTEREST RECEIPTS:

The estimates of Interest Receipts are required
to be prepared in the following groups:
(a) Interest receipts from State and Union
Territory Governments;
(b) Interest receipts from foreign governments;
(c) Interest receipts from public sector financial
institutions;
(d) Interest receipts from industrial and
commercial enterprises, both in the public
and private sectors;
(e) Interest receipts from statutory bodies
(municipalities, port trusts, etc.);
(f) Interest receipts from departmental
commercial undertakings;
(g) Interest receipts from other borrowers
(excluding Government servants) e.g. dock
labour boards, cooperative societies,
educational institutions, etc;
(h) Interest on advances to Government
servants; and
(i) Other interest receipts e.g. premium on loans
floated, interest on Cash Balance Investment
Account - these would mainly pertain to the
Department of Economic Affairs.
The Chief Controllers of Accounts is responsible
for preparing estimates of interest receipts with
reference to loans outstanding against borrowers in
their books including loans expected to be sanctioned
during the ensuing financial year. The estimates are
required to be furnished after obtaining the approval
of the Financial Adviser. These Statements should be
furnished in duplicate to the Budget Division in the
form prescribed in Appendix-II of the Budget Circular
and within the date prescribed. In case of ‘nil’
proposal also, the same is required to be submitted
to Budget Division in writing without fail.

46
Revenue/Capital Receipts
APPENDIX-II
Estimates of Interest Receipts and Loan Repayments
Ministry/Department:
Interest Repayments
B.E. R.E. B.E. B.E. R.E. B.E.
Current Current Ensuing Current Current Ensuing
Year Year Year Year Year Year
1. State Governments*
2. Union Territory Government*
3. Interest on Capital Outlay in Departmental
Commercial Undertakings**
4. Foreign Governments*
5. Industrial/Commercial/Financial Undertakings
(Undertaking-wise details to be given as in
Appendix II-A) (a) Public Sector Undertakings
(b) Private Sector Undertakings
6. Statutory Bodies (Port Trusts, Municipalities,
KVIC, Tea/Coffee Boards etc.)*
7. Railways
8. Other Parties (Cooperatives, Educational
Institutions, displaced persons and other
Individual loanees excluding Government Servants)*
9. Government Servants***
TOTAL
No. Ministry/Department Signature
Designation
Date
Telephone No.
* Estimates for each State/Union Territory/Foreign Government, Statutory Body or institution should be
separately appended to the Annexure.
** Value of capital outlay and interest rates applicable should be given.
*** Estimates of interest receipts from Government servants will only be included in this Statement. Estimates
of repayment of loans by Government servants are to be furnished separately in the form prescribed in
Appendix VII.

For the industrial and commercial undertakings in the Public Sector/other parties, the estimates are required to
be invariably supported by details as indicated in the form prescribed in Appendix-II-A of the Budget Circular,
furnishing the details relating to each such undertaking/party. Wherever the estimated interest receipt is notional
(being either matched by subsidy provision or by grant of loans to meet the interest liability), this fact is required to
be specifically indicated in the ‘Remarks’ column.
No column in Appendix-II-A of the Budget Circular should be left blank, especially details relating to Defaults in
respect of dues upto the end of last financial year.

47
 Revenue/Capital Receipts

APPENDIX-II-A
Estimates of Loan/Interest Repayment by Central PSUs/Other Parties

Ministry/Department:
(in crores of Rupees)
Name of the Undertaking/Other Party Paid up Capital as on 31st March
of Current Year
1. Central loans outstanding as on 31st March
of Current Year
2. Defaults in respect of dues upto 31st March
of Current Year, if any: Principal Interest

3. Recoveries during Current Year (upto October):

(a) Current dues
(b) Defaulted dues
4. Estimates Interest Principal
B.E. R.E. B.E. B.E. R.E. B.E.
Current Current Ensuing Current Current Ensuing
Year Year Year Year Year Year
(a) from internal resources
(b) from budgetary support:
(i) Plan*
(ii) Non-Plan*
(iii) Conversion of past loans into equity
Total (a) and (b)

5. Details of proposals under consideration, if any, for providing relief to PSU, which would have impact on
repayments/interest payments by it.
Signature of Controller of Accounts
Date
Telephone No.
Please indicate the type of budgetary support – loans or subsidy (towards interest or interest differential) and
enter estimates for each separately; moratorium on loan repayment/ holiday should be mentioned specifically.

48
 A realistic assessment should be made of or conversion into equity, the fact should be
interest due from Public Sector Undertakings and highlighted in the ‘Remarks’ column. Likewise, any
other loan recipients as also of loan repayments by modification in the terms of repayment, like extension
them, taking into account the need to ensure that of period of moratorium and/or repayment should
they fully discharge their current interest obligations also be clearly mentioned. The estimates should fully
and also clear their outstanding dues within a reflect the endeavours to realize the amounts due
practical timeframe. from the various bodies.
The estimates of interest receipts and recoveries Estimates of receipts in respect of bonus shares,
of loans and advances from Public Sector issued by Government companies in favour of the
Enterprises including financial institutions must be Central Government, classifiable under Major Head
framed on the basis of the departmental records and ‘4000-Miscellaneous Capital Receipts’ is required to
the Loan Register maintained by the Pay and be furnished by the Chief Controller of Accounts in
Accounts Office and not on what is proposed by the form prescribed in Appendix-I of the Budget Circular,
companies or financial institutions. Accordingly, with Company-wise estimates. These estimates
information given in Appendix II-A, should reflect the should correspond with the provisions for related
position as per departmental records. The estimates investments included on the expenditure side.
should show (i) company-wise defaults in repayment
of interest upto the end of last financial year, (ii) BE of The estimates of disinvestment of equity holdings
last year and (iii) RE of last year & BE for the ensuing in Public Sector Enterprises are required to be
financial year, on the basis of current dues as per the furnished by Department of Disinvestment in a
loan registers. centralized manner.

Separately in a footnote as approved by PUBLIC ACCOUNT:

Financial Adviser, assessment of the prospects of The estimates of transactions relating to the
recovery of dues may also be given in ‘Remarks Public Account of India are required to be furnished
column’. The amount due for recovery as interest & by the Chief Controllers of Accounts and the
loan repayment during the current and ensuing fiscal concerned Accounts Officers of Union Territory
or financial year should be shown distinctly for each Governments/Administrations both with legislatures
Public Sector Undertaking. and without legislatures in the form prescribed in
Estimates relating to interest charged on Capital Appendix-III of the Budget Circular.
Outlay of the Departmental Commercial Undertakings
should correspond to the expenditure provisions and
the Chief Controllers of Accounts while framing these
estimates must ensure that this correspondence is
maintained. The average rate of interest to be
adopted for this purpose is advised separately by the
Ministry of Finance.
Reliefs and concessions provided to various
PSUs in the form of write off of loans, waiver of
interest/guarantee fee are required to be reflected in
Expenditure Budget as distinct items of expenditure
with equivalent receipts assumed thereunder. Even
though these are all non-cash expenditure, the
receipts so assumed in such cases should also be
included while furnishing receipts estimates to
Budget Division.
CAPITAL RECEIPTS:
Estimates of Capital receipts from
Ministries/Departments will include receipts by way of
loan repayments, disinvestment of equity holdings in
Public Sector Enterprises, issue of bonus shares by
the PSEs in favour of Central Government, and net
receipts under Public Account transactions.
Estimates of receipts by way of loan repayments
along with estimates of interest receipts is also
required to be furnished in the forms prescribed in
Appendix II and II-A of the Budget Circular. In cases
where such receipts are notional, for example due to
write off of loans or re-financing through fresh loans

49
 Capital Receipts
APPENDIX-III
Estimates of transactions relating to the Public Account of India for inclusion
In the Budget for Ensuing Year
RECEIPTS/OUTGOINGS
(in crores of Rupees)

Major, Minor Accounts Balance as B.E. Adjustments R.E. B.E. Remarks

Sub-head etc. Preceding at end of Current upto 1st week Current Current
Year Preceding Year of November of Year Year
Year Current Year
1 2 3 4 5 6 7 8

Signature of Controller of Accounts

Date
Telephone No.

N.B.: The estimates of receipts and disbursements should be prepared on separate sheets.

50
 The concerned Accounting organizations should It is necessary to review the existing Expenditure
prepare the estimates on the basis of a detailed Budget in the first instance, to prioritize the activities
review of the Public Account transactions that are and schemes, both on the Plan and Non-Plan side
accounted for in their books and should be worked and identify those activities and schemes, which can
out on the basis of the past trends and other be eliminated or reduced in size or merged with any
information available that would impact the estimates. other scheme. All Ministries/Departments are
The estimates of receipts and estimated expected to take up the exercise of review/evaluation
disbursements should be prepared on separate of all ongoing schemes/programmes to determine
sheets and should reach Budget Division by the date their continued relevance as stipulated vide O.M. No.
prescribed in the Budget Circular. The estimates 7(5)/E-Coord/2004 dated 24.09.2004 issued by
relating to Group Insurance Scheme for Central Secretary Expenditure (Annex – A of the Budget
Government and Union Territory employees are not Circular). Departments should ensure that all
required to be included in this Statement by schemes that have been discontinued, do not find
Ministries/Departments since these are furnished by mention in Revised Estimates of the current year.
the Chief Controller of Accounts, Ministry of Finance Similarly schemes that are not to continue beyond
in a consolidated manner for the Central Government the current year should not be included for Budget
Employees and by the UT Cell of Ministry of Home Estimates of ensuing year. A mention of the schemes
Affairs for the Union Territory Government discontinued or merged should be made in the notes
Employees. below the Statement of Budget Estimates. Under the
standing instructions of this Ministry, no provision
The estimates relating to Public Account should normally be made in the Budget without
transactions should have footnotes explaining the completion of pre-Budget scrutiny of a
nature of the transactions and should provide project/scheme. Where, however, provision has been
adequate explanation for any major variation in made without the necessary scrutiny, such scrutiny
budget estimates with reference to actual receipts in should be completed and appropriate approvals
the past year. The estimates should be furnished to obtained before the commencement of the financial
Budget Division after getting it approved by the year and passing of Budget by the Parliament.
concerned Financial Adviser, in a consolidated
manner for the Ministry/ Department as a whole While framing the estimates due note may also
(Demand-wise) and should be complete in all be taken of the past performance, the stages of
respects. formulation/implementation of the various schemes,
the institutional capacity of the implementing
Ministry of Railways (Railway Board), Ministry of agencies to implement the scheme as scheduled, the
Defence (Finance Division) and Department of constraints on spending by the spending agencies,
Telecommunications are required to furnish the and most importantly the quantum of Government
estimates of Public Account transactions in their assistance lying with the recipients unutilised etc.
Cash Requirement Estimates. Normally with a view to minimize the scope for surrenders at a
Ministries/Departments should not have any large later stage. The Public Accounts Committee requires
transactions in Public Account except in areas like
that savings in a Grant amounting to `100 crore and
Provident Funds and approved Special Deposits.
above be explained to the Committee. The other
There should not ideally be any Net debit or credit in
Parliamentary Committees have also been
a year in the Public Account transactions and,
repeatedly expressing concern over incidence of
therefore, will not be accepted except with full
large savings in the Grant.
justification for such instances.
Budget Division, Ministry of Finance has issued
instructions on the need for the individual
ESTIMATES OF EXPENDITURE: Ministry/Department to put in place effective
mechanism for realistically assessing their
The estimates of expenditure are required to be requirement of funds in a way that would ward off the
furnished to Budget Division in stages. The estimates occurrence of unwarranted surrender of savings at a
are finalised after Secretary (Exp.) has held later date.
discussions with the Financial Advisers of the
Ministries/Departments. These discussions are For providing grants-in-aid to autonomous bodies
normally scheduled to commence around end of and institutions, the instructions contained in Rule
October/November and are held to decide the Net 209 of the General Financial Rules, 2005 may be
Budgetary ceilings of each Ministry/ Department- that kept in view. In cases where activities of a body cover
is, Expenditure- less dedicated revenue receipts and more than one function of the Government and where
capital receipts which are netted. the body is likely to approach several Departments
for grants, consultation should take place between
The following aspects are required to be kept in the concerned Departments before the grants are
view by the Ministries/Departments while formulating approved. The body should be specifically asked to
the expenditure estimates: furnish details of assistance received or proposed to
be received from other Central Government
Departments or from the State Governments.

51
 It is necessary to take into account the economy expenditure on revenue account from other
instructions issued from time to time by Finance expenditure. Rule 46(2) of General Financial Rules,
Ministry, including the need to bring down subsidies 2005 (GFR) mentions that the estimates of
through improvement of operational efficiency and expenditure shall distinguish provisions for
effective direction of flow of subsidies to targeted expenditure on revenue account from that for other
groups. The estimates must conform and abide by expenditure including expenditure on Capital Account
the prescribed cuts and economy measures. on loans by the government and for repayment of
loans, treasury bills and ways and means advances.
No provision may be made in the establishment All the Ministries/Departments are required to refer to
budget for posts, which are lying vacant for one year these Rules and prepare the Budget Estimates in
or more. Even otherwise, provisioning for vacant compliance of the statutory obligations.
posts should be made with circumspection so as to
avoid chances of eventual savings due to these PLAN PROVISIONS FOR NORTH EASTERN
vacant posts not being filled up. REGION AND SIKKIM:
The provision for externally aided projects may All the Ministries/Departments (except those
be made under identifiable heads, segregated from specifically exempted by Ministry of Development of
other items of expenditure as in the form at Appendix North Eastern Region) are required to spend 10% of
IX-B of the Budget Circular. the Gross Budget Support from their Central Plan for
the benefit of North Eastern Region & Sikkim. Budget
Ministries/Departments make Plan provisions Division’s O.Ms. dated 24th April, 2001 (Annex – C of
against externally aided projects and show these in a the Budget Circular), 13th September, 2002 (Annex –
separate annex viz., “Statement showing project-wise D of the Budget Circular), 14th September, 2005
provisions for expenditure on externally-aided (Annex – E of the Budget Circular) and 5 February,
th

projects in the Central Plan” in the “Detailed 2007 (/Annex-E-I of the Budget Circular) in this
Demands for Grants” of the concerned connection may be kept in view. While sending the
Ministry/Department, in the form at Appendix X-B of RE (Plan) for the current year, the Ministries/
the Budget Circular. It has been observed that there Departments should separately show the Central
is a time lag between incurrence of expenditure and Plan Expenditure on schemes/projects benefitting the
claiming reimbursement thereof from the concerned North Eastern Region and Sikkim.
donors. This puts pressure on the GOI’s Ways &
Means Advances position. In order that the eligible
expenditures are promptly lodged in the form of
claims with the relevant donors through the Office of Budget provisions towards projects/schemes for
Controller of Aid Accounts & Audit for seeking development of North Eastern Region and Sikkim
disbursement of the committed external assistance, have, hitherto, been provided as ‘lump sum’ under
Financial Advisers should hold periodical reviews in the Major Head ‘2552-North Eastern Region’ for
this regard. Budget provision made in BE of the Revenue expenditure and the Major Head ‘4552-
current year against externally aided projects and the Capital Outlay on North Eastern Region’ for Capital
action taken to claim reimbursements thereof from expenditure for eventual reappropriation to
the external donors, is normally reviewed in the pre- appropriate functional heads of expenditure.
budget review meetings to be taken by Secretary However, such lump sum provisions should be
(Expenditure). desegregated upto object head level corresponding
to different functional major/sub-major/minor heads,
Items of expenditure which are linked to receipts, in the Detailed demands for Grants and provided for
like those met from proceeds of cess or 1605- under the Major Head ‘2552-North Eastern Region’
External Grant Assistance or 1606-Aid Material and for Revenue expenditure and the Major Head ‘4552-
Equipment is also required to be similarly segregated Capital Outlay on North Eastern Region’ for Capital
in the Statement of Budget Estimates. expenditure or ’6552-Loans for North Eastern Region’
for eventual re-appropriation. The purpose is to
Subsidies provided towards payment of interest facilitate information to Parliament about the nature of
fall under two categories. They are (i) 100% subsidy expenditure, end-beneficiary, etc. After approval of
and (ii) interest differential (part subsidy). These two the budget by Parliament, the expenditure provisions
items are to be shown distinctly in Statement of can be transferred to the functional head through
Budget Estimates. reappropriation for incurring expenditure by exercise
With a view to maintaining uniformity in the of powers delegated in Finance Ministry’s D.O. letter
treatment of provision for Voluntary Retirement No. F.2 (66)-B (CDN)/2001 dated 12.6.2001 (Annex –
Scheme(VRS)/Voluntary Separation Scheme (VSS) F of the Budget Circular). In this connection,
to Central PSUs, it is required that these amounts instructions have been issued vide Finance Ministry’s
should be depicted as a Non-Plan loan, unless O.Ms. No. F.2(66)-B(CDN)/2001 dated 14.9.2005
otherwise approved by the Finance Ministry. (Annex – E of the Budget Circular) and dated
5.2.2007(Annex-E-I of the Budget Circular).
As per Article 112 of the Constitution of India,
Annual Financial Statement shall distinguish

52
OTHER INSTRUCTIONS ON PREPARATION OF While the prescribed date for receipt of the
STATEMENT OF BUDGET ESTIMATES: estimates of receipts by the Budget Division is
normally not later than the end of December, the date
The Statement of Budget Estimates included in for estimates of expenditure is normally 31st October.
the Expenditure Budget, Volume 2, should normally The estimates of departmental receipts and
show distinctly, the schemes etc. for which Budget expenditure received in the Budget Division are duly
provision is ` 10 crore or more. Important schemes, scrutinised and then accepted for incorporation in the
irrespective of the provision should also be reflected Budget documents through a detailed process, which
separately in the Statement of Budget Estimates. has been explained later in the section Budget
Further, the estimates in the Expenditure Budget Finalization. The sanction of estimates is done in
Vol. 2 (and also Demands for Grants) are expressed accordance with the provisions under Rule 49 of the
in rupees in crore with two decimal places. Under the GFR, ‘Acceptance and inclusion Of Estimates’, which
present system of rounding, major head under which interalia states that:
the total provision is less than ` 50,000 gets excluded (1) The estimates of receipts and expenditure of
from the two documents referred to above. This each Ministry / Department will be scrutinized in the
causes discrepancy with Detailed Demands for Budget Division of the Ministry of Finance. Finance
Grants in which the provisions are expressed in Secretary or Secretary (Expenditure) may hold
thousands of rupees. In such cases the major head, meetings with Secretaries or Financial Advisers of
scheme etc. should be shown in the SBE and the Administrative Ministries or Departments to discuss
Demands for Grants with a footnote that “the the totality of the requirements of funds for various
provision is less than `1 lakh”. programmes and schemes, along with receipts of the
Ministries or Departments.
SANCTION OF ESTIMATES:
(2) The estimates initially submitted by the
The estimating authorities forward the budget Departments may undergo some changes as a result
proposals to their departmental heads for of scrutiny in the Budget Division, Ministry of Finance
consideration and onward transmission to the and deliberations in the pre-budget meetings
ministries administratively concerned. These between the Finance Secretary or Secretary
ministries scrutinize the estimates, make (expenditure) and the Secretary or Financial Adviser
modifications where necessary, and transmit these of the Department concerned. The final estimates
revised estimates to the Financial Adviser for further arrived at on the basis of scrutiny and pre-budget
examination and processing. The Financial Adviser meetings will be accepted by the Budget Division,
ensures the correctness of accounts classification, Ministry of Finance and incorporated in the Budget
makes modifications as may be called for in his documents.
judgment in the context of economy and other
considerations, consolidates the estimates for each The Ministries/Departments are required to
programme/organisation to present a complete review the Statement of Budget Estimates for the
picture of their financial costs, and obtains approval current year in respect of their Demands for Grants
of the Secretary (Expenditure) in the Ministry of and suggest to Budget Division such modifications as
Finance, wherever necessary. Departmental budgets may be required keeping in view the guidelines
are then forwarded to the Budget Division. mentioned above.

For framing the detailed estimates, the estimating SUBMISSION OF ESTIMATES FOR PRE BUDGET
authorities are to assess with good care their receipts DISCUSSION (PROPOSED STATEMENT OF
and requirements. They should be judicious so that BUDGET ESTIMATE):
there is no extravagance in making provisions and no
Before the submission of the Statement of Budget
under estimation of receipts. They are to keep in
Estimates which will be furnished after the finalization
mind that unnecessary provision of expenditure or
of the budgetary ceilings during the pre-budget
under estimation of receipts may lead to avoidable
meetings, the Ministries/Departments are required to
tax burden or exclusion of some important items of
submit the Statement of proposals for pre-budget
expenditure for which otherwise provision could be
discussion in the form prescribed in Appendix IV.
made. Under estimation of expenditure or over
estimation of receipts may similarly result in For furnishing the above estimates, the
undesirable deficit at the end of the year because of Ministries/Departments will, as usual, arrange to
excess expenditure and/ or lesser receipts. obtain the estimates of expenditure for the current
year and the next year from various organisations
The detailed estimates of receipts for the ensuing
and units under their control. The estimates may be
year are prepared by the estimating authorities on the
obtained in the form prescribed in Budget Circular
basis of the rates applicable during the current year.
and may be modified to suit the special requirements
They have to take into account the normal rate of
of individual Ministries/Departments. The estimates
growth, on the basis of experience and latest trends,
will be scrutinised by the administrative units of the
and also unrealized arrears relating to earlier years, if
Ministry/Department and forwarded to the Financial
any.
Adviser for further examination and processing. The

53
estimates finally recommended by the Financial
Adviser will be summarised in the form of Statement
of Budget Estimates (proposed) and eighteen (18)
copies thereof forwarded to the Budget Division of
the Ministry of Finance. The estimates will be on the
same pattern as appearing in the Expenditure Budget
Vol. 2 of the current year. SBE items of omnibus
nature like “other programmes” may be desegregated
so that they are below `10 crore. The expenditure on
“Salaries and Wages” may be shown separately.
Further, the expenditure met from any cess or on
externally aided projects (reimbursable portion) may
be distinctly identified. The form in which these
estimates including recoveries are to be furnished is
at Appendix IV to IV-B as in Budget Circular.

54
 Expenditure
APPENDIX-IV
Estimates of Gross Recoveries NON-PLAN/PLAN
REVISED Current Year
BUDGET Ensuing Year
Major Head of Account
Demand No. & Title
(in thousands of Rupees)
Minor Head Sub-head Units of B.E. R.E. B.E. Remarks (Please enter
as in the as in the Appropriation Current Current Current explanations for major
Demands Demands as in the Year Year Year variations and other
for Grants for Grants Demands information
for Grants
Total (Gross) Recoveries
(Minor head-wise)
Net
Expenditure/SBE
APPENDIX-IV-A
Statement of Budget Estimates

Ministry/Department Demand No.

A. The Budget allocations, net of recoveries, are given below: (in
crores of Rupees)
Current Year Budget Current Year Revised Ensuing Year Budget
Plan Non-Plan Total Plan Non-Plan Total Plan Non-Plan Total
Description Major Head

Revenue
Capital
Total

B. Investment in Public Enterprises:

Current Year Budget Current Year Revised Ensuing Year Budget

Head of Budget I.E.B.R. Total Budget I.E.B.R. Total Budget I.E.B.R. Total
Dev.

C. Plan Outlay:
Central Plan*
State Plan

D. Major Head-wise totals:

Current Year Budget Current Year Revised Ensuing Year Budget
Plan Non-Plan Total Plan Non-Plan Total Plan Non-Plan Total

E. State and UT Plans:

Current Year Budget Current Year Revised Ensuing Year Budget
Revenue Cap/Loan Total Revenue Cap/Loan Total Revenue Cap/Loan Total
Major Head

55
*
Inclusive of works outlay provided in the Demands of Ministry of Urban Development.
APPENDIX-IV-B
Statement of proposals for pre-Budget discussion

Demand No.
(in crores of Rupees)
Part A-Non-Plan items
Description as Preceding Preceding B.E. Actuals for Actuals for R.E. B.E.
shown in the Year-II Year-I Current Preceding Current Current Ensuing
Exp.Bud. Actuals Actuals Year Year-I Year upto Year Year
Vol.2(SBE) upto Sept. Sept. of
of Pre- Current
ceding Year
Year-I
1 2 3 4 5 6 7 8 9
Note: Salary component under any particular item may be indicated separately within brackets.

Part B-Plan items

Description as Preceding Preceding B.E. Actuals for Actuals for R.E. B.E.
shown in the Year-II Year-I Current Preceding Current Current Ensuing
Exp.Bud. Actuals Actuals Year Year-I Year upto Year Year
Vol.2(SBE) upto Sept. Sept. of
of Pre- Current
ceding Year
Year-I
1 2 3 4 5 6 7 8 9
Note: Salary component under any particular item may be indicated separately within brackets.

Part C- Object head wise summary of Non-Plan estimates

Description as Preceding Preceding B.E. Actuals for Actuals for R.E. B.E.
shown in the Year-II Year-I Current Preceding Current Current Ensuing
Exp.Bud. Actuals Actuals Year Year-I Year upto Year Year
Vol.2(SBE) upto Sept. Sept. of
of Pre- Current
ceding Year
Year-I
1 2 3 4 5 6 7 8 9

56
 In so far as the Department of Atomic Energy expenditure. In preparing RE, the following factors
and Department of Space are concerned, SBE inter alia, must be taken into consideration:
(proposed) may be forwarded to Budget Division as
soon as the estimates are compiled, but not later a) Latest actuals during current year;
than the date prescribed in the Budget Circular; b) Actuals for the same period in preceding
without waiting for the approval by the respective year;
Commissions.
c) Actuals in past year/previous years;
Office of the Comptroller & Auditor General of
India may send the SBE to Budget Division by the d) Appropriations/re-appropriations
date prescribed in the Budget Circular. All estimates ordered/contemplated during remaining part
of expenditure may be supported by figures of actual of the year, or any sanction to expenditure
expenditure as indicated in preceding paragraph issued/proposed to be issued during the
including item-wise actuals for the previous year, remaining part of the year;
actuals upto September, of the previous year against
e) Any other relevant factor which may be
the BE for the previous year and actuals upto
foreseen at the time of framing the RE for the
September, of the current year against the BE of
current year or BE for the ensuing year;
current financial year.
f) Actual expenditure upto September, of
Ministries/Departments are also required to
previous year against BE of previous year as
furnish the details position of outstanding utilization
also actual expenditure upto September, in
certificates and unspent balances, which are taken
the current year against BE of current year
into consideration for deciding the Revised
may supplement the process of finalization of
Estimates.
RE for the current year. The actual
PRE-BUDGET MEETINGS: expenditure may be reconciled with the
monthly accounts compiled by Controller
Preparation of Revised estimates of receipts and General of Accounts before incorporating the
expenditure for the current year necessarily precedes same in the revised Appendix IV-B of the
the estimation for the Budget for the ensuing year, Budget Circular;
although preparation of the budget estimate for the
ensuing year is also completed before the end of g) The following information may also be
current financial year. The revised estimates for the furnished to Budget Division along with the
current year are however prepared before the budget SBEs (Proposed):
estimates of the ensuing year as the Supplementary
(i) Effect of additional installments of dearness
Demands are based on the revised estimates of
allowance sanctioned in the current year and
expenditure for the current year, which have to be
the net additionality asked therefore (that is,
obtained before the end of the current financial year.
after setting off against savings, if any).
The figures of the revised estimates are finalized in
the pre-budget meetings with Secretary (Expenditure) (ii) Estimates of committed expenditure, which is
along with the Non Plan Budget Estimates, for the being provided for the first time as Non-Plan
ensuing year. in RE of current year and thereafter in BE of
the ensuing year.
On the basis of the revised estimates of
expenditure, Supplementary Demands for Grants are (iii) Items of expenditure, which are matched by
prepared by the Government of India under Article or linked to receipts like externally aided
115 of the Constitution. projects, bonus share, cess etc.
(iv) Provision included in respect of vacant posts.
PRE BUDGET DISCUSSIONS WITH SECRETARY (v) A separate statement indicating (a) Plan
EXPENDITURE: provision made scheme/project-wise in BE of
the current year against externally aided
The Ministries/Departments are required to
projects, (b) expenditure incurred up to
prepare the Statement of Budget Estimates for RE of
August/September of the current year, (c)
current year and the ensuing year’s Budget
amount for which claims have been lodged
Estimates for pre-budget discussions with Secretary
with the office of Controller of Aid Accounts &
(Expenditure). The dates of discussions are intimated
Audit, DEA seeking reimbursement from the
separately. In the meantime, Financial Advisers are
external donor and (d) requirement in RE for
required to process the SBEs and forward the same
the current year.
to Budget Division by the date prescribed in the
Budget Circular. In the Statement of Budget (vi) Details of authorized and held manpower and
Estimates (proposed) by the Ministries/Departments, current/arrear liability on account of pay &
the current year RE for Plan and Non-Plan allowances in respect of CPSUs and
expenditure and Non Plan BE for the ensuing year is substantially financed autonomous bodies
to be indicated separately for Revenue and Capital getting Non-Plan budget support.

57
 (vii) Unspent balances as on 31st March, of the
current year with all grantee/loanee bodies
(other than the States) in respect of all
bodies which received more than ` 1 crore
grant/loan during the previous financial year.
(Separate details for each body).
(viii)Unspent balances, State-wise and scheme-
wise, as on 31st March, of the current year,
in respect of all schemes.
(ix) Status of pending utilization certificates.
(x) Explanations for variations between BE of
the current year and RE of the current year
(proposed) may be given scheme-wise
separately. Any increase/decrease in BE for
the ensuing year (proposed) may also be
explained suitably.

Note: - The Pre-budget meeting of the

Ministry/Department is generally scheduled only after
receipt of full information as required above.

The briefs for the pre-budget meetings are

prepared by the officers in the Budget Division as per
the horizontal allocation of Ministries/Departments
and the related Demands. As far as possible, the
briefs are to be prepared as per the following internal
guidelines of the Budget Division, and the brief for the
previous year may also be referred to for any relevant
information for the ensuing budget estimates-

58
GUIDELINES FOR PRE- BUDGET BRIEFS:
1. The brief should firstly indicate the following details:
YEAR PLAN NON PLAN
BE RE ACTUALS BE RE ACTUALS
Previous Year (4)

Previous year (3)

Previous year (2)

Previous year (1) @ @

Current Year # * # *

Ensuing Year #
@ Provisional *Upto September/October
# Proposed

2. As far as possible, an effort should be made to detail the following information for those items where
expenditure is more or less than the proportionate:

Sl. No. Plan Schemes BE (Current Year) Exp. Upto Sept. RE (Current Remarks
(Current Year) (Current Year) Year) proposed
♦ The details of Unspent Balance/UC’s as furnished by the Ministries/Departments should also be highlighted
in the remarks column.

♦ The deliberations on the Plan expenditure should be summed up with a proposed RE figure (for current
year).

3. On the Non-Plan side, the same matrix should be followed regarding the schemes/items of expenditure.
Further; a column should be inserted with the following details:

BE RE as Proposed
Salary
Non Salary Non Plan

59
 At first, the details should be for proposing an RE STATEMENT OF BUDGET ESTIMATES (FINAL):
(for the current year). In the calculation of the ceiling,
due cognizance should be taken of the Dept of After the pre-Budget meetings are over, and the
Expenditure’s Economy Instructions (a copy of which approved ceilings for expenditure, as finalised in
is made available in the Budget Circular). these meetings, are communicated including ceilings
for Plan and Non-Plan expenditure (The Revenue
4. BE for the ensuing financial year should be and Capital expenditure break up is finalized within
discussed thereafter for Non-Plan. If detailed items of the concerned Ministries/Departments by the
expenditure exist, then these should be put down in a Financial Advisers) the Financial Advisers are
tabular form. Allowing for increase in the Salary required to prepare the Statement of Budget
component as per the guidelines enunciated in the Estimates (Final) in form Appendix IV-A of the Budget
Dept of Expenditure’s Economy Instructions, a Circular and forward to Budget Division. This SBE
tentative ceiling may be indicated. (final) is to be accompanied by the following
statements-
OTHER RELATED ISSUES:

All the Briefs containing detailed Revised

Estimate/Budget Estimate information are required to
be invariably submitted to JS/AS (Budget) and
Secretary (Expenditure) well in advance of the
meeting date. These Briefs are also circulated to all
Dy. Secretaries/Directors of Budget Division. Apart
from the normal circulation in the Budget Division, the
briefs are also sent to AS (Expenditure), JS
(Personnel), JS (Plan Finance-I) and JS (Plan
Finance-II). Ministries/Departments are also required
to deposit a copy of the information furnished by
them for the pre-budget discussions to the Nodal
Officer in the Planning Commission.
On the folder of pre-budget briefs, the date and
time of the meeting along with the name of the
Financial Adviser, the Chief Controller of Accounts
and the representative of the Planning Commission
may be pasted. Every officer in the Budget Division is
required to work with a well defined time table to
ensure that the task allotted to each officer is
completed as per schedule.
In the discussions during the meetings taken by
Secretary (Expenditure) the totality of the
requirements of funds for various programmes and
schemes are discussed, along with receipts of the
Departments (viz. interest receipts, dividends, loan
repayments, departmental receipts, receipts of
Departmental Commercial Undertakings, etc). The
indicative budget figures are discussed on a net
basis.
The estimates initially submitted by the
Departments may undergo some changes as a result
of scrutiny in the Budget Division, Ministry of Finance
and deliberations in the pre-budget meetings
between the Finance Secretary or Secretary
(Expenditure) and the Secretary or Financial Adviser
of the Department concerned. The final estimates
arrived at on the basis of scrutiny and pre-budget
meetings will be accepted by the Budget Division,
Ministry of Finance and incorporated in the Budget
documents.

60
(1) Statement of charged expenditure included under each of the major heads in RE of the current year, BE of
ensuing year (Appendix V of Budget Circular).

Expenditure
APPENDIX-V
Statement showing amount of “charged” expenditure included in the Estimates

Ministry/Department
Demand No. Name and title of the Demand
(in crore of Rupees)
Serial Name of Major Budget Estimates Revised Estimates Budget Estimates
Number Scheme Head Current Year Current Year Ensuing
Plan Non Total Plan Non Total Plan Non Total
1 2 3 4 5 6
Note: 1. The amount should be indicated in crore of rupees upto 2 decimal places and gross
amounts of expenditure to be shown in Demands for Grants.

Signature
Designation
Date
Telephone No.

(2) Showing the estimates, if any of recoveries taken in reduction of expenditure under each of the major
heads included in the SBE, (Appendix V-A of Budget Circular);

Expenditure
APPENDIX-V-A

Statement showing the estimate of recoveries taken in reduction of expenditure under each
of the Major Head included in SBE

Ministry/Department
Demand No. Name and title of the Demand
(in crores of Rupees)
Serial Name of Major Budget Estimates Revised Estimates Budget Estimates
Number Scheme Head Current Year Current Year Ensuing
Plan Non Total Plan Non Total Plan Non Total
1 2 3 4 5 6

Note: 1. The amount should be indicated in crore of rupees upto 2 decimal places.
2. Where the amount is negligible a symbol should be provided in the appropriate column and
the actual amount in thousands should be indicated at the end of the statement duly linked with the symbol.

Signature
Designation
Date
Telephone No.

(3) Loan and equity components of investments in Public Enterprises with the externally-aided component
therein (Appendix V-B of Budget Circular);

61
 Expenditure
APPENDIX-V-B

Statement showing equity and loan component of investments in Public Sector Enterprises
Modification to Statement of Budget Estimates (Final)
(in crores of Rupees)

(included in Section B of the SBE and Appendix VI)

Name of the P.S.E. Major Head B.E. R.E. B.E.
etc. Current year Current year Current year
Examples:
1. Cement Corporation of India 4854 32.00
6854 64.00
0.00
Total 0.00
2. Oil India Ltd. 4802 0.00
6802
Total 0.00
And so on ....

(4) Brief notes explaining major variations between RE and BE of current year; and between BE of the ensuing
year and RE of the current year should also be furnished with these estimates. Explanations should be
furnished in all cases wherever the variations under the items listed in the SBE exceed `50 lakhs or 10% of
the BE or RE, as the case may be, whichever is lower. Even where the individual variations are within
these limits but the variations under a particular major head included in the SBE exceed `1 crore, a brief
explanation for the variations may be furnished. The explanation should be meaningful and specific. Vague
indications in phrases like “due to less requirement of the project” or “more requirement of the project”
should not be given.
The SBE (final) is required to be sent to Budget Division in two stages:
(i) Immediately after the ceilings are communicated by the Budget Division, the columns relating to Non-Plan
RE of current year and BE for the ensuing year along with Plan RE for the current year should be filled and
forwarded to Budget Division; and
(ii) As soon as the Planning Commission communicates the Annual Plan allocations, SBE (final) for the Plan
expenditure in the ensuing financial year should be forwarded to the Budget Division. Budget Division will
require three copies of SBE (final) in both cases.
In case any modification or amendment is required to be made in the figures already communicated to Budget
Division through SBE (final), the modifications/amendments should be communicated in the form in Appendix VI of
the Budget Circular, as indicated below. Ministries/Departments should not send the entire SBE for this purpose
once again.

Expenditure
APPENDIX-VI
Ministry/Department Scheme wise and Head wise Budget Provisions/Estimates
Demand No. Name and title of the Demand
(in crores of Rupees)
Serial Name of Major Revised Estimates Budget Estimates
Number Scheme Head Current Year Ensuing
Plan Non Total Plan Non Total
1 2 3 4 5

1. Indicate the effect of change as (+)………………….or (-)………………in crores of rupees, immediately after this
indicate in the next line the Major Head total in the individual column after effecting this change.
2. After all these changes give the summary of the final total as below:

Revised Estimates Ensuing Year Budget Estimates Ensuing Year

Plan Non Total Plan Non Total
Revenue
Capital
Total

62
 Ministries/Departments may take particular care be proposed by the Ministry/Department to which the
in filling the estimates relating to each of the public work has been transferred.
enterprises (budgetary support, internal and extra
budgetary resources and total plan outlay). Similarly, Pursuant to the instructions contained in the
if works expenditure is to be incurred through the Government of India (Allocation of Business) Rules
Ministry of Urban Development, the same should be 1961, any transfer of items of works and their
included in the column provided therefore in the corresponding provisions from a Ministry/Department
Statement of Budget Estimates after settling the will be put into effect through the Supplementary
estimates with Ministry of Urban Development. SBE Demands for Grants. Therefore, at RE stage, the
(final) for Plan should carry a certificate that the total Ministry/Department from where the work has been
provision inclusive of the works outlay corresponds to transferred should surrender the expenditure
the allocation given by the Planning Commission. provision from those specific items of work and
indicate the same categorically during the pre-Budget
The budget provision towards ‘Works Outlay’ are discussion with Secretary (Expenditure).
reflected in the Demands for Grants (both under plan
and non-plan) in respect of Ministries/Departments, OTHER INFORMATION REQUIRED TO BE
who expressed their willingness for such reflection, in FURNISHED WITH THE STATEMENT OF BUDGET
terms of Budget Division’s O.M. No.1(5)B(AC)/2005 ESTIMATES:
dated 12.10.2006 (Annex-R of the Budget Circular).
In addition to the Statement of Budget Estimates and
Such provisions in respect of other the Recoveries prescribed above, the
Ministries/Departments are required to be continued Ministries/Departments are required to furnish other
to be reflected in the Demands for Grants of Ministry
details for the finalization of various Statement and
of Urban Development (Demand of Department of
Urban Development and Demand of Public Works) in Annexure of the Budget documents including the
BE of the ensuing year. Ministries/Departments, Demands for Grants, Expenditure Budget Volume1
which are willing to shift their provisions towards and 2, Receipts Budget etc in the forms prescribed
‘works outlay’ from the Demands for Grants of below. These Statements are required to be
Ministry of Urban Development to their Demands for
Grants, may approach Budget Division, separately. furnished as per the timelines indicated in the Annual
Budget Circular.
In the case of Union Territories without
Legislature the Ministry of Home Affairs (being the
nodal Ministry) will get the Statement of Accepted
Estimates from the Ministries/Departments and U.T.s
concerned and examine these to ensure that the total
provisions are within the ceilings approved for each
U.T. They should furnish the information along with
related recoveries, and receipts, to the Ministry of
Finance (Budget Division). The information should be
furnished Major Head-wise and Ministry-wise on the
same pattern as per the Demands for Grants of
current year. The other Ministries/Departments and
U.Ts are not required to send any SBEs to the
Ministry of Finance directly, and all correspondence
in this regard should be made through the Ministry of
Home Affairs only.
In cases of items of work transferred from one
Ministry/Department to another subsequent to the
presentation of the Budget for current year, the B.E.
and R.E. for the current financial (and in the Detailed
Demands for Grants, the Actuals for the previous
financial year also) in respect of these items may be
shown along with the BE for the ensuing financial
year in the relevant Demands for Grants (for ensuing
financial year) of the Ministry/Department which has
taken over the work, to facilitate comparison.
Consequently, these items may completely be
deleted from the Demands for Grants for ensuing
financial year of the Ministry/ Department from which
these have been transferred. Necessary
Supplementary Demands for Grants provision may

63
 APPENDIX-VII
Loans to Government servants, etc.
Ministry/Department
Disbursements
(in thousands of Rupees)
Actuals
Preceding Preceding Preceding Current Year Major Heads, Current Year Ensuing Year
sub-heads etc. BE RE BE
Year - III Year-II Year-I (upto Sept.
of current
year)
Total

(i) House building advances

(ii) Advances for purchase of motor cars
(iii) Advances for purchase of other motor
Conveyance s
(iv) Advances for purchase of computers
(v) Advances for purchase of other conveyances
(vi) Other advances

Total

Repayment (of the Principal)

Preceding Preceding Preceding Current Year Major Heads, Current Year Ensuing Year
sub-heads etc. BE RE BE
Year - III Year-II Year-I (upto Sept.
of current
year)

Signature of Controller of Accounts

Date
Telephone No.

NOTES ON DEMANDS:
The Notes on Demands for Grants appear in Expenditure Budget Volume-2. These are intended to depict a
brief summation of the budget allocations as appearing in the Expenditure Budget Volume-2. Hence, these are
required to be brief, to the point and should be linked to the item for which the Budget allocations have been
reflected. Further and more elaborate detailing on schemes can be made in the Expenditure Budget Volume-1.
The note may be forwarded in bilingual form together with a soft copy to the designated officers in the Budget
Division within three days of rendition of the Final SBE for Plan expenditure of the ensuing financial year. Broad
guidelines for preparation of the Notes on Demands are contained in Appendix VIII of the Budget Circular. These
guidelines may be adhered to and all relevant information made available in time.

64
 APPENDIX-VIII

Guidelines for preparation of Notes on Demands

a) Explanation for variations in estimates (between current BE and RE and RE and next BE) are to be given in
respect of each programme where the variation is 10% or `10 crore, whichever is more.
b) In respect of programmes costing `100 crore or more physical data, like target and achievements, are to be
given.
c) Assistance to autonomous bodies - if budget provisions include maintenance grants to institutions this fact may
be indicated adding whether the institution is fully funded by the Central Government or otherwise.
d) In respect of departmentally run commercial undertakings like Delhi Milk Scheme, Currency Note Press,
Canteen Stores Department, etc., wherever appropriate, targets of production may be given. These need not
be given in respect of CPSUs like BHEL, etc.
e) Some organizations like CCIE, Passport Organisation, etc. have significant non-tax receipts, the estimates of
receipts in such cases may also be indicated in the Notes against the expenditure proposals.
f) In respect of Central Plan and Centrally Sponsored Plan Schemes, implemented through State and Union
Territory Governments, the pattern of financing by the Central Government (as grants and/or loans) and
allocation of incidence of the expenditure as between the Central and State Governments may be indicated. If
the provision relates to State Plan or U.T. Plan the same should be specified.
g) In some cases, provision is made in lump sum covering the requirements of numerous units; the number of
units for which the provision is made may be mentioned (like number of Consulates and Missions abroad for
which provision is made at one place in the Ministry of External Affairs).
h) In regard to a capital project, the focus of attention should be on the following:–
(i) Purpose of the project.(ii) Estimated cost of the project in ` crore. (iii) Capacity. (iv) Target date for
completion.
i) All major projects under a Public Enterprise costing `25 crore or more may be specifically referred to in the Notes. In respect of multi-
project enterprises like NTPC, for projects costing `100 crores or more, budget provisions may be indicated in the Notes.
j) In respect of a Ministry/Department for which a separate Performance Budget is not presented (like Defence
Ministry), the total value of production may be given in respect of each of the public enterprise under it.
k) All projects, schemes, etc. which are financed (fully or partly) from external assistance may be mentioned.
l) All organizations, schemes, etc. included under the residuary items like other programmes may be mentioned
except where the Budget provision is very small.
m) In respect of Government’s investment in public sector enterprises for plan purposes, the break-up of the
investment as equity investment and loans may be given separately, preferably in a tabular form when more
than one company is involved.
n) Lastly, lengthwise, the Notes should be concise and devoid of repetition.
o) Where the expenditure includes any item connected with foreign currency expenditure, a note indicating the
exchange rates adopted for the purpose of estimation should accompany the SBE.
p) It has been noticed that many items do not provide any useful insight about the expenditure. It is stressed that the
notes on Demands are carefully and comprehensively revised and that last year’s notes are not merely modified.

In addition to above the Statement of Budget Estimates/Demands for Grants will be accompanied by the
following schedules/ statements:-
(i) Schedule showing the estimated strength of establishment and provision there for (Appendix IX-A of the
Budget Circular). Provisions are to be grouped according to pay scales. The figures shown should
correspond with those given for summary statement.

65
 DETAILED DEMANDS FOR GRANTS
APPENDIX-IX-A
Ensuing Year

DEMAND NO.

Estimated strength of Establishment and provisions therefor.

(in thousands of Rupees)
Strength as on 1st March
Current Year Ensuing Ensuing Actuals Budget Revised Budget
Year-I Year-II Preceding Current Current Ensuing
estimated estimated Year Year Year Year-I
sanctioned sanctioned
strength strength

Scale of Status of Group of Total no. No. of

of post of post post of posts emp. in
posi-
tion
GAZ./ Regular/ Gp-A
GAZ. Adhoc Gp-B
Gp-C
Gp-D
Unclass ified
1. Salary
(a) Officers
Indicate in respect of each scale of pay
(b) Staff
Indicate in respect of each scale of pay
Total Salary …………………………………………

2. Allowances (other than OTA and travel expenses)

3. Wages
4. Overtime allowance
5. Domestic travel expenses
6 .Foreign travel expenses*
Total …………………………………………

*will include travel expenses abroad of scientists (on deputation)

(ii) Statement showing project-wise provision for expenditure on Externally Aided Projects in the Central Plan
(Appendix IX- B of the Budget Circular).
APPENDIX-IX-B

Project-wise provision for expenditure on externally aided projects in the Central Plan
(in thousand of Rupees)

Major Name of Actuals Revised Estimates Budget Estimates

Head the
etc. Project Preceding Year Current Year Ensuing Year
Budget of which external Budget of which external Budget of which external
Support and through Support aid through Support aid through
Budget Budget Budget
1 2 3 4 5 6 7 8

Total

(iii) Schedule showing broad details of Non-Plan expenditure provisions of `25 lakhs and above in BE 2008-
2009 (Appendix IX –C of the Budget Circular).

66
 APPENDIX-IX-C
DETAILED DEMANDS FOR GRANTS

Ensuing Year

Statement showing broad details of Non-Plan Expenditure provisions costing to ` 25 lakh

and above in BE Ensuing Year
(in thousand of Rupees)
Sl. No. Demand No. and sub-head Brief particulars of the scheme Provision in BE Ensuing Year

(iv) Schedule showing provisions included in BE 2008-2009 for payment of grants- in- aid to non-Government
bodies. (Appendix IX-D of the Budget Circular).

APPENDIX-IX-D
DETAILED DEMANDS FOR GRANTS

Ensuing Year

Details of provisions in BE Ensuing Year for payments of grants-in-aid to non-Government bodies

(in thousands of Rupees)
Grant Sl. No. Organisation Broad Whether Whether Provision Remarks
No. receiving purpose of recurring/ Plan/ BE ensuing
assistance assistance non-recurring Non-Plan Year
1 2 3 4 5 6 7 8

(v) Statement showing details of individual works and projects costing `5 crore or above included in BE for the
ensuing financial year (Appendix IX-E of the Budget Circular).

APPENDIX-IX-E
DETAILED DEMANDS FOR GRANTS

Ensuing Year

Works Annexure-Details of individual works costing ` 5 crore or above

(in thousand of Rupees)
Particulars Estimated Actual expenditure Probable expenditure Total of Provision in
of the work cost of to the end of during current year column
Budget
work preceding year year 3&4 ensuing year
1 2 3 4 5 6

N.B. Works costing less than ` 5 crore should be shown in a single entry in lump.

(vi) Statement showing revised cost estimates of projects of public sector enterprises and departmental
undertakings (Appendix IX-F of the Budget Circular).

67
 DETAILED DEMANDS FOR GRANTS
APPENDIX-IX-F

Statement showing revised cost Estimates of Projects of Public Sector Undertakings

and Departmental Undertakings

(A) Public Sector Undertakings

(Figures in columns (3) and (5) in crores of Rupees)
Undertaking Project Sanctioned Revised Reasons
Cost Year Cost Year
1 2 3 4 5 6 7

(B) Departmental Undertakings

Undertaking Project Sanctioned Revised Reasons
Cost Year Cost Year
1 2 3 4 5 6 7

(vii) `Statement showing transfer or gift of Government properties of value exceeding `5 lakhs to non-
Government bodies (Appendix IX-G of the Budget Circular).

DETAILED DEMANDS FOR GRANTS

APPENDIX-IX-G
Ensuing Year

Particulars of Government property of value exceeding Rupees five lakhs proposed to be transferred/gifted
to non-Government bodies in Ensuing year
(Figures in unit of Rupees)
Serial Details of property Book value To whom proposed to be Purpose of Remarks
proposed to be transferred or gifted transfer or
transferred or gift
gifted

1 2 3 4 5 6

(viii) Statement showing contributions to International bodies provided for in the Budget Estimates (Appendix
IX-H of the Budget Circular). 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.

DETAILED DEMANDS FOR GRANTS

APPENDIX-IX-H
Ensuing Year

Statement showing contribution to International Bodies provided for in the

Budget Estimates for Ensuing year
(Figures in unit of Rupees)
Name Nature and purpose Actual Budget Revised Budget
of contribution Preceding Current Current Ensuing
Year Year Year Year
1 2 3 4 5 6
Note: The total number of items in the statement and the total of the amounts in columns 3 & 6 should also be worked out and shown in the
statement.

68
 (ix) Statement showing guarantee given by the Central Government and outstanding as on 31st March of the
current year (Appendix IX-I of the Budget Circular). This should not be at variance with the statement of
guarantee shown in Receipt Budget. Guarantees given by the Government on loans from foreign sources
contracted by other bodies, PSEs, etc., the outstanding loan amount to which the guarantee relate, should
be converted at the exchange rate prevalent on 31st March of the current year, which may be obtained from
the Controller of Aid Accounts and Audit of this Ministry, instead of the historical value. It may be noted that
if the Government guarantee is for repayment of the principal and payment of interest, the sums
guaranteed and outstanding as on 31st March of the current year should cover both. It may be ensured that
the totals shown in this statement should exactly correspond with the summary statement.

DETAILED DEMANDS FOR GRANTS

APPENDIX-IX-I
Ensuing Year

Statement showing Guarantees given by the Central Government and outstanding

as on 31st March of Current Year
(in lakhs of Rupees)
Sl. Name of Nature and Rate of Maximum Sums Whether any Payments Remarks
No. the insti- extent of interest amount of guaranted securities are if any, to
tution for guarantee involved guarantee and out- pledged to made by
whom gu- (with No. & if any for which standing Government Government
arantee has date of the (percent Government as on 31st as a set-off in pursuance
been given sanction in per have entered March of against the of the
the case new annum) into Current guarantee guarantee
items) agreement Year
1 2 3 4 5 6 7 8 9

Note: 1. Amount of guarantee should be in Rupees and not in foreign currency.

2. The total number of items in the statement and the total of the amounts in columns 5 & 6 should also be worked
out and shown in the statement.

(x) Statement showing grants-in-aid exceeding `5 lakhs (recurring) or `10 lakhs (nonrecurring) actually
sanctioned to private institutions/organizations/individuals during the previous financial year (Appendix IX-J
of the Budget Circular).

DETAILED DEMANDS FOR GRANTS

APPENDIX-IX-J

Statement showing Grant-in-aid exceeding ` 5 lakh (recurring) or ` 10 lakh (non-recurring) sanctioned to

private institutions/organizations/individuals during the Preceding Year

Name of the institution/ Ministry/Department Recurring Non-recurring Purpose of the grant

organisation/ giving the grant
individual
1 2 3 4 5

Note: The total number of items in the statement and the total of the amounts in columns 3 & 4 should also be worked out
and shown in the statement.

69
 (xi) Statement showing the source of funds for grantee bodies receiving grants of over ` 10 lakh per year from
Consolidated Fund of India and from other sources (including external sources (Appendix IX-K of the
Budget Circular).

APPENDIX-IX-K

Statement showing the source of funds for grantee bodies receiving

grants of over `10 lakh per year from Consolidated Fund of India
(in thousands of Rupees)
Sl Name of the Ministry/ Actuals Grants Grants Grants received from
No. institution/ Department of from from other sources
organisation/ giving the releases Consolidated Consolidated Preceding
individual grant during Fund of Fund of Year
preceeding India India
Year as per as per
from the BE BE
Consolidated Current Preceding
Fund of Year Year
India

Public Private Domestic External/

Foreign
1 2 3 4 5 6 7 8 9

While placing the requisition for printing of Detailed Demands for Grants the Ministries/Departments may
include Budget Division’s requirement of 100 copies for direct supply by the Press.
Major-Head number and description may be indicated at the top right corner of each page of Detailed Demands
for Grants under the header line.

70
SPECIAL INSTRUCTIONS FOR THE COMPOSITE DEMAND FOR CIVIL ‘PENSIONS’:
The arrangements for submission of estimates January 1982. The Department of Expenditure
for inclusion in the demand ‘Pensions’ is as follows: (Establishment Division) in this regard will furnish
consolidated estimates of expenditure to the Budget
(i) The Demands for Grants ‘Pensions’ is Division, under advice to the CPAO.
administered and controlled by the Central
Pension Accounting Office (CPAO), SPECIAL INSTRUCTIONS RELATING TO
Department of Expenditure, New Delhi. ESTIMATES TO BE INCLUDED IN DEMANDS FOR
Accordingly, the Demand ‘Pensions’ for the GRANTS CONTROLLED BY BUDGET DIVISION:
ensuing financial year will be prepared and
compiled by the Central Pension Accounting Interest Payments: Estimates for interest on
Office. provident fund balances of employees, including
Group ‘D’ employees, and on various deposits in the
(ii) The Accountants General will furnish to Public Account including Reserve Funds, deposits of
CPAO the estimates in respect of pension Commissioners of Payments and other items for
payments accounted for by them and in inclusion in the Appropriation “Interest Payments” will
respect of other sub-heads to the extent be furnished by the Controllers of Accounts and by
operated by them. Wherever Pensionary the Ministry of Railways (Railway Board), Ministry of
charges are categorized as ‘charged’ Defence (Finance Division), Department of Posts,
expenditure, they should be reflected Department of Telecommunications and Department
accordingly. of Civil Accounts, Director of Accounts, Andaman and
Nicobar Islands and Goa, Daman and Diu (for
(iii) The Director of Audit, Central Revenues will Daman and Diu) and respective Accountants General
furnish to CPAO the estimates of pensions in in respect of other Union Territory Administrations.
respect of staff of the Indian Audit and The Finance Wings of the Ministries/Departments are
Accounts Department retiring during the advised that estimates of ‘Interest Payments’ will be
ensuing financial year. In doing so, estimates furnished by their Controllers of Accounts to Budget
of Post and Railway Audit Offices which are Division. Any increase or decrease in Revised
ab-initio debited to their working expenses Estimates for the current year and in Budget
and budgeted for separately will be excluded Estimates for the next year will also be explained
by him. suitably by the estimating authority, while furnishing
(iv) All other pensionary estimates prepared by estimates to Budget Division.
the Accounts Offices of the various Public Accounts Committee, in its 23rd Report
Ministries/Departments and Union Territory (13th Lok Sabha) on the excesses over voted grants
Administrations as also by the Controller and charged appropriation (1998-99), suggested that
General of Defence Accounts, New Delhi will effective coordination between various estimating
be sent to the CPAO who will consolidate and disbursing authorities be put in place with the
them and furnish the consolidated estimates help of sound data-base and other IT facilities so that
to the Budget Division. the excess expenditure could be avoided altogether.
(v) A separate estimate of corresponding It is therefore emphasized that PAC’s directive may
recoveries from State Governments be complied with in order to avoid excess
adjustable under the Receipt major head expenditure in the ‘Appropriation-Interest Payments’.
‘0071 - Contributions and Recoveries Loans to Government Servants etc: The
towards Pension and Other Retirement estimates of loans to Government servants and
Benefits’ should be forwarded by the CPAO recoveries thereof should be accompanied by a
to Budget Division for incorporating them in Statement indicating actual disbursements and
the estimates of revenue receipts under recoveries under each category of advance during
Department of Expenditure. the preceding three years and also actual
Note (1): Compassionate Fund: The expenditure/recoveries in the first 6 months of the
expenditure out of ‘Compassionate Fund’ is current financial year. The estimates and actual may
adjustable under the sub-head ‘Payment from be furnished to Budget Division in the form as per
Compassionate Fund’ under Major Head ‘2235- Appendix VII of the Budget Circular. The
Social Security and Welfare - Other Social Security Ministries/Departments should furnish the estimates
and Welfare Programmes – Other Programmes’. In of loans to Government Servants and recoveries
furnishing the estimates for payments out of thereof to Ministry of Finance as per the prescribed
Compassionate Fund, this classification may be date in the Budget Circular.
adopted. Pre-partition Payments: The provision relating
Note (2): Central Government Employees’ to Civil, Defence, Railways and Posts and
Insurance Scheme: This Scheme is confined to Telecommunications, adjusted under Major Head
those employees only who have opted out of the ‘2075 - Miscellaneous General Services’, is also
Group Insurance Scheme introduced from 1st centralized in the Demand ‘Department of Economic

71
Affairs’. Necessary estimates in this regard (both
Charged and Voted) will be furnished to the Budget
Division by the Chief Controller of Accounts,
Department of Commerce, Ministry of Defence
(Finance Division), Ministry of Railways (Railway
Board) and the Departments of Posts and
Telecommunications.
MATERIAL FOR STATEMENTS TO BE
APPENDED TO DEMANDS FOR GRANTS:
A statement showing items of new service/new
instrument of service is included in the Demands for
Grants. Ministries/Departments should, as soon as
SBE (Final) is forwarded to Budget Division, arrange
to furnish a statement showing details of items of new
service/new instrument of service for which provision
is made in BE of the ensuing financial year (Appendix
X-A of the Budget Circular). The information so
furnished for inclusion in Demands for Grants should
exactly match the information included in the Detailed
Demand for Grant of the respective Ministry
/Department.

Attention is invited to Department of Economic

Affairs’ O.M. No.F.1 (23)-B(AC)/2005 dated
25.05.2006 on Revised Guidelines on Financial
Limits to be observed in determining cases relating to
“New Service/New Instrument of Service” (Annex-Q
of the Budget Circular).

72
MATERIAL FOR STATEMENTS TO BE APPENDED TO DEMANDS FOR GRANTS/EXPENDITURE BUDGET
VOLUME-1:
As soon as SBE (Final) is forwarded to Budget Division, Ministries/Departments should arrange to furnish the
following statements to Budget Division:-
(i) Statement showing “New Service”/”New Instrument of Service” for which provision is made in BE of the
ensuing financial year (Appendix X-A of the Budget Circular).

APPENDIX-X-A
DETAILED DEMANDS FOR GRANTS

Particulars of “New Service/New Instrument of Service” for which

provision is made in the Budget Estimates Ensuing Year
(in crores of Rupees)
Serial Demand Number and Provision in Budget Estimates Remarks*
No. Major Head/sub-head Ensuing Year
1 2 3 4

* ‘Remarks’ column should clearly bring out the purpose and objective and financial implications of the provision in question. In the case of
public sector undertakings/private companies, provisions for loan and investment should be shown separately and the latest paid up capital
of the public sector undertakings/private companies should also be indicated.

No. Ministry/Department of

For Financial Adviser

Date
Telephone No.

(ii) Statement showing provision for externally aided projects in Central Plan (Appendix X-B of the Budget
Circular).

APPENDIX-X-B
EXPENDITURE BUDGET Vol. 1

Provision for externally-aided projects in Central Plan

Ministry/Department of (in crores of Rupees)

Current Year RE Ensuing Year BE
NBS External IEBR Total NBS External IEBR Total
aid External Other outlay aid External Other outlay
through aid IEBR through aid IEBR
Budget received Budget received
direct direct
1 2 3 4 5 6 7 8 9 10

(iii) Statement showing additional Central Assistance for Externally aided projects in State Plan (Appendix X-C
of the Budget Circular). The information may be furnished to Budget Division centrally by PF-I Division of
Department of Expenditure.

73
 APPENDIX-X-C

EXPENDITURE BUDGET Vol. 1

Statement showing Additional Central Assistance for Externally-aided projects in State Plan
(in crores of Rupees)
Sl. No. Name of the State ACA released during Current Year Ensuing
Year Preceding Preceding Preceding
Year-III Year-II Year-I BE RE
BE
1 2 3 4 5 6 7 8

Total

(iv) Statement showing resources of public enterprises, etc. Information is required to be given enterprise wise
in the form in Appendix X-D of the Budget Circular. The internal and extra budgetary resources of the
public enterprises to be shown in RE of the current financial year should be as agreed to by the Plan
Finance Division of Finance Ministry while the IEBR for the ensuing financial year should be as per the
financing pattern approved by the Planning Commission and shown as such in the ‘Plan Allocation
Statement’ from the Planning Commission.

APPENDIX-X-D

EXPENDITURE BUDGET Vol. 1

Statement showing Internal and Extra Budgetary Resources of public enterprises

(in crores of Rupees)
Name Revised Estimates Current Year Budget Estimates Ensuing Year
of the
Enterprise Internal Bonds E.C.B. Others Total Internal Bonds E.C.B. Others
Total resourcesDebentures Suppliers resources Debentures Suppliers
credit credit

1.
2.
3.

(v) Statement (Appendix X-E of the Budget Circular) showing provisions in the Budget for Central and
Centrally Sponsored Plan Schemes. In this statement all Plan schemes for which the provision in the next
Budget is ` 10 crore and above are to be shown distinctly and all other schemes, etc. merged under ‘Other
schemes/ programmes, etc.’ The information is required to be given separately for Central Plan and
Centrally sponsored Plan.

74
 APPENDIX-X-E
EXPENDITURE BUDGET Vol. 1

Statement showing provisions in the Budget for Central and Centrally sponsored Plan scheme
(in crores of Rupees)
Scheme, etc. Major Head B.E. Current Year R.E. Current Year B.E. Ensuing Year
Central Plan
1.
2.
3.
Centrally Sponsored Plan
1.
2.
3.
For Financial Adviser
Schemes, etc., for which provisions in BE Current Year is `10 crore and above should be listed distinctly while other schemes/programmes, etc., merged
under as a residuary item in the respective category, namely, Central Plan and Centrally Sponsored Plan.

(vi) Statement (Appendix X-F of the Budget Circular) showing the estimated strength of ‘Establishment’ and
provisions therefor.

APPENDIX-X-F
EXPENDITURE BUDGET Vol. 1

Ministry/Department of
Estimated strength of Establishment and provisions therefor.

Strength as on 1st March (in crore of Rupees)

Actuals Preceding Year RE Current Year BE Ensuing Year
Actual Estimated Pay Allowances Travel Pay Allowances Travel Pay Allowances Travel
Current Ensuing Ensuing and DP expenses and DP expenses and DP expenses
Year Year-I Year-II (other than (other than (other than
travel travel travel
expenses) expenses) expenses)

For Financial Adviser

Date
Telephone No.

(vii) Summary Statement (Appendix X-G of the Budget Circular) showing contributions to international bodies.
In this statement items for which the provision in BE for the current year is `5 lakh or more are to be shown
distinctly; items of less than `5 lakh are to be bunched and, shown as ‘Others’.

75
 APPENDIX-X-G
EXPENDITURE BUDGET Vol. 1

Summary statement showing the Contributions to International Bodies provided for in the
Budget Estimates, Ensuing Year [to be appended to SBE (Final)]

Sl. Name of Total no. Actuals BE RE BE

No. Ministry/Department of items Preceding Current Current Ensuing
Year Year Year Year
1 2 3 4 5 6 7

No. Ministry/Department of

For Financial Adviser

Date
Telephone No.

(viii) Summary Statement showing grants-in-aid to private institutions/organizations/ individuals (Appendix X-H
of the Budget Circular).

APPENDIX-X-H
EXPENDITURE BUDGET Vol.1

Summary statement showing Grants-in-aid exceeding ` 5 lakh (recurring) or ` 10 lakh (non-recurring)

sanctioned to private institutions/organizations/individuals during the Preceding year
(in crores of Rupees)
Serial No. Name of the Number of items Total amount
Ministry/Department
Recurring Non-recurring

No. Ministry/Department of

For Financial Adviser

Date
Telephone No.

(ix) Summary Statement (Appendix X-I of the Budget Circular) showing actual expenditure of
Ministries/Departments on a net basis. This information is to be furnished to Budget Division by the office of
the Controller General of Accounts by the date prescribed in the Budget Circular.

76
 APPENDIX-X-I
EXPENDITURE BUDGET Vol. 1

Summary statement showing expenditure of Ministries/Departments on a net basis,

during the Preceding year

(in crores of Rupees)

Name of Ministry/Department Budget Preceding Year Accounts Preceding Year
Plan Non-Plan Total Plan Non-Plan Total

( __________________________ )
Office of the CGA
Date
Telephone No.

(x) Statement of Guarantees given by Union Government, a summary statement (in Appendix-X-J of the Budget
Circular) circulated vide Finance Ministry’s O.M. No. F. 12(20)-B(SD)/ 2002 dated 16.10.2003 (Annex- N of the
Budget Circular) is required to be appended to the Receipts Budget. The information given in this statement is
essentially intended to be a summarized account of the statements of guarantees given by Government (Appendix-
IX-I of the Budget Circular). In the case of external guarantees, administrative ministries should coordinate with
Financial Adviser (Finance) and weed out duplicate entries. The Ministries/Departments concerned will especially
be responsible to ensure that these totals also tally with the information regarding guarantees given by the Central
Government and outstanding as on 31st March of the current year, given by them to the Controller General of
Accounts for inclusion in the Union Government’s Finance Accounts for previous year. The Guarantee fee in
arrears (col. 21 (-) col.22 of Appendix-X-J of the Budget Circular) should correspond and match with the figures
depicted as Guarantee fee arrears reported in D-2 statement in Appendix X-L of the Budget Circular.

APPENDIX X-J
GUARANTEES GIVEN BY THE GOVERNMENT

Name of Ministry/Department [` in crore]

Sl. Beneficiary Loan Holder/ Authority for Period of validity Purpose of Class* Sector* Details of Details of
No. [Name of the Entity Guarantee [MOF ID No., & Loan Reschedule Securities
PSU etc in giving [MoF approval date through pledged
whose favour Loan No. & Date] which the
guarantee guarantee was
is given] last extended]
1 2 3 4 5 6 7 8 9 10

Amount Extent of Additions Deletions Invoked Outstanding Rate of Guarantee Fee/ Other Other
of loan Guarantee of Loan Guarantee principal, Guarantee Commission conditions Material
interest Fee/ Details
Details etc at the
compliance end of 31st
March of
Current
Year
Principal InterestTotal Discharged Not Receivable Received
discharged
11 12 13 14 15 16 17 18 19 20 21 22 23 24

77
* As given below.
Note: i) It is certified that Register of Guarantees as envisaged in Rule 249 of GFR, 2005 is being maintained and periodical
reviews are being carried out. Further it is certified that the Guarantee Fee/Commission outstanding as worked out
above is correctly shown as arrears of Non-Tax Revenue in Appendix X-L under the head ‘Guarantee Fee’.
ii) The amounts should be shown in Indian Rupees in crore and not in any foreign currency.

Ministry/Department of

For Financial Adviser

Date/Tel. No.

GUARANTEE- CLASS
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 for providing working capital to
companies, corporations and cooperative societies and banks; [A]
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; [B]
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., towards repayment of
principal, of interest/commitment charges on loans, etc., and/or for payment against supplies of material and equipment;
[C]
iv. Counter-guarantees to banks in consideration of the banks having issued letters of credit/authority to foreign suppliers for
supplies made/services rendered; [D]
v. Guarantees given to Railways/State Electricity Boards and other entities for due and punctual payment of dues by
Companies/Corporation. [E]
vi Performance guarantees given for fulfillment of contracts/projects awarded to Indian companies in foreign countries; [F]
vii. Performance guarantees given for fulfillment of contracts/projects awarded to foreign companies in foreign countries. [G]
viii. Any others [H]

GUARANTEE - SECTORS
i. Power ii. Cooperative iii. Irrigation
iv. Roads & Transport v. Urban Development & Housing vi. Other Infrastructure

78
INTRODUCTORY NOTES FOR EXPENDITURE numeric codification by standard numeric codification
BUDGET VOLUME 1: of heads of accounts may be strictly adhered to. No
new sub-head/detailed head will be opened and
In order to prepare introductory notes on incorporated in the Detailed Demands for Grants
important Non-Plan items of expenditure, like food without getting necessary numeric codes there for
subsidy, fertilizer subsidy, petroleum subsidy from the Controller General of Accounts.
assistance for export promotion, interest subsidy etc.
for Expenditure Budget Vol. 1, In cases of items of work transferred from one
Ministries/Departments concerned should arrange to Ministry/Department to another subsequent to the
send separate self contained material for these Non- presentation of the Budget for the current financial
Plan items. year, the B.E. and R.E. for the current financial year
(and in the Detailed Demands for Grants, the Actuals
Similar write-up should be sent for Plan items of for the previous financial year also) in respect of
expenditure. All figures reflected in the write up these items may be shown as a footnote in the DDG
should tally with the figures given in SBEs and with along with the BE for the ensuing financial year in
the physical targets given in the material for Budget the relevant Demands for Grants (for the ensuing
at a Glance. financial year) of the Ministry/Department which has
taken over the work, to facilitate comparison.
Consequently, these items may completely be
DETAILED DEMANDS FOR GRANTS: deleted from the Demands for Grants for the ensuing
financial year of the Ministry/ Department from which
The respective Ministries/Departments are
these have been transferred. Necessary
required to prepare the Detailed Demands for Grants.
Supplementary Demands for Grants provision may
While preparing the Detailed Demands for Grants it is
be proposed by the Ministry/Department to which the
important to ensure that the classification, namely,
work has been transferred. Pursuant to the
Major Head, Minor Head, etc. is as per the heads of
instructions contained in the Government of India
account prescribed in the List of Major and Minor
(Allocation of Business) Rules, 1961, any transfer of
Heads of Account. During formulation of Detailed
items of works and their corresponding provisions
Demands for Grants for the ensuing financial year,
from a Ministry/Department would be effected
due regard is required to be given to Budget
through Supplementary Demands for Grants.
Division’s circular F.No.15(4)-B(D)/2003 dated 9th
Therefore, at RE stage, the Ministry/Department from
July, 2003 (Annex- L of the Budget Circular), on the
where the work has been transferred should
issue of budgeting for “Information Technology”.
surrender the expenditure provision from those
It has also to be ensured by Ministries/ specific items of work and indicate the same
Departments that the totals for each Major Head and categorically during the pre-Budget discussion under
the total provisions by Revenue and Capital sections the Chairmanship of Secretary (Expenditure).
separately for ‘charged’ and ‘voted’ included in the
Detailed Demands for Grants exactly correspond to
the provisions included in the main Demands for MODIFIED EXCHEQUER CONTROL BASED
Grants which are prepared by the Budget Division. EXPENDITURE MANAGEMENT SYSTEM:
For these purpose copies of the main Demand as
finally included by the Budget Division is made The Scheme of ‘Exchequer control based
available to the Ministries/Departments concerned for expenditure management system’ has been, as
ensuring this correspondence. Final Print order for detailed in Ministry of Finance, Department of
Detailed Demands for Grants should be given Economic Affairs’ O.M. No. 21(1)-PD/2005 dated
only after the reconciliation is completed. 27th December, 2006 (Annex-M of the Budget
Circular), inter alia, provides for inclusion of Monthly
The Major Heads Codes shown in the Detailed Expenditure Plan (MEP) as an annex in the Detailed
Demands for Grants should correspond to the code Demands for Grants.
in the main Demands for Grants. Consequently, while
for a particular major head there are figures of actual It would be advisable to draw up the Monthly
expenditure for the previous financial year but there Expenditure Plan [MEP] keeping in view the extant
is no provision in B.E. and R.E. of current year and guidelines relating to release of funds, including
B.E. for the ensuing financial year, a separate sub- those prescribed in Ministry of Finance, Department
head therefore should not be retained. The actual of Expenditure’s O.M. F. No. 7(3)/E-Coord/2006
may, however, be included in the total for that major dated August 8, 2006 (Annex-K of the Budget
head with a footnote as follows: Circular).

“Includes expenditure of Thousand ` ..........

against sub-head ....... in the Demands for Grants INSTRUCTIONS ON GENDER BUDGETING/FRBM
No......... for ————(year).” RULES/PROVISIONS OF SC & ST/PLAN
Instructions issued by Finance Ministry in PROVISIONS FOR NORTH EASTERN REGION
December, 1994 regarding replacement of alpha AND SIKKIM ETC:

79
 For the Budget of the ensuing financial year, all education and employment. Statement No.21 –
the Ministries are required to prepare these two Expenditure Budget Vol. 1 reflects the budget
statements (Budget Estimates of current year, provisions that are substantially meant for the welfare
Revised Estimates of current year and Budget of Scheduled Castes and Scheduled Tribes and is
Estimates for the ensuing financial year, Plan and intended to serve as a reference point for facilitating
non-Plan) which reflect the respective beneficiary further analysis of the activities and outcomes of such
class identification in order to highlight the quantum provisions with a view to making the necessary
of public expenditure earmarked for (a) women changes where required in the operational guidelines
specific programmes (100% provision), (b) SC & ST of such scheme, so as to improve the coverage and
specific programmes (100% provision), (c) pro- benefits of public expenditure for the Development of
women allocations (at least 30% provision) and (d) Schedule Castes and Scheduled Tribes.
pro-SC & ST allocations (at least 20% provision) for
gender neutral/composite programmes, in respect of DISCLOSURE STATEMENTS REQUIRED UNDER
the budget provisions, administered by various THE FISCAL RESPONSIBILITY AND BUDGET
Ministries/Departments and send to the Budget MANAGEMENT RULES, 2004 FOR INCLUSION IN
Division for consolidation along with SBEs for Plan. In THE ENSUING BUDGET:
order to facilitate this exercise, information in the The following statements, with information as on
format of these two statements (Statements No. 20 31st March, of the current year, are meant for
& 21, Expenditure Budget Vol. 1) may be sent in two inclusion in Receipts Budget for the ensuing year.
parts, Part “A” reflecting 100% provisions and Part ‘B” Instructions for preparation of these Statements were
reflecting the specified percentage provisions (for issued vide the Budget Division O.M. F. No. F7(3)-
pro-women and pro- SC & ST allocations B(D)/2003 dated 26th April, 2005 (Annex– O of the
respectively) in respect of Budget Estimates of Budget Circular) and may be referred to. The
current year, and proposed Revised Estimates of statements are to be sent by the prescribed date for
current year. While sending the information to Budget pre-budget discussions to be held by the Secretary
Division, Ministries/Departments may ensure tjat (Expenditure) with the respective Financial Advisers,
consistency of information provided and incorporated and in the Formats shown below.
in the printed budget documents in the previous year
is maintained.
STATEMENT NUMBER 20- GENDER BUDGETING:
Gender budgeting is an evolving area where,
with better understanding and appreciation of the
subject more and more Ministries/Departments are
reviewing programmes and schemes to assess the
quantum of resources that have the budgetary
potential to impact and address the development
needs of women. Ministries/Departments may furnish
necessary information for compilation of this
statement in two parts, viz. part ‘A’ details of
schemes in which 100% provision is for women and
part ’B’ reflects schemes where the allocations for
women constitute at least 30% of the provision.
Statement No. 20 - Expenditure Budget Vol.1 reflects
the budget provisions under the various programmes
and schemes administered by the different
Ministries/Departments that target the socioeconomic
welfare and empowerment of women as a key
objective of these schemes. All Ministries and
Departments are required to carefully scrutinize their
Detailed Demands for Grants and identify such
programmes/schemes as fulfill the above objectives,
along with their budgeted provisions for inclusion in
the above Statement.

STATEMENT NUMBER 21- SCHEMES FOR

DEVELOPMENT OF SCHEDULED CASTES AND
SCHEDULED TRIBES:
Government is committed to the welfare of
Scheduled Castes and Scheduled Tribes and in
particular, ensuring full equality of opportunity in

80
Guarantees given by the Government –
(Appendix X-J of the Budget Circular as shown in the earlier part of this Chapter))
Tax Revenues raised but not realized:
(Appendix X-K of the Budget Circular)
APPENDIX X-K
Form D-1
TAX REVENUES RAISED BUT NOT REALISED
(principal taxes)

(As at the end of the Preceding Financial year)

Amounts under dispute Amounts not under dispute
(` crore) (` crore)
Major Description Over Over Over Over Total Over Over Over Over Total Grand
Head 1 year 2 years 5 years 10 1 year 2 years 5 years 10 Total
but less but less but less years but less but less but less years
than 2 than 5 than 10 than 2 than 5 than 10
years years years years years years
Taxes on
Income &
Expenditure

0020 Corporation
Tax
0021 Taxes on
Income
other than
Corporation
Tax
Taxes on
Commodities
& Services
0037 Customs

0038 Union Excise

0044 Service Tax

Total

Ministry/Department of
For Financial Adviser
Date
Telephone No.

81
 Arrears of Non - Tax Revenues:
(Appendix X-L of the Budget Circular)
APPENDIX X-L
Form D-2

ARREARS OF NON-TAX REVENUE

Demand No. ____________ (As at the end of the Preceding Financial year)

Description Amounts pending (` crore)

0-1 year 1-2 years 2-3 years 3-5 years above 5 years Total

Fiscal Services

Interest receipts
Of which
-From State
Governments and
Union Territory
Governments
-From Railways
-From Departmental
Commercial
Undertakings
-From Public Sector
& other Undertakings

Dividends and Profits

General Services

-Police receipts
-Economic Services
-Petroleum Cess/Royalty
-Communications
(License Fee) Receipts
-Guarantee fee

Other Receipts

Total

Ministry/Department of
For Financial Adviser
Date
Telephone No.

82
 Asset Register:
(Appendix X-M of the Budget Circular)
APPENDIX X-M
Form D-4
ASSET REGISTER
Demand No. ____________

Assets at the Assets acquired Cumulative total of

beginning of the during the year assets at the end of the
year Preceding Year Preceding Year year Preceding Year
Cost (` cr) Cost (` cr) Cost (` cr)
Physical assets:
Land
Building
Office
Residential
Roads
Bridges
Irrigation Projects
Power projects
Other capital projects
Machinery & Equipment
Office Equipment
Vehicles

Total

Financial assets:
Equity Investment
Shares
Bonus shares
Loans and advances
Loans to State & UT Govts.
Loans to Foreign Govts.
Loans to companies
Loans to others
Other financial investments
Total
Notes:
1. Assets above the threshold value of Rupees two lakh only to be recorded.
2. This disclosure statement does not include assets of Cabinet Secretariat, Central Police Organizations,
Ministry of Defence, Departments of Space and Atomic Energy.

Ministry/Department of
For Financial Adviser
Date
Telephone No.

83
DIRECT TRANSFERS OF CENTRAL ASSISTANCE TO STATES/DISTRICT LEVEL AUTONOMOUS BODIES:
Statement (Appendix X-N of the Budget Circular) circulated vide Finance Ministry’s D.O. F.No. 2(43)-B
(CDN)/2004 dated 21.1.2005 (Annex-P of the Budget Circular) showing Direct Transfers of Central Assistance to
States/District level Autonomous Bodies. The information in the statement should show major head wise plan
allocations to be released directly to State and district level autonomous bodies in the ensuing financial year. The
statement has to be forwarded along with the Plan SBEs of the ensuing year. While forwarding the statement, it
may be ensured that amounts provided under the Major Heads ‘3601’, ‘3602’, ‘7601’ & ‘7602’ are excluded from
this statement.

APPENDIX X-N

Ministry/Department of
Statement showing direct transfers of Central Assistance to
State/District level Autonomous Bodies*
(in crores of Rupees)
Sl.No. Name of scheme Major Head Allocation in BE Ensuing Year

Sub/Grand
Total
* These could be Societies/State PSUs/Corporations owned/controlled by State Governments.

Ministry/Department of
For Financial Adviser
Date
Telephone No.

While preparing the above statements particular attention may be paid to the following:
i) Values may be shown in crore of rupees and not in lakhs/thousands e.g. an asset valued at ` forty lakh may
be shown as `0.40 crore.
ii) Consistency may be ensured in the information shown in Appendix X-K of the Budget Circular and the
information that goes into the respective Reports of the Comptroller and Auditor General of India on Direct
and Indirect Taxes for the relevant year.
iii) While reporting Non-Tax revenue arrears in Appendix X-L of the Budget Circular, information particularly
relating to guarantee fee arrears may be reconciled with the information given in Appendix X-J of the
Budget Circular. Similar consistency needs to be ensured in relation to financial assets and interest
receipts to the extent these are relevant.
iv) Threshold limit of `0.02 crore for inclusion of assets in Appendix X-M of the Budget Circular may reckon
with details as entered in the Register of Fixed assets in “Form GFR – 40” prescribed under Rule 190(2)(i)
of the General Financial Rules, 2005.
v) Variations, if any, with last year’s reported information on any of the above statements, may be duly
explained in appropriate footnotes.
vi) The statements duly signed by the competent authority (along with telephone number) may be forwarded to
the Budget Division.

84
GENERAL INSTRUCTIONS:
While the estimates furnished by various
organizations/units etc. to the Ministries/
Departments will be in thousands of rupees, the
Statement to be furnished in the SBE and other
Statements to be forwarded to the Budget Division
should be suitably rounded into rupees in crore with
two decimal places, for each major head. The break
up of the provision for schemes included under a
major head should also be suitably rounded so as to
work up to the total in respect of each major head, in
crores of rupees with two decimal places. Similarly,
the provisions under the various detailed heads in the
Detailed Demands for Grants should also be suitably
rounded so that the total under each major head
included in that demand is in crores of rupees with
two decimals. It should, however, be ensured that the
amount so rounded off does not lead to any change
in the total fund requirements.
The estimates of revenue receipts, capital
receipts and public account transactions should
reach Budget Division by due dates prescribed in
the Budget Circular.
To ensure that there is no delay in transmission
of estimates, the Ministries/Departments should
forward these to the designated sections in the
Budget Division indicated in Appendix XI of the
Budget Circular.

85
 APPENDIX-XI
Sections in Department of Economic Affairs, Budget Division to which the various estimates etc. are to be
forwarded.
(i) Revenue Receipts States Section
(ii) Capital Receipts W & M Section
(iii) Interest Receipts and Recoveries of Loans SD Section
(iv) Statement showing guarantees given by Central SD Section
Government and outstanding as on 31.3.2007.
(iv) SBE Proposed Coordination Section
(v) SBE (Final):
Non-Plan Accounts Section
Plan Coordination Section
(vi) Notes on Demands and material for Demands for Grants Demand Section
(vii) Statement showing resources of public enterprises Coordination Section,
(viii) Statement showing provisions in the Budget Coordination Section
for Central and Centrally sponsored Plan Schemes
(ix) Statement showing estimated strength of Demand Section
establishment and provision therefore
(x) Contribution to international bodies and Direct NS-II Section
transfers of Central Assistance to State/District
level Autonomous bodies
(xi) Notes on important Non - Plan items of expenditure Accounts Section
(xii) Composite Grants:
Interest Payments Accounts Section, Room No. 224-C, North Block,
Tel. 23095210
Pensions Demand Section, Room No. 225-A, North Block,
Tel. 23095095
Loans to Government Servants, etc. Coordination Section, Room No. 224-C, North Block,
Tel. 23095174

(The communications should be sent by special messenger and not through the R & I Section of the Ministry or to
the R & I Section of the Ministry of Finance).

86
 While providing the estimates to Budget Division,
the forwarding authority is required to indicate his/her
name, complete office address viz. Room No., name
of the building etc. and the telephone number in the
forwarding letter.
The information may also be submitted on 3.5"
(IBM compatible PC formatted) floppy/pen drive
along with the usual hard copy format.
The Statement of Budget Estimates (Final) for
each grant may be prepared on pen drives for
providing them to the Budget Division. For this,
separate pen drives for each grant should be
collected from Under Secretary (Demands) of Budget
Division. The files, which will be provided in these
pen drive, are designed in a certain format and are
protected. Data entry in this pen drive will be
restricted to certain areas in the spreadsheet. The
Ministry is to enter the data with regard to the
Revised Estimates for the current year and BiE for
the ensuing year only in regard to this information.
A printed version of all appendices prescribed in
the Budget circular relating to SBEs and Expenditure
Budget should accompany the floppy at the time of
submission, immediately after the ceilings are
conveyed by the Budget Division. For Plan
expenditure, BE of ensuing year, the Plan estimates
should be added on the same file on a floppy and
should be submitted within three days of the receipt
of Plan allocation from the Planning Commission
alongwith a hard copy of all relevant appendices.
Training is organized in October/November by
NIC in Ministry of Finance, in this regard, for officers
of the IFU of each Ministry/Department. Exact dates
and detailed instructions about the data entry are
provided separately.
For any doubt/clarification relating to Budget
Circular Additional Budget Officer/DS (Budget),
Department of Economic Affairs, Ministry of Finance,
is required to be contacted.
The list of existing Demands for Grants drawn up
on the basis of the Government of India (Allocation of
Business) Rules, 1961 as amended is shown below
and reflected in Appendix-XII of the Annual Budget
Circular. However, this list and the Demand numbers
are subject to change depending upon requirements,
particularly the amendments to the Allocation of
Business Rules, which would require the creation of
separate Demands for Grant.

87
 CHAPTER-V
BUDGET FINALIZATION: DUTIES AND
RESPONSIBILITIES OF BUDGET DIVISION.
BUDGET ACTIVITIES AND TIMELINES:
In the entire budget process commencing with the issue of Budget Circular there is a need for maintaining
secrecy, accuracy and timeliness in the work related to the preparation of Budget. All the statements, information
and inputs require intensive checking with special attention given to the manually generated statements, for which
an additional level of check is to be ensured. The list of such statements allocated/distributed amongst the staff and
officers is circulated internally every year in the Budget Division, with the approval of JS/AS (Budget).
In addition, concerned Under Secretaries in the Budget Division are required to follow up with
Ministries/Departments for the receipt of information regarding different statements/ annexures of Budget
documents for which they are responsible, ensuring that they are received and processed within the given
timelines. The tentative timelines for the receiving of the information/activity associated with the budget and
preparation/completion of the budgetary documents/processes have been brought out in the following Tables.
ACTIVITY TENTATIVE DATES
1. Issue of Budget Circular to all Ministries/Departments regarding
framing of estimates of receipts and expenditure, time schedule etc.
[Action: Budget Division] 2nd week of September
The month of October and November is devoted to follow-up action on the Budget Circular that
includes coordinating with various Ministries/Departments, procuring data for the Receipts Budget and
scrutiny of the estimates framed by the Ministries/Departments for the Pre-Budget meetings

EXPENDITURE ESTIMATES
[Non-Plan: Revised Estimates (RE) and Budget Estimates (BE)]
2. Pre-budget meetings taken by Secretary (E) with Financial Advisers
[Action: Budget Division] End October/November

3. Finalizing ceilings of expenditure: Plan & Non-plan RE for the

current year and Non-Plan BE for the following year (excluding
major subsidies and Defence)
[Action: Budget Division] Mid-December

4. Communication of ceilings of expenditure to Ministries/

Departments under Item 3 above Prior to 1st week of
January

5. Rendering Statement of Budget Estimates to Budget Division by

Ministries/Departments on the basis of ceiling communicated
[Action: Ministries/Departments] Within one week of
communication of ceilings

6. (i) Issue of Circular calling for 3rd Batch of Supplementary

Demands for Grants 1st week of January
(ii) Last Date of receipt of proposals from Ministries/
Departments 1st week of February
Action: Budget Division / Administrative Ministries]

7. Estimates of major subsidies and of Defence Expenditure

[Action: Budget Division/Administrative Ministries/FA (Defence)] Last week of January

8. (i) Plan resources forecast, for Planning Commission by

Finance Ministry separately for externally aided projects
of Centre and States. 1st week of December
(Action: Budget Division, PMU and Deptt. of Revenue)
(ii) Communication Gross Budgetary Support to Planning Commission 15 to 18 th January
[Action: Budget Division ]
(iii) Communication of plan allocation to Ministries/
Departments by Planning Commission 25th January
[Action: Planning Commission]

88
 (iv) Receipt of Plan estimates from Ministries along with write-up 29th January
[Action: Ministries/Departments]

9. Closing of all expenditure estimates and work of Budget printing begins

[Action: Budget Division] 5th February

RECEIPTS BUDGET
10. (I) Assessment of borrowings
[Action: Budget Division] 20th December

(ii) Assessment of revenues

[Action: Department of Revenue/Budget Division] 20th December

11. Assessment of internal and extra-budgetary resources of Central PSUs

[Action : PF- II Division] From September
Till mid- December
12. Estimates of Tax Revenue
[Action: Department of Revenue, CBDT (JS-TPL)/CBE&C (JS-TRU)] 1st week of January

13. Processing and finalization of the estimates of non-tax

Revenue Receipts rendered by Ministries/Departments
[Action : Budget Division] 28th December

14. Processing and finalization of estimates of recoveries of loans and

advances and interest receipts, rendered by Ministries/Departments
[Action : Budget Division] 28th December

15. Processing and finalization of estimates of Public Account

transactions rendered by Ministries and finalization of Capital receipts.
[Action: Budget Division] 28th December

16. Proposals for Finance Bill

[Action: CBDT/CBE&C]
Should start going to Legislative Department by the end of the first
week of February to be completed in time for printing.

17. (Review Meetings by JS- Budget on a weekly basis with

JS-TPL/TRU and Law Ministry) From 1st week of January

18. Railways Estimates

[Action: Railway Board] 30th January

19. Finalization and printing of ‘Key to Budget Documents’.

[Action : Budget Division] 25th January
20. Implementation of Budget Announcements
[Action: Budget Division] 1st February

21. Printing of non-sensitive documents, namely Expenditure

Budget Vol. 1 & 2, Demands for Grants, etc.
[Action : Budget Division] 13th February
22. Removal of non-sensitive documents from Budget Press to
Room No.72, North Block
[Action : Budget Division] 15th February

23. ‘Lock in’ of Budget Press 20th February

24. Printing of Receipts Budget including 4 Annexes required under

FRBM Rules, 2004 21st February

25. Printing of Annual Financial Statement 21st February

89
 26. Printing of 3 FRBM statements 21st February

27. Complete Finance bill (both in Hindi and English) to be given for printing
[Action: CBDT/CBE & C/Legislative Department] 22nd February

28. Memorandum Explaining the Provisions in the Finance Bill

to be given for printing
[Action: CBDT/CBE & C/Legislative Department] 22nd February

29. Finalization and printing of Budget at a Glance 22nd February

30. Finance Minister’s Budget Speech and Key Features of Budget 25th February

31. Summary for the Cabinet 26th February

32. Obtaining approval of the PM to the ‘Summary for the President’ 27/28th February

33. President’s recommendation under Articles 112, 115 &

117 of the Constitution 27/28th February
(By 8.30 AM)
34. Obtaining approval of the Cabinet to the Budget proposals
(on Budget Day and as per time intimated by Cabinet Secretariat) 28th February
(Prior to Budget presentation)

35. Presentation of Budget in Lok Sabha 28th February

(11.00 AM)

36. Introduction of the Finance Bill in Lok Sabha 28th/ 29th February
(Immediately after
completion
of Budget Speech)

37. Laying of Budget documents in Rajya Sabha 28th /29th February

(Immediately after
completion of Budget
Speech and Introduction
of Finance Bill in Lok-
Sabha).

Activity Tentative Dates

The Appropriation (Vote on Account) Bill

38. Finalization and printing 1st week March

39. Sending of the Bill to Legislative Department 1st week March

40. Summary for the President 1st /2nd week March

41. Issue of notices for introduction, consideration and

passing of the Bill in Lok Sabha 1st /2nd week March

42. Passing of the Bill by Lok Sabha 2nd week March

43. Repeat action as at 41 for Rajya Sabha 2nd week March

44. Passing of the Bill in Rajya Sabha 2nd/3rd week of March

90
 BUDGET IN PARLIAMENT*

* - Subject to the provisions of the Provisional Collection of Taxes Act, 1931 (XVI of 1931) which
enjoins that some of the provisions of the Finance Bill shall take immediate effect.

45. General Discussion (1st phase) in both Houses of Parliament As per Business

46. Finance Minister’s reply to the General Discussion

(in Lok Sabha and Rajya Sabha) As per Business

Both Houses adjourn for approximately one month from mid March to enable the Department-Related
Parliamentary Standing Committees to consider the Demands for Grants of different
Ministries/Departments and prepare their Reports.

47. Laying of reports of Standing Committees in Lok Sabha by

Lok Sabha Secretariat As per Business

Demands for Grants Indicative Dates

48. Notice to Secretary-General, Lok Sabha for making of Demands and

forwarding of list of Demands of voted Grants to Lok Sabha 1st week of April

49. Discussion and voting on the Demands for Grants of

selected Ministries in Lok Sabha As per Business

50. Voting of remaining Demands for Grants through Guillotine

In Lok Sabha As per Business

The Appropriation (Main) Bill Indicative Dates

51. Forwarding of the draft Bill to Legislative Department 1st week of April

52. Summary for the President for introduction and consideration of the
Appropriation Bill 1st week of April

53. Notices for introduction and consideration and passing of the

Appropriation Bill in Lok Sabha. As per Business

54. Passing of the Appropriation Bill 3rd week of April

55. Repeat action as at 53 above for Rajya Sabha 3rd week of April

56. Consideration and passing of the Appropriation Bill by Rajya Sabha

and its return to Lok Sabha. Last week of April

Finance Bill Indicative Dates

57. President’s recommendation for amendments to the Finance Bill As per Business

58. Speech by Finance Minister in Lok Sabha at the start of

consideration of the Finance Bill As per Business

59. Consideration and passing of Finance Bill in Lok Sabha 4th week of April/
1st week of May

60. Consideration of the Finance Bill in Rajya Sabha 4th week of April/
1st week of May

91
 61. Finance Minister’s reply in Rajya Sabha, Passing and return of the
Finance Bill by Rajya Sabha 4th week of April/
1st week of May

62. President’s assent to the Appropriation Bill and Finance Bill 1st week of May

Indicative Calendar for Receipt of Materials from Ministries/Departments for Finalizing RE & BE:

Details of Estimates/ Statement Indicative Dates for Finalization

(Dates for receipt of estimates will be as per timelines mentioned in Budget Circular)

Letter for Dividend to select Ministries End October

Non-Tax Revenue/Capital Receipts End October
Finalization of Non-Tax Revenue Receipts-Dividends End January
Estimates of Foreign Grants 30th November
Interest Receipts and Loan Repayments 26th October
Loan Repayments and Interest Payment by CPSUs and other parties 26th October
Estimates of Public Accounts of India 26th October
SBE (proposed) 26th October
SBE (Final) Plan (RE) Non-Plan (RE & BE) Plan (BE) Immediately after the ceilings are
communicated and within 3 days
Of allocation by Planning
Commission
Proposals for Pre-Budget discussions As mentioned in Budget Circular
Statement of “Charged” Expenditure As mentioned in Budget Circular
Statement of recoveries taken in reduction of expenditure As mentioned in Budget Circular
Equity and Loan components of investments in PSEs As mentioned in Budget Circular
Modifications to SBE (Final) As mentioned in Budget Circular
Loans to Government Servants, etc. As mentioned in Budget Circular
Notes on Demands for Expenditure Budget Vol-2 Within 3 days of rendition of
Plan SBE (Final)
Materials for statements to be appended to Demands for Grants/
Expenditure Budget Vol.1 Within 3 days of rendition of
Plan SBE (Final)
Guarantees given by the Government As mentioned in Budget Circular
Tax Revenues raised but not realized As mentioned in Budget Circular
Arrears of Non-Tax Revenues As mentioned in Budget Circular
Asset Register As mentioned in Budget Circular
Direct Transfers of Central Assistance to States/District Level Along with the Plan SBEs
(As per dates indicated in Budget
Autonomous Bodies Circular)

The Budget Documents currently assigned to the staff/officers are as follows. However, these allocations are
dynamic and may be changed/re-assigned as per the requirements with the approval of AS/JS (Budget) in so far as
they are the responsibilities of the Budget Division

92
 RESPONSIBILITIES FOR BUDGET DOCUMENTS:
Each Director/Deputy Secretary in charge of the concerned Section in the Budget Division are responsible for
keeping a close watch and personally supervise the preparation of these documents through the Section
Officers/Under Secretaries responsible for them. The assignment of the documents may change as per decisions
taken by competent authorities.
Sl. No. NAME OF DOCUMENT SECTION
1. KEY TO BUDGET NS II
2. DEMAND FOR GRANTS DEMANDS
3. EXP BUDGET VOL.I All statements as per distribution list issued.
- PLAN PORTION COORDINATION/SUPPLEMENTARY DEMANDS
- NON PLAN PORTION ACCOUNTS
4. EXP BUDGET VOL.II SBE’s including write-up to be seen by the US/DD’s.
Write-up to be checked by all Dir/DS/ABO/OSD
5. RECEIPT BUDGET
- REVENUE RECEIPTS STATES
- CAPITAL RECEIPTS WAYS &MEANS
6. AFS PUBLIC DEBT/ ACCOUNTS/
SUPPLEMENTARY DEMANDS
7. BUDGET AT A GLANCE ACCOUNTS / STATES/ SUPPLEMENTARY DEMANDS
8. SPEECH*
- PART A PUBLIC DEBT/ ACCOUNTS
- PART B STATES
9. KEY FEATURES OF BUDGET ACCOUNTS/SUPPLEMENTARY DEMANDS
10. FRBM DOCUMENTS FRBM
* For checking facts and figures in so far as they are referred to in the other budget documents.
11. IMPLEMENTATION OF BUDGET
ANNOUNCEMENTS ADMINISTRATION DIVISION
12. FINANCE BILL DEPARTMENT OF REVENUE (CBEC/CBDT)
13. EXPLANATORY MEMORANDUM DEPARTMENT OF REVENUE (CBEC/CBDT)
14. CABINET SUMMARY/ SUMMARY FOR
THE PRESIDENT (Including Annexure/
Documents etc) AS ASSIGNED TO DS/DIRECTOR BUDGET
15. VOTE ON ACCOUNT DEMANDS SECTION
16. SUPPLEMENTARY DEMANDS SUPPLEMENTARY DEMANDS
Note: 1. Time lines for the preparation of these documents are issued each year internally by the Budget Division.
2. The letters issued in relation to the presentation of Budget are placed at Annexure I of Chapter V.

It is advisable that the staff/officers of the Budget responsibilities and preferably have a check-list for
Division fully acquaint themselves with the current each statement of each document, for which they are
year’s document in relation to the allocated responsible.

93
WORKING UPON THE STATEMENT OF BUDGET without any number preceding it. It is a collection of
ESTIMATES (SBE) WORKSHEET AND THEIR schemes which are depicted continuously in SBE and
CONTENTS: totaled at the end of sub sub group. Examples
include:
After the pre-Budget meetings are over, the
approved ceilings for expenditure, as finalised in • Launch Vehicle Technology, Satellite
these meetings, are communicated including ceilings Technology, Launch Support, Tracking
for Revenue and Capital expenditure separately, on Network and Range Facility under Space
the basis of which Financial Advisers are required to Technology sub group and Space Research
prepare the Statement of Budget Estimates (Final) in Group in Department of Space.
the form prescribed in the Budget Circular and
forward it to Budget Division. Scheme: It is a line item in SBE which starts with a
A new data based software has been created for one or two digit number such as 1, 2, 50, 80 etc. and
the submission/processing and finalization of has a description. A scheme can have
Statement of Budget Estimates and other budget • One or more major heads or
documents which is an improvement over the earlier • One or more sub schemes
Excel sheet based format. This software has been
already put to test and shall be put to use from the A scheme can be part of a Group or appear in SBE
Budget 2011-12. The forms and formats in which the by itself (not part of any group).
data will be required to be submitted by the
Ministries/Departments will remain largely unaltered. Sub Scheme: It is a line item in SBE which starts
A brief description of the details of information with a number in two parts such as 1.01, 2.05, 5.11,
required to be filled in each section (Group/sub- 80.09 etc. and has a description. A sub scheme can
Group/Section etc.) are brought out below: have
• One or more major heads or
Group: A group is a line item in SBE which appears • One or more programmes
as a heading without any number preceding it. It is a
collection of schemes which are depicted Programme: It is a line item in SBE which starts with
continuously in SBE and totaled at the end of group. a number in three parts such as 1.01.01, 2.05.10,
A group can have none, one or more sub groups. 5.11.09, 80.09.10 etc. and has a description. A
Examples include: programme can have
• One or more major heads or
• Crop Husbandry in Department of
• One or more sub programmes
Agriculture and Cooperation
• Nuclear Power Projects in Nuclear Power Sub Programme: This is the lowest entity in SBE. It
Schemes is a line item in SBE which starts with a number in
• Foreign Trade and Export Promotion in four parts such as 1.01.01.01, 2.05.10.09,
Department of Commerce 5.11.09.11, 80.09.10.20 etc. and has a description. A
sub programme can have
Sub Group: A sub group is a nested grouping within • One or more major heads
a group and is a line item in SBE which appears as a
heading without any number preceding it. It is a Expenditure Type: Expenditure is categorized as :
collection of schemes which are depicted
• Total Expenditure or Voted Expenditure (E)
continuously in SBE and totalled at the end of sub
• Charged Expenditure (C)
group. A sub group can have none, one or more sub-
sub groups. Examples include: • Recovery (Y)
• Receipt (R)
• Food grain crops, Commercial Crops, Major Head Expenditure: In case of Expenditure
Agriculture Economics and Statistics under Type - Charged/Voted/Total, it is the major head
Crop Husbandry group in Department of under which expenditure is incurred/proposed. In
Agriculture and Cooperation case of Expenditure Type-Receipt, it is the major
head against which the receipt is netted. In case of
• Coal and Lignite under Labour and
Expenditure Type-Recovery, it is the same as Major
Employment group in Ministry of Coal
Head Receipt/Recovery.
• Promotion of Art and Culture, Archaeology,
Archives and Museums, Libraries under Art
Major Head Receipt/Recovery: In case of
and Culture group in Ministry of Culture
Expenditure Type-Receipt/Recovery it is the receipt
or recovery major head.
Sub Sub Group: A sub sub group is a nested
grouping within a sub group, lowest level of grouping
and is a line item in SBE which appears as a heading

94
 Plan Type: Plan expenditure under any It may be relevant to mention here that the NIC Cell
scheme/sub scheme/programme/ sub of the Ministry of Finance conducts a comprehensive
programme is either part of training every year for the officers/staff of
• Central Plan (C) Ministries/Departments handling the Budget work for
• State Plan (S) a proper orientation and understanding of the SBE
• UT plan (U) and the format in which the information is required to
be sent to the Budget Division. Any doubts on these
Special Statements (Volume-I) : If the line item in are expected to be clarified in these training sessions
SBE is to be included in any of the Special to enable a smooth completion of the budget work.
Statements forming part of Volume-I of Expenditure
Budget (4,5,6,7,8,9,10), the Statement No. needs to
be indicated in this column. If the line item is to be
shown in more than one statements, then these
statements should be shown separated by commas
(such 4,7 or 8,10 etc.).

PSE Category: A PSE Category is a heading which

appears by itself without any number preceding it in
Part B of SBE and is a grouping for PSEs. All PSEs
within a category are totalled at the end of the
Category.

The worksheet for the Statement of Budget

Estimates in the database will have one worksheet
for each Demand for Grant. Each worksheet is
identified separately as Dxx, where xx is the demand
number. Eg: D10, D25 etc. Both the Statement of
Budget Estimates and Demands for Grant provisions
for individual demands is prepared in the same
database worksheet. The complete worksheet
functions as input as well as final output for SBEs
and Demands for Grants. In addition to these two,
there are other functional areas and summary areas
defined within the worksheet, for intermediate
calculation and further processing of other output
statements.
A sample format of the Worksheet in the new
database software is placed below which is self
explanatory.

95
 CHECK-LIST OF VARIOUS BUDGET DOCUMENTS AND THEIR RELATED STATEMENTS/ ANNEXURES:

is required to check the demands for grants

Each Section is required to prepare a check-list to ensure:
for the preparation of each of the Budget
documents/statements etc assigned to them, which (a) The correctness of the number of
are broadly as follows- Demand for Grant;
(b) Nomenclature of the
Ministries/Departments; and
I. FINANCE MINISTER’S SPEECH:
(c) Nomenclature of Heads of Accounts.
For the preparation of Budget Speech various Nomenclature is required to be checked
Departments/Divisions in the Finance Ministry and from the List of Major and Minor Heads
other Departments/Ministries of the Government are of Accounts (LMMHA).
required to provide the information related to Budget
Speech of the Finance Minister. For checking facts ♦ Statement showing details of NS/NIS –
and figures in the Finance Minister’s speech insofar Demands Section has the responsibility to
as they are referred to in the other budget call for the information from all the
documents, the same is done by the Budget Division. Ministries/Departments and prepare the
statement on the basis of the information so
II. KEY TO BUDGET DOCUMENTS:
furnished by the concerned
♦ Editorial Revisions are required to be carried Ministries/Departments.
out wherever required;

♦ Concerned years are to be amended in the

cover page, pg.Nos.11, 14, 16 and 17 of the
document;

♦ Key to Budget Document has to be

added/explained as the first document; and

♦ Index has to be reviewed / amended as per

the changes made.
The practice has been to submit this document for
approval during the third week of January.

III. DEMANDS FOR GRANTS:

♦ Contents – Page numbers etc. as given in

the list of contents must be checked to
ensure that these match with those assigned
to each Demand for Grant.

♦ Introduction – Necessary consequential

changes are to be carried out in the
introduction.

♦ Summary – Revenue/Capital and

Charged/Voted expenditure is to be taken
from the approved Statement of Budget
Estimates while checking the ‘Summary’
portion.

♦ Demands for Grants - Demands for Grants

are to be prepared and got approved by the
concerned Sections of the Budget Division
assigned a particular Ministry/Department. It
is also the responsibility of the concerned
Sections to ensure the correctness of the
contents therein. However, Demands Section

96
 IV. EXP BUDGET VOLUME-1:
MANUALLY GENERATED STATEMENTS /DATA.
ANNEX/ TITLE OF THE
STATEMENT STATEMENT/ANNEX SECTION CHECK-LIST
1 2 3 4

Statement- 2
(Actuals ) Expenditure by Ministries/Departments Accounts This statement is generated after
getting necessary inputs from
CGA. This is also subject to
reconciliation of ‘net expenditure’
as worked by Budget Division &
CGA. Inputs from CGA is
expected to be received in the
month of December.
Variation in
Revised Estimates
from BE. Revised Estimates Accounts Prepared on the basis and on the
finalization of Vol. II of
Expenditure Budget & Statement
No. 4 of Expenditure Budget Vol.
I.
Variation in Budget
Estimates from RE Budget Estimates Public Debt Prepared on the basis and on the
finalization of Vol. II of
Expenditure Budget & Statement
No. 4 of Expenditure Budget Vol.
I.
Statement- 19 Estimates of Provision for
Externally Aided Projects Coordination It is compiled from the
information obtained from
Planning Commission with
respect to provisions for
Externally Aided Projects in Central Plan,
Department/Ministry-wise and
Statement for Additional Central
Assistance for Externally Aided
Projects in State Plans to be
obtained from JS (PF-I).
Information is required to be
called from Planning Commission
and JS (PF-I) by making a formal
reference, normally by 15th
January.

Annex- 3 Trends in Expenditure Accounts Based on the figures of Actuals

furnished by CGA for the previous
year. Net expenditure is required
to be worked out to generate
these Annexes.
Annex- 4 Contributions to International Bodies NS-II Information is required to be
obtained from all Ministries/
Departments for compilation of
the statement. (Letter in this
regard is normally issued in 1st
week of November).

97
 Annex- 5 Grants-in-aid to private W&M/NS Information is required to be
institutions, organizations etc. obtained from all Ministries/
Departments for compilation of
the statement. (Letter in this
regard is normally issued in 1st
week of November).
Annex- 6 Estimated strength of Establishment and Information is required to be
provisions therefor called for from all the Ministries/
Departments, through a D.O.
letter from AS/JS (Budget) to all
Ministries/Departments. The
letter is sent in the first week of
January, and the compilation is
targeted to be completed by early
February.

Statement-20 Gender Budgeting Accounts This is based on the inputs

received from various Ministries/
Departments, and is to be
compiled after finalization of Vol.
II of Expenditure Budget. A
letter in this regard is sent in the
first week of January,
Statement- 21 Schemes for Development of Scheduled
Castes/Scheduled Tribes States The Statement is compiled based
On estimates under Plan and
Non-Plan Schemes, furnished by
the Ministries/Department
along with SBEs, under BE
& RE ( Current Year) and BE
(Next Year). The information is
required to be called through a
formal reference to the
Departments/Ministries, if
received along with SBEs/in1st
Week of January.
Statement- 18 Direct Transfers to State/ District
Level Autonomous Bodies NS-II Information is required to be
obtained from all Ministries/
Departments for compilation of
the statement. (Letter in this
regard is normally issued in 1st
week of November).
EXPENDITURE BUDGET VOLUME- 1 (OTHER THAN MANUAL STATEMENTS):
Overall charge of coordination and finalization is allocated to the concerned DS /Director in the Budget Division.
Statement Number TITLE OF THE STATEMENT Section
1 2 3 4
Statement-1 Summary of Expenditure Accounts Generated from Statement 2 and
15. This is also reconciled with
summary Statement of Exp.
Budget Vol. 2. This should also
be reconciled with the expenditure
figures maintained by DS/
Director responsible for Control
Sheet on expenditure.

98
Statement-2 Expenditure by Ministries/Departments
(Actuals) Accounts This is required to be checked
with individual SBEs of Ministries/
Departments.
Statement-2
(remaining part) Expenditure by Ministries/Deptts.
(remaining part) Demands/
Reports Figures are required to be
compared from the statement
compiled by Accounts Section
from the inputs received from
CGA.
Statement-3 Expenditure of UTs without Legislature NS-II
Statement-4 Non-Plan Expenditure by
Broad Categories Accounts Generated from the individual
SBEs, Annexures and various
Statements of Expenditure
Budget-Vol.1
Statement-5 Non-Plan Subsidies –
Interest Subsidies Accounts/
Reports This is generated from
the SBEs. Figures are required to
be taken from Spreadsheet (Plan)
of Final SBEs of concerned
Ministries/Departments.

Statement-6 Non-Plan Subsidies – Other Subsidies Accounts /

Reports This is generated from the
SBEs. Figures are required to be
taken from Spreadsheet (Plan) of
Final SBEs of concerned
Ministries/Departments.

Statement-7 Departmental Commercial Undertakings Suppl. Demands

Statement-8 Non-Plan Capital Outlay Accounts/ Suppl.

Demands This is generated from the
Annexure- I & SBEs of individual
Ministries.
Statement-9 Non-Plan Grants & Loans to Public
Enterprises Accounts /
Reports This is generated from the
SBEs. Figures are required to be
taken from Final SBEs of
concerned Ministries/ Departments.

Statement-10 Non-Plan Grants & Loans to State/

UT Governments States Non-Plan Grants & Loans to
State and Union Territory
Governments is a computerized
statement generated through
NIC. This statement needs to be
cross-checked against the Major

99
 Heads 3601, 3602, 7601
and 7602 as appearing
in Expenditure Budget Volume-II, under various
Demands. This has to be
incorporated under Resources
transferred to States & UTs/ in
the Budget at a Glance.
Statement-11 Grants & Loans to Foreign Governments States Grants and Loans to Foreign
Governments is also a
computerized statement
generated through NIC. This
statement needs to be cross-
checked against the Major Heads
3605/3606/7601/7602) as
appearing in Expenditure Budget
Volume-II, under various
Demands, and to ensure that it
contains only Non-Plan figures.
Statement-12 Central Plan Outlay by Ministries/
Departments CDN/ Suppl.
Demands Plan outlay portion is received
from all Ministries/Departments,
and thereafter figures are
required to be checked with
Expenditure Budget Vol.-II. The
necessary editing of write-up is
also required to be carried
out. Figures are required to be
taken from Central Plan of SBE.

Statement-13 Central Plan Outlay by

Heads of Development CDN/ Suppl.
Demands Figures are required to be taken
from Central Plan of SBE. (It is
Head-wise & Plan-wise figures of
Expenditure Budget Vol.-II.
Statement-14 Plan Investments in Public Enterprises CDN/ Suppl.
Demands Figures are required to be taken
from Plan investment, Public
Enterprises section of SBE in the
Spreadsheet. (It is Head-wise &
Plan-wise figures in B Part of
Expenditure Budget Vol.-II).
Statement-15 Resources of Public Enterprises CDN/ Suppl.
Demands Figures are required to be taken
from B Part of SBE in
Spreadsheet
(It is Head- wise & Plan-wise
figures of B part of Exp..Budget
Vol.- 2.

Statement-16 Central Assistance for State & U.T. Plans States/ NS-II Central Assistance for State and
Union Territory Plans is a
computerized statement
generated by NIC. This statement
requires to be cross-checked with
the Developmental Head ( 43601

100
 & 43602) as appearing in
Expenditure Budget
Volume-II, under various Demands.
Statement-17 Plan Grants & Loans to State & CDN Figures are required to
U.T. Governments be taken from State Plan (Part
of SBE spreadsheet – Grants &
Loans).

Statement-18 Estimates of Provision for Externally

Aided Projects CDN This statement is to be prepared
after obtaining/on the basis of the
figures received from PF Division
& Planning Commission and from
CAAA, M/o Finance.
Annex-1 Budget Provision by Heads of
Accounts(Revenue) Suppl.
Demands Generated from the SBE.
Budget Provision by Heads of
Accounts(Capital) PD/Demands Generated from SBE in
Spreadsheet and should be compared with the
vetted hard copy of SBE.

Annex-2 Reconciliation between Expenditure shown

in Demands for Grants, Annual Financial
Statement & Annex-I Accounts Total Expenditure as brought out
in DG is to be reduced by
recoveries and receipts-
individually. This is done by
tracing and identifying the
receipts netted out against
expenditure from the SBEs.
Annex-3 Trends in Expenditure Accounts /States Checks in Accounts Section:
Based on the actuals furnished
by CGA for the previous year. Net
expenditure is required to be
worked out to generate these
annexure. Checks in States
Section: Part A-Non-Plan
Expenditure (Item Nos.1 to 10) is
picked from Statement
No.4/Volume-I and item No.11 is
taken from Statement
No.2/Volume-I.
Part-B- Plan Expenditure is
generated out of Annexure-
I/Volume –I (Top portion).
Annex-3.1 Details of Subsidies
included in Annex 3-is taken from
details available in Statement
No.4/Volume-I read with
Statement No.5 & 6/Volume-I
(containing details of Interest and
Other Subsidies).
Annex-3.2 Details of Other Non-
Plan Revenue Expenditure
included in Annex 3 is taken from
details available in Statement

101
 No.4/Volume-I read with Annexure-I/Volume-I (Sector -Wise Expenditure).
Anenex-3.3- Details of Plan
Expenditure included in Annex 3
–Part-A is generated with the help
of Statement No.13 (leaving part
of IEBR financing) & Annex-
1/Volume –I. Part-B & C are
taken from Statement No
16/Volume-I (Central Assistance
for State Plans and Union
Territory Plans) .
Annex-4 Contributions to International Bodies NS-II Information is required to be
obtained from all Ministries/
Departments for compilation
of the statement. (Letter in this
regard is normally issued in 1st
week of November).

102
 V. EXP BUDGET VOLUME- II:
The figures in the Expenditure Budget Volume II,
are as per the Statement of Budget Estimates
filled/submitted by the respective
Ministries/Departments in the format given (in soft
copy). These figures are checked in the concerned
sections of the Budget Division against the hard
copies and sent to NIC for consolidation. The write-
up/Notes to the Demands together with the print
proof of the SBEs have to be seen /checked by the
concerned USs/DDs for their respective
Grants/Ministries, with reference to the final vetted
copies of the SBEs/Demands for Grants received
from the respective Ministries/Departments. In
addition to this, the write ups/ Notes to the Demands
will also be checked by all Dir//DS/ABO/OSD in the
Budget Division.
In the expenditure Budget Volume II, it has to be
further checked that the provisions for investment in
Public ‘enterprises as indicated in Part B, matches
with the provisions given in Part A. Following should
also be kept in view-

♦ Correctness of Number/Nomenclature of
Demands for Grants relating to the
Ministry/Department;

♦ Correctness of Number/Nomenclature of
Major Heads and Budget provisions;

♦ Number corrections, if any, are to be carried

out only through the NIC;

♦ If there is any scheme newly

included/deleted in the RE /BE, the same has
to be properly inserted / deleted in the soft
format of SBE through NIC. This is important
as some of the statements have to be
compiled from the final SBEs;

♦ Soft data of SBE needs to checked properly,

and the matching of figures from one section
in the Spreadsheet to the other has to be
verified;

♦ If any correction is required to be made at a

later stage after submission of SBE’s to NIC,
the same must be routed through NIC for
ensuring the capture of revised data in all the
related statements; and

♦ It should be seen that there is uniformity in

the pattern/presentation of write-ups of
different Ministries/Departments.

103
VI. RECEIPTS BUDGET:
Section Checklist
REVENUE STATES Tax Revenue Receipts
RECEIPTS Department of Revenue CBDT and CBEC are requested by Budget Division to
furnish the Estimates in respect of Direct Taxes and Indirect Taxes, by 7th January.
Write up also needs to be taken from CBEC/CBDT Revenue Department for -
Direct/Indirect Taxes. On receipt of estimates from CBDT and CBEC, States’
share is calculated for RE (Current Year) / BE (Budget Year) from the shareable
pool, as per the percentage recommended by the Finance Commission after
deducting cost of collection as provided in Expenditure Budget Volume 2.

Non-Tax Revenue Receipts:

Letters are issued to the Ministries/Departments (including UTs) by 1st week of
October every year after issue of Budget Circular in September, calling for Non-Tax
Revenue Receipts’ estimates by end of November. These estimates are given to
respective sections in the Budget Division i.e. Ministry/Department wise for getting
the same approved from the designated Director in the Budget Division, tentatively
by the end of January. Estimates as approved by Director are then consolidated in
the form of Statement and submitted for approval of Secretary (DEA), tentatively by
2nd week of February every year, for incorporation in the Receipt Budget
documents.

Annexure-1 of the Receipts Budget, indicating State-Wise Share of Taxes (for

Budget Year):
State wise share of taxes is reflected in the Statement. Figures for Actuals of Tax
Revenue in Gross are taken from Finance Accounts (Taxes & Duties assigned to
States and Part-A/Tax Revenue). The figures of Tax and Non-Tax Revenue for
UTs are taken from NS Section.

NON DEBT CAPITAL RECEIPTS:

CAPITAL WAYS & Recovery of Loan and Advances (A):
RECEIPTS MEANS/PD This is worked out by States/SD section, on the basis of estimates received from
Ministries/Departments.

Misc. Capital Receipts (B):

These figures are included as per the information received from the Department of
Disinvestment and other Ministries/ Departments, and subsequent discussions
carried out, if any.

DEBT CAPITAL RECEIPTS:

1. Market Loan:
This is worked out by W&M Section on the basis of Market borrowing requirements
of Government.
2. National Small Savings Fund:
NS section compiles the information on the basis of information received from
Department of Posts/CGA.
3. Other Receipts - Railway Reserve Funds:
The figures are included on the basis of information received from the concerned
Ministry/Department/RBI. For example, the estimates of Funds pertaining to
Railways are received from the Ministry of Railways.

104
 4. International Financial Institutions:
MI and BC Division of the Department of Economic Affairs compiles the information
and sends to Budget Division for incorporation in the Receipts Budget, through IFU
of DEA.
5. Market Stabilization Scheme:
This is included as per the estimates provided by the RBI.

Annex 3- Debt Position of Government of India:

This is worked out by W&M Section on the basis of Market borrowing requirements
of Government.
Statement of Liability/Assets:
Actual Figures are required to be shown for the year1950-51, and four preceding
years to the current year, along with RE for the current year and BE for next year.
Actuals up to one year earlier than current is required to be verified with the figures
of last year’s Capital Receipts Budget, while last year’s actual has to be taken from
the figures provided by the CGA.
Annex 4- Details of Current Rupee Loan with the Central Government:
These are worked out on the basis of figures provided by the RBI and checked with
the figures compiled in the W&M Section.
Annex 4 A and B - Special Securities Converted into Marketable Securities:
These are worked out on the basis of figures provided by the RBI and checked with
the figures compiled in the W&M Section.
Annex 5,6 and 7- Trends in Receipt/ Trends in Expenditure:
These are compiled on the basis of information furnished by Controller General of
Accounts. Actual expenditure/receipt figures are given for 8 preceding years to
current year along with Revised Estimates and the estimates for the Budget year.
Annex. 9- Reconciliation between Estimates of Receipts Shown in AFS and
Receipt Budget:
This annex has two parts, A- Revenue Receipts and B - Capital Receipts. In the
Revenue Receipts difference in the figures of AFS and Capital Receipts is on
account of Railway Receipts/Postal Receipts/Commercial Receipts/Receipts
Incidental to Market Borrowings and Write off or Waiver of Loans and Interest. On
the Capital Receipts side, difference in the figures of AFS and Receipts Budget is
on account of the figures of Public Debt Disbursement and Special Securities
issued for payment of Subsidies.
Annex 10 and 12- Tax Revenue raised but not realized/ Revenue Foregone
under the Central Tax System:
The statements are furnished by the Department of Revenue.
Annex 11- Arrears of Non Tax Revenue:
The statement is compiled on the basis of estimates furnished by
Ministries/Departments.

VII.ANNUAL FINANCIAL STATEMENT:

Statement Checklist
AFS This is compiled in NIC on the basis of information filled by different sections of Budget
Division.
Accounts:
Actuals in all the statements are provided by the CGA.
Estimates for the Budget year:
This has to be checked with the figures shown in different budget documents.
Statement-1
Consolidated
Fund of India:

105
 Revenue Account–
Receipts. A-Tax Revenue:
Figures are included as per the estimates provided by Department of Revenue. States’
share is calculated by the States Section in Budget Division, on the basis of the Finance
Commission recommendations.
B-Non-Tax Revenue:
(a) Interest Receipts and Dividend & Profit - These figures are finalized by all the
concerned sections with the approval of designated DS/Director in the Budget Division
and sent for compilation to SD section.
(b) Receipts from Department/Ministries- These are required to be checked with the figures
provided by Ministries/Department in their Final SBEs.
(c) Railways – The figures are provided by Ministry of Railways. The Ministry of Railways
do not present any Annual Financial Statement with their Budget and their figures are
included as part of AFS in the General Budget.

Statement-1 This is compiled in the NIC on the basis of Final SBE’s of Ministries/Departments and
Consolidated Fund of has to be checked/verified against the original SBEs of Ministries/Departments.
India-Revenue Account
– Disbursements.

Statement-1 A. Public Debt:

(a) Internal Debt- These figures are taken from RBI through W&M section.
Consolidated Fund (b) External Debt- These figures are taken from Controller of Aid Accounts and Audit.
of India- Capital (c) Recoveries of Loans and Advances- For the State Governments and Union Territory
Account- Receipts. Governments, it is calculated by the States Section on the basis of the estimates received.
Recoveries of loans and advances for the Foreign Governments and Other loans and
Advances, the figures are worked out by the SD Section on the basis of the estimates
received.
(d) Miscellaneous Capital Receipts- e.g. the Disinvestment proceeds are worked out on the
basis of estimates furnished by Department of Disinvestment, and similarly for other
Ministries/Departments.

Statement-1 (a) Capital Expenditure – These are taken from the final SBEs and are compiled by the
NIC on the basis on information received from Ministries/Departments. These figures are
Consolidated Fund required to be checked/verified with figures of original SBEs.
of India - Capital .
Account –
Disbursements (b) Public Debt- The figures are provided by the RBI/CAAA/NS section. It also includes
figures of Loans and Advances proposed to be sanctioned by different Department/
Ministries to PSE and other institutions. The figures of loan and advances proposed to be
sanctioned by the Ministries/Department are checked with figures of original SBEs.
(c) Loans to States/UTs/Foreign Governments/Government Servants- These details are
worked out on the basis of estimates received from Controller of Aid Accounts & Audit, Plan
Finance (I) and the estimates received from Ministries/Departments in the CDN Section of
Budget Division.

Statement-1 These figures are compiled on the basis of SBEs and require to be checked/verified with
the figures of original SBEs.
Disbursement
Charged on the
Consolidated Fund
Of India-

Statement-II In case of any enhancement of the Contingency fund, the figures are required to be
indicated in this statement.
Contingency Fund
of India- Net.

106
 Statement-III Public The estimated receipts in the Public Account of India are reflected in this Statement.
Account of India- (a) NSSF- Figures are compiled by NS section on the basis of the estimates received from
Receipts/ Department of Post/CGA etc.
Disbursements b) State Provident Fund/Postal Insurance and Life Annuity Fund/Other Items— Reserve
Funds—Deposit and Advances- These figures are worked out on the basis of estimates
. received from Ministries/ Department and RBI and compiled in W&M section.

VIII.BUDGET AT A GLANCE:
Title of the Statement/Annexure Checklist
Budget at a Glance This statement is generated after working out the information from ‘Trends
in Receipts’ and ‘Trends in Expenditure’ in Receipts Budget and
Expenditure Budget.
Rupee comes from/goes to Graphs are prepared on the basis of inputs available in the Statement of
Budget at a Glance as well as from Expenditure / Receipts Budget.
Expenditure The expenditure figures are compiled on the basis of Expenditure Budget,
Volume-1.
Plan Expenditure Revenue Expenditure/Capital Expenditure: The figures are taken from
Expenditure Budget Volume-I and II and are required to be
checked/verified with the original SBEs.
Receipts These are worked out from the Receipts Budget.
Central Plan Outlay by Sectors The figures are taken from Statement – 13 of Expenditure Budget
Volume-I.

Central Plan Outlay by Ministries/ The figures are taken from Statement 12 (Central Plan Outlay) of
Departments Expenditure Budget Volume-I.

i) Budget Support; ii) IEBR The figures are taken from the relevant statements of expenditure Budget
of Public Enterprises, etc. Volume 1.
and iii) Total Central Plan
Outlay.

Highlights of Central Plan Information is compiled on the basis of estimates received from the
Ministries/Departments. These figures are verified/ checked with
Expenditure Budget Volume-II figures.

Resources transferred to States & UTs (1)States’ share of Taxes and Duties- It is compiled by States Section on
the basis of the recommendations of the Finance Commission.
(2) Non-Plan Grants & Loans- This is worked out from Statement No.10 of
Expenditure Budget, Volume-1 (Non-Plan Grants and Loans to State & UT
Governments).
(3) Central Assistance for States & UTs (with legislature) Plans—This is
worked out of Statement No.17 in Expenditure Budget, Volume-1.
(4) Assistance for Central and Centrally Sponsored Schemes – This is
also worked out of Statement No.17 in Expenditure Budget, Volume-1.
(5) Recovery of Loans & Advances –These estimates are worked out on
the basis of information received from Ministries/Departments.

107
 Resources transferred to States The Bar Diagram indicates the Net Resources transferred to States
(only)
and is taken from figures in Receipts Budget and Budget at a Glance
(other statements).
Deficit Trends Graphs of Deficits for current year/ensuing year are based on the basis of
figures in the Statement-Budget at a Glance. Previous years’ data are
taken from the Budget at a Glance of the preceding years.
State & UT Plan Outlays These are based on the estimates in the SBEs.

IX. KEY FEATURES OF BUDGET:

The Key Features of Budget are prepared by the designated Director/DS in the Budget Division on the basis of
the Finance Minister’s speech and the major features of the budgetary allocations for the Ministries/Departments.

X.FRBM STATEMENTS:
The three FRBM statements presented with the Budget are prepared on the basis of the guidelines in the
FRBM Rules, and has been discussed in detail in Appendix to Chapter IV of the Manual.

CONTROL CHECKS:
Apart from the work sheet related checks, there are certain basic checks that are required to be carried out
while examining the SBEs. These include-
1. Ceilings verification;

2. Verification with Plan figures as communicated by Planning Commission;

3. Verification of IEBR reflection in SBEs as per Planning Commission communicated Revised Estimates and
Budget Estimates;

4. Checking upon the break-up of investments in Public Enterprises as Equity and Loan for Revised
Estimates and Budget Estimates;

5. Verification of Charged Expenditure;

6. Verification of provisions relating to Revised Estimates to be based upon supplementary given/likely to be

given;

7. Verification of Recoveries/Netted receipts;

8. Verification of provisions for North East Region;

9. Reviewing the Write up (Hard & Soft Copy);

10. Verification of the CHECK DIGIT; and

11. Deletion of zero lines.

The checks required to be carried out during the lock in period in the Budget Press include-

1. Verification of Ceilings with detailed break-down;

2. Checking the provisions for Charged Expenditure (italics);

3. Checking on the Recoveries/Netted receipts;

4. Review of Plan/Non-Plan write ups; and

5. Deletion of zero lines.

108
 BUDGET PRESS AND SECURITY/LOCK-IN the Budget Division procedures and requirements
ARRANGEMENTS: (followed up with communication in writing).
The Finance Ministry has its own press to print
the entire set of Budget papers. The Budget Press
which runs in the basement of the North -Block, 3.(i) Inquire whether the requirements relate only
becomes totally forbidden in the month before the Vote-on-Account or Supplementary
Budget is presented. Demands also.

The employees of the press, stay in the Press (ii) As far as possible it should be insisted upon
along with other staff and officers who are also that the format of Budget documents should
locked-in for the last seven days. This is a part of the be the same as for the Union Budget.
security measure put in place to ensure foolproof (iii) State Government Officers should
secrecy for the budget papers, and is part of a bring/provide the documents in ‘PageMaker’
practice started in the pre-Independence era. The and both in English and Hindi languages. If
Economic Survey is, however, printed outside, in one required, they should bring their translators.
of the government presses in the city.
(iv) They should also bring their Budget sets of 2-
The press is used for the printing of annual 3 previous years.
budget documents and the printing of the
supplementary demands for grants. It has quite 4. Confirm with the Home Ministry in writing
sophisticated printing and other related machines and whether the full budget provision is required to be
equipments. Budget speech, given the sensitivity is provided or provisions are to be made only for Vote-
usually the last document to be printed. on-Account.

During the Budget period, and in order to 5. Alert the Hindi section and the Budget Press
complete the Budget printing work in time, Manager of the position and the requirements expected of
(Press) is responsible to ensure that- them.

a. Time schedule for procurement and receipt 6. As soon as the State Government
of items for printing documents are on representatives arrive, soft copy of the Budget should
stream; be obtained from them and up-loaded in the Budget
Press system.
b. Action is initiated in time to ensure that all
key personnel are in position; 7. Print out of one copy of the Budget document
should be taken for obtaining the certification of State
c. Cleanliness inside/outside Budget Press is Government representative for correctness and
ensured; taking their consent for printing.
d. Status of coordination work with other 8. Before the documents are certified as correct
agencies- Fire Brigade, Delhi Police, MTNL, for printing, the Budget provisions should be
IB, Canteen, Hospital, setting up of CCTV, scrutinized in the States section to ensure that there
etc are monitored; and are no apparent/obvious mistakes.
e. Construction/Maintenance works in and 9. It is the responsibility of Budget Division to
around budget press sanctioned for the year seek recommendation of the President for
are completed latest by the 30th November. introduction of the Bill relating to the State Budget in
The Security arrangements for the entire Budget the Lok Sabha.
period are made by the Intelligence Bureau, in 10. Simultaneously, the date for laying of the
consultation with the Budget Division in the Ministry State Budget in Parliament and the Lok Sabha /
of Finance. They are responsible for screening all the Rajya Sabha Table offices should be decided and
officers and staff associated with the budget and set request made through AS/JS(Budget) to include it in
up an elaborate security arrangement in the Budget the List of Business. ( Authenticated copies of the
Division and the Budget Press to ensure that the Budget documents are also required to be sent to the
budget related information is not leaked. Table Offices).
CHECK LIST FOR THE PREPARATION OF 11. Arrangements for labour/vehicle etc for
BUDGET OF A STATE UNDER PRESIDENT’S transportation of budget documents and required
RULE: passes for them must be obtained in time. Anti-
1. Collect a copy of the Notification from the Sabotage certificate is also required to be obtained
Home Ministry relating to the Declaration of from Delhi Police.
President’s Rule in a State by the Central 12. As soon as the proposal is sent to the
Government. President for approval, a copy of the Bill should be
2. Immediate establishment of contact with the sent to the Ministry of Law.
concerned State Government and apprising them of

109
 13. D.O. letters from FM to Secretary
General (Lok Sabha) and the Speaker should
be prepared for the purpose of introducing, passing
etc of the relevant Bill. These letters should be got
signed at proper time keeping in view the time
constraints.
14. As soon as the President’s recommendation
is received, the letters from Finance Minister should
be dispatched and telephonic liaison established with
the Lok Sabha Secretariat.
15. Home Ministry and the PF-I Division should
be informed in writing for deputing their officials to
attend the discussions on the Budget.
16. As soon as the Bill is returned by the Ministry
of Law for vetting and immediate return, the action
should be promptly taken for compliance.
17. Law Ministry prints the Bill and sends a copy
of the printed version to Budget Division for checking.
After getting confirmation of the correctness, Ministry
of Law forwards the printed Bills to the Lok Sabha
(legislative section) for circulation amongst the
Members of Parliament. The Hindi translation of the
Bill is also carried out by the Ministry of Law.
18. As soon as the Bill is passed in the Lok
Sabha, Budget Division should immediately approach
the office of the President for his/her
recommendation for introduction of the Bill in Rajya
Sabha.
19. D.O. letters from FM to Secretary General
(Rajya Sabha) and Chairman Rajya Sabha ( for
waiver of time) should be prepared in anticipation.
20. The letters from Finance Minister should be
dispatched immediately after getting the President’s
recommendation.
21. After the Bill has been passed in both the
Houses of Parliament, Ministry of Law sends a copy
of the Bill as passed, for verification of correctness.
22. After the certification of correctness from
Budget Division, the Ministry of Law gets it
authenticated by the Speaker (Lok Sabha) and then
puts up the Bill to the President for his/her assent.
23. After obtaining the Presidential assent,
Ministry of Law intimates Budget Division about the
assent by the President and its printing in the Official
Gazette as Act No.—.
24. Budget Division intimates the concerned
State Government.

110
 CHAPTER-VI
BUDGET IMPLEMENTATION
Rule 51 Of the GFR, lays down provisions part thereof, placed at his disposal, every controlling
regarding ‘The Communication and Distribution of officer must satisfy himself that adequate provisions
Grants and Appropriations’, which interalia states exist within the departmental organisation for
that- ‘After the Appropriation Bill relating to Budget is systematic internal checks calculated to prevent and
passed, the Ministry of Finance shall communicate detect errors and irregularities in the financial
Budget provisions to the Ministries / Departments proceedings of his subordinate officers and to guard
which, in turn, shall distribute the same to their against waste and loss of public money and stores, to
subordinate formations. The distribution so made ensure that the prescribed checks are effectively
shall also be communicated to the respective Pay applied.
and Accounts Officers who shall exercise check
against the allocation to each subordinate authority’. As regards receipts, it is the duty of the
departments concerned to ensure that the dues of
ROLE OF DEPARTMENTS IN SPENDING AND Government are correctly and promptly assessed
CONTROL: and paid into the treasury/bank. All moneys received
by or on behalf of Government either as dues of
The relevant administrative ministry has the main Government or for deposit, remittance or otherwise
responsibility for ensuring that (i) expenditure is are required to be brought into Government Account
incurred for the approved purpose, (ii) it is within the without delay in accordance with the prescribed rules
sums allotted, (iii) it has been incurred under the and regulations.
authority competent to sanction it, and (iv) due
prudence has been shown in its incurrence. As CONTROL OF EXPENDITURE AGAINST BUDGET:
ministries have delegated their powers to lower
functionaries, the basic responsibility is shifted to the Rule 52 of the GFR lays down provisions
particular functionary concerned, but overall relating to the Responsibility for control of
responsibility remains with the administrative Expenditure, which is as follows:
ministry. (1) Departments of the Central Government shall
As per rules, no public authority can incur any be responsible for the control of expenditure against
expenditure or enter into any liability involving the sanctioned grants and appropriations placed at
expenditure or transfer of moneys for investment or their disposal. The control shall be exercised through
deposit from government account unless such the Heads of Departments and other Controlling
expenditure or transfer, as the case may be has been Officers, if any, and Disbursing Officers subordinate
sanctioned by general or special orders of the to them.
Government or by any authority to which power has (2) A Grant or Appropriation can be utilised only
been delegated in this regard. No expenditure can be to cover the charges (including liabilities, if any, of the
incurred against a sanction unless funds are made past year) which are to be paid during the financial
available to meet the expenditure by valid year of the Grant or Appropriation and adjusted in the
appropriation or re-appropriation. The government account of the year. No charges against a Grant or
authorities have to comply with rules prescribed in Appropriation can be authorized after the expiry of
the General Financial Rules and the Delegation of the financial year.
Financial Power Rules in all financial matters. The
designated controlling authorities have to ensure not (3) No expenditure shall be incurred which may
only that the total expenditure is kept within the limits have the effect of exceeding the total grant or
of the authorised grants but also that the funds appropriation authorized by Parliament by law for a
allotted to spending units are expended in the public financial year, except after obtaining a supplementary
interest and on objects for which the money was grant or appropriation or an advance from the
provided. Contingency Fund. Since voted and charged portions
as also the revenue and capital sections of a Grant /
In order to maintain proper control, the controlling Appropriation are distinct and re-appropriation inter
officer obtains information on not only what has se is not permissible, an excess in any one portion or
actually been spent from the grants but also what section is treated as an excess in the Grant /
commitments and liabilities have been and will be Appropriation.
incurred against them. He must be in a position to
assume, before the Government and Public Accounts (4) To have effective control over expenditure by
Committee, complete responsibility for departmental the Departments, Controlling and Disbursing Officers
expenditure and to explain or to justify any instance subordinate to them shall follow the procedure given
of excess expenditure or financial irregularity that below:
may be brought to notice as a result of audit scrutiny
(i) For drawal of money the Drawing and
or otherwise. In the discharge of his ultimate
Disbursing Officer shall:-
responsibility for the administration of a grant, or a

111
 (a) Prepare and present bills for “charged” (c) the totals of such adjustments under the
and “voted” expenditure separately. various detailed heads as communicated to him by
the Accounts Officer on account of transfer entries
(b) Enter on each bill the complete accounts and expenditure debited to the grant as a result of
classifications from major head down to the object settlement of inward account claims and not
head of account. When a single bill includes charges reckoned by his DDOs.
falling under two or more object heads, the charges
shall be distributed accurately over the respective (v) If any adjustment communicated by the
heads. Accounts Officer affects the appropriation at the
disposal of a subordinate Disbursing Officer, the fact
(c) Enter on each bill the progressive total of that the adjustment has been made shall be
expenditure up-to-date under the primary unit of communicated by the Controlling Officer to the
appropriation to which the bill relates, including the Disbursing Officer concerned.
amount of the bill on which the entry is made.
(vi) On receipt of all the necessary returns, the
(ii) (a) All Disbursing Officers shall maintain a Head of the Department shall prepare a consolidated
separate expenditure register in Form GFR 9, for account in Form GFR 12, showing the complete
allocation under each minor or sub-head of account expenditure from the grant or appropriation at his
with which they are concerned. disposal upto the end of the preceding month.
(b) On the third day of each month, a copy of the (5) The Head of the Department and the
entries made in this register during the preceding Accounts Officer shall be jointly responsible for the
month shall be sent by the officer maintaining it, to monthly reconciliation of the figures given in the
the Head of the Department or other designated accounts maintained by the Head of the Department
Controlling Officer. This statement shall also include with those appearing in the Accounts Officer’s books,
adjustment of an inward claim, etc., communicated and as per the reconciliation procedure laid down in
by Pay and Accounts Officer directly to the DDO (and the General Financial Rules.
not to his Grant Controlling Officer). If there are no
entries in the register in any month, a ‘nil’ statement
shall be sent.
CASH MANAGEMENT AND EXCHEQUER
(iii) (a) The Controlling Officer will maintain a CONTROL:
broadsheet in Form GFR 10 to monitor the receipt of
the return prescribed in the foregoing sub-clause; Exchequer Control Based Expenditure
Management was initially introduced from 1st April,
(b) On receipt of the returns from Disbursing 2006. Based on the working of the scheme, it was
Officers, the Controlling Officer shall examine them decided to expand and modify the scheme as
and satisfy himself:- detailed below. The Modified Cash Management
System seeks to achieve, interalia, the following
(aa) that the accounts classification has been objectives-
properly given;
(i) Obtain greater evenness in the budgeted
(bb) that progressive expenditure has been expenditure within the financial year,
properly noted and the available balances worked out especially in respect of items entailing large
correctly; sums of advance releases and transfers to
(cc) that expenditure up-to-date is within the corpus funds;
grant or appropriation; and (ii) Reduce rush of expenditure during the last
(dd) that the returns have been signed by quarter, especially the last month of the
Disbursing Officers. financial year;

Where the Controlling Officer finds defects in any (iii) Reduce tendency of parking of funds;
of these respects, he shall take steps to rectify the (iv) Effectively monitor the expenditure pattern;
defect. and
(iv) When all the returns from the Disbursing (v) Better planning of Indicative Market
Officers for a particular month have been received Borrowing Calendar of the Central
and found to be in order, the Controlling Officer shall Government.
compile a statement in Form GFR 11, in which he will
incorporate - The scheme has been made applicable on 23
Demands for Grants for the time being (with effect
(a) the totals of the figures supplied by from 2007-08), and the Financial Advisers have been
Disbursing Officers; made responsible for the implementation of the
(b) the totals taken from his own registers in modified expenditure management system. The
Form GFR 9; scheme provides that in respect of each Demand for
Grant, a Monthly Expenditure Plan (MEP), separately

112
 for Plan and Non Plan expenditure would be an original provision for one purpose to another,
worked out and included in the suggested subject to the limits and restrictions laid down. The
format, as an annexure to the said Detailed Demand Comptroller & Auditor General and the Public
for Grant. MEP would also form the basis of Quarterly Accounts Committee reviews these re-appropriations,
Expenditure Allocations (QEA), implying, the and wherever necessary, comments on them for
Department/Ministries concerned may not issue taking necessary corrective actions.
cheques beyond the QEA (which would be equivalent
to the sum of provisions under MEP), without the As per Rule 59 of the General Financial Rules,
prior consent of Ministry of Finance, Cash the provisions relating to the Re-appropriation of
Management Cell (Budget Division). MEP and the Funds, state that:
QEA may be made in gross terms. (1) Subject to the provisions of Rule 10 of the
The Monthly Expenditure Plan may be finalized Delegation of Financial Powers Rules, 1978, and also
taking into account that (a) MEP for the month of subject to such other general or specific restrictions
March may not exceed 15 percent of the budgeted as may be imposed by the Finance Ministry in this
provision (Budget Estimate); (b) MEP for the months behalf, re-appropriation of funds from one primary
of January-March may be so fixed that the QEA for unit of appropriation to another such unit within a
the last quarter may not exceed 33 percent of the grant or appropriation, may be sanctioned by a
budgeted provision; and (c) keeping in view the competent authority at any time before the close of
extant guidelines of Ministry of Finance, Department the financial year to which such grant or appropriation
of Expenditure. relates.

The expenditure control would apply cumulatively (2) Re-appropriation of funds shall be made only
at the Demand for Grants level only, i.e. inter se when it is known or anticipated that the appropriation
variations between months within a quarter, between for the unit from which funds are to be transferred will
Plan and Non Plan and between schemes would be not be utilized in full or that savings can be effected in
permissible, subject to statutory restrictions and the appropriation for the said unit.
extant guidelines. Savings under the QEA would not (3) Funds shall not be re-appropriated from a unit
be available for automatic carry forward to the next with the intention of restoring the diverted
quarter and the Department/Ministry would require to appropriation to that unit when savings become
approach Ministry of Finance for revalidation of such available under other units later in the year.
savings through modification in the MEP and thereby
QEA. Spill over in respect of MEP, not inconsistent (4) An application for re-appropriation of funds
with QEA would not require prior revalidation from should ordinarily be supported by a statement in
Ministry of Finance, but may be included in the Form GFR 4 or any other special form authorized by
quarterly modification. The scheme provides that the departmental regulations showing how the excess is
Ministry of Finance is to consider such requests for proposed to be met. In all orders, sanctioning re-
revalidation within a period of 15 days of receipt of appropriation, the reasons for saving and excess of
such request, failing which the request for Rupees 1 lakh or over and the primary units
revalidation would be deemed to have been granted. (secondary units, wherever necessary), affected
The scheme further provides that the MEP and QEA should be invariably stated. The authority sanctioning
pertaining to the 4th quarter of the financial year would the re-appropriation should endorse a copy of the
be subsumed in the finalization of the Revised order to the Accounts Officer.
Estimates for the financial year.
Rule 10 of the Delegation of Financial Powers
In respect of Demands for Grants not covered by Rules lay down the General Restrictions relating to
the Modified Exchequer Management System, it has Appropriations and Re-appropriations, which are as
been advised that the expenditure in the last quarter follows-
of the financial year may not exceed 33 percent of
(1) Funds shall not be appropriated or re-
the budget allocation for those Demands for Grants.
appropriated to meet expenditure which has not been
However, in the event of Revised Estimate being
sanctioned by an authority competent to sanction it.
fixed lower than the Budget Estimate, actual
expenditure may be kept within the Revised (2) Funds provided for charged expenditure shall
Estimate. not be appropriated or re-appropriated to meet
votable expenditure and funds provided for voted
(Source: Office Memorandum No. F.No.21(1)-
expenditure shall not be appropriated or re-
PD/2005 dated December 27, 2006.)
appropriated to meet charged expenditure.
(3) No re-appropriation shall be made from one
RE-APPROPRIATIONS: Grant or Appropriation for charged expenditure to
another Grant or Appropriation for charged
The executive Government is allowed to re- expenditure.
appropriate provisions from one sub-head to another
within the same Grant, thus altering the destination of

113
 (4) Funds shall not be appropriated or re- (c) from the provisions made for any specified
appropriated to meet expenditure on a new new item of expenditure in a Grant or Appropriation
service or new instrument of service not for another purpose;
contemplated in the Budget as approved by
Parliament. (d) from funds provided under the Plan Heads to
the Non Plan Heads both under Revenue and under
(5) Expenditure on Works shall be subject to the Capital Heads; and
following further conditions, namely-
(e) so as to augment the provision under the
(a) Funds shall not be appropriated or re- primary unit ‘overtime allowance’.
appropriated to any work which has not received
administrative approval and technical sanction as (7) Funds shall not be appropriated or re-
prescribed by the Government from time to time. appropriated from or to the primary unit of
appropriation ‘Deputation or Travel abroad of
(b) The amount appropriated to any work shall Scientists’ over and above the funds provided for in
not, save with the previous consent of the Finance the budget as approved by Parliament.
Ministry, exceed the amount approved or sanctioned
for that work by a sum greater than the excess which (2) Ministries/Departments will have full powers
may be authorized under the rules referred to in for re-appropriation of funds from one Plan head to
clause (a). another Plan head in a Grant, except in cases
involving foreign exchange provided that-
Provided that such consent may not be
necessary if savings are available elsewhere under (i) Commitments are not made beyond the
appropriate Works Head to re-appropriate funds to allocations for the schemes during the Plan period;
cover excess of expenditure over authorized limits up and
to 15 percent. (ii) No re-appropriation from Capital to Revenue
(c) Save with the previous consent of the and vice-versa is made.
Finance Ministry, no re-appropriation shall be made (3) The Ministries/Departments shall not have
from the primary unit ‘Major Works’ to any other unit: powers to make re-appropriation in respect of
Provided that where such a provision is made following types of cases without the prior approval of
under Revenue Head in the budget, a Department of Finance Ministry-
the Central Government shall be competent to re- (i) Re-appropriation of funds to augment the
appropriate funds between the allied primary units Secretariat expenditure;
‘Major Works’, ‘Minor Works’, ‘Maintenance’, ‘Tools
and Plants’, included within the same Grant or (ii) Re-appropriation of funds between direct
appropriation and no such re-appropriation shall, expenditure in the Revenue Section to Grants in aid
however, be made from or to the ‘Suspense Head’ to States/Union Territories in the same Section and
relating to public work. vice-versa; and

(d) (i) Save with the specific approval of (iii) Re-appropriation of funds between Capital
Parliament or an advance from the Contingency Fund Outlay and loans or vice-versa, in Capital Section.
of India, appropriation or re-appropriation shall not be
Some other DFPR provisions related to re-
made to meet an expenditure for a new public work
appropriation in brief are as follows-
not provided for in the budget, which may cost [
rupees fifty lakhs] or more. (3-A) Financial Advisers are not to allow
diversion of funds to augment provision for travel
(ii) Save with the previous consent of the
expenses.
Finance Ministry, no re-appropriation shall be made
for a new public work costing rupees ten lakhs or (4) Savings in Revenue Section are not available
above but less than rupees fifty lakhs. for re-appropriation in Capital Section and vice-versa.
(6) Without the previous consent of the Finance (5) Administrative Ministries/Departments may
Ministry, no re-appropriation shall be made- enhance provision under ‘Travel Expenses’ up to 10
percent.
(a) From and to the provision for the Secret
Service expenditure; (6) Prior approval of Secretary (Expenditure) is
necessary for re-appropriation increasing the budget
(b) So as to augment the provision under the
provision by rupees five crores or more.
primary units ‘Salaries’, ‘Wages’, ‘Office Expenses’
and ‘Other Charges’, taken together for the entire Note: For detailed provisions relating to above,
Grant or Appropriation, except for the exception for the relevant rules under DFPR may be referred to.
the Ministry of Information and Broadcasting as
provided vide Note under Rule 10 (6) (b) of DFPR;

114
 SUPPLEMENTARY DEMANDS FOR cannot form the basis of concluding that there will be
GRANTS: no savings of Budgeted funds.
PROCEDURE RELATING TO THE EXAMINATION 2.2 During the Winter Session, Supplementary
AND PREPARATION OF SUPPLEMENTARY Demands are called for the following purposes:-
DEMANDS:
• Cases where advances from Contingency
1. There are three Parliament session in each Fund of India have been granted, which are
financial year viz., Monsoon Session, Winter Session required to be recouped to the Fund,
and Budget Session. Supplementary Demands for • Payment against court decree, which cannot
Grants is normally presented in each session of the be postponed,
Parliament, largely owing to the following • Urgent cases of additional requirement of
circumstances- funds to be met by re-appropriation of
savings in the Grant which attracts the
• When amount authorized during Current limitation of New Service/New Instrument of
Financial Year is insufficient; Service, and
• Need has arisen during CFY for • Cases where Ministry of Finance has
additional expenditure on existing service specifically advised moving of
or expenditure on a new service not Supplementary Demand in the Winter
contemplated in the Annual financial Session.
Statement for that year;
• For recouping Contingency Fund 2.3 During the Budget Session, Supplementary
Advance. Demands are called for the following purposes:-
PROVISIONS OF GFR RELATING TO
SUPPLEMENTARY DEMANDS FOR GRANTS: • Cases where advances from Contingency
Fund of India have been granted, which are
As per Rule 60 of GFR, if savings are not required to be recouped to the Fund,
available within the Grant to which the payment is • In cases where the approved Revised
required to be debited, or if the expenditure is on Estimates would result in excess over the
“New Service” or “New Instrument of Service” not sanctioned provision in the Grant. The
provided in the budget, necessary Supplementary excess is separately assessed for the
Grant or Appropriation in accordance with Article 115 Revenue expenditure, Capital expenditure,
(1) of the Constitution should be obtained before the Voted expenditure and the Charged
payment is authorized. expenditure included in the Grant. Thus the
Supplementary Demands will be required in
cases where additional provision is required
2. Data for preparation of Supplementary over and above the original budget provision
Demands for Grants is called for from the plus the additional provisions granted in the
Ministries/Departments in the month of June for first and second batches of the
Monsoon Session, October for Winter Session and Supplementary Demands for Grants plus
January for Budget Session of each year, requesting the advances sanctioned from the
them to send the data as per the prescribed format Contingency Fund of India, if any.
within 3 to 4 weeks of the issuance of circular (as per
• Payment against court decree, which cannot
the timelines stipulated).
be postponed,
• Urgent cases of additional requirement of
2.1 During the Monsoon Session, Supplementary
funds to be met by re-appropriation of
Demands are called for the following purposes:-
savings in the Grant which attracts the
limitation of New Service/New Instrument of
• Cases where advances from Contingency
Service, and
Fund of India have been granted, which are
• Cases where Ministry of Finance has
required to be recouped to the Fund,
specifically advised moving of
• Payment against court decree, which cannot
Supplementary Demand in the Budget
be postponed, and
Session.
• Urgent cases of additional requirement of
funds to be met by re-appropriation of REVISED ESTIMATES
savings in the Grant which attracts the
limitation of New Service/New Instrument of Revised Estimates are mid-year review of possible
Service. expenditure, taking into account the trend of
expenditure, New Service, New Instrument of
Supplementary for additional cash outgo are Services, etc. Revised Estimates are not voted by
discouraged during the First batch of Supplementary, Parliament, and hence by itself does not provide any
as the trend of expenditure till May of each year authority for expenditure. Therefore, any additional

115
 projections made in the Revised Estimates Voted and the same is proposed to be
needs to be authorized for expenditure through utilized for another scheme under Capital-
Parliament’s approval (in case of New Service/New Voted section, the same can be done after
Instrument of Service, etc) or by Re-appropriation obtaining approval of Parliament through
order as per Delegation For Financial Power Rules. ‘Technical Supplementary’.
The 3rd batch of Supplementary Demands presented • There are three occasion when technical
in the Parliament during the Budget Session takes supplementary is sought viz., (a) surrender
into account the Revised Estimates projections and from one of the 4 sections mentioned above
also Post Revised Estimates developments. and utilizing the same in other section within
the Demand, (b) transfer of a scheme from
one Demand to another Demand which will
2.4 Annexure to Supplementary Demands result in surrender of the amount from the
Demand which has transferred the scheme
As recommended by the Public Accounts and utilization of the same in the other
Committee, any order for re-appropriation, issued Demand, where the scheme has been
during a financial year, which has the effect of transferred, and (c ) waivers/write offs.
increasing the budget provision under a sub-head or • Technical Supplementary, if resorted
standard object head by more than the limit specified between the Revenue and Capital sections of
in Budget Division’s OM No. F.1(23)-B(AC)/2005 the Grant, has an impact on the revenue
dated May 25, 2006 or as mentioned in the deficit position but does not change the fiscal
Delegation of Financial Power Rules, is required to deficit position.
be reported to Parliament along with the final batch of
the Supplementary Demands for Grants. This 3.3 Token Supplementary
information is also called for from the
Ministries/Departments by the Budget Division. • Token supplementary of ` 0.01 crore is
obtained when due to NS/NIS limits, approval
3. Types of Supplementary Demands for of Parliament is required for Reappropriation
Grants towards utilizing the savings within the same
section of the Demand. For example, if under
On the basis of the Supplementary Demands revenue section there are savings under a
for Grants received from various major head which is proposed to be utilized
Ministries/Departments, Supplementary Demands in another major head but falls within the
can be classified into three categories, which are as purview of NS/NIS limits for expenditure, the
follows: same can be made available for re-
appropriation after obtaining of a token
3.1 Cash Supplementary supplementary. Token supplementary does
not alter revenue/fiscal deficit position.
• This supplementary is over and above the
original budget provisions and results in
enhancement of the allocation for the 4. Ministries/Departments are required
Demand/Grant. For Example, if a sum of ` to review their requirements on the following
1000 crore is sought for by a line Ministry for broad guidelines, before firming up their
payment of Subsidy and the Ministry is proposals for the supplementary demands for
unable to find any savings within the grants:
Demand/Grant, then the additional fund
sought for, in case it is agreed to be • Need for economy and
provided, results in cash supplementary or rationalisation of expenditure;
enhancement of the overall allocation for the • A thorough review of expenditure to
Demand/Grant. explore the possibility of meeting the
• Cash Supplementary impacts the requirements for additionality through
fiscal/revenue deficit. Token or Technical Supplementary;
• Cash supplementary should be obtained as a • No new schemes and programmes,
last resort and after proper due diligence. except those that are part of the
• Cash supplementary is required to have Budget announcements should
specific approval of Secretary (Expenditure). normally be introduced during the
course of the financial year;
3.2 Technical Supplementary • Additional expenditure over and
above the prescribed approved
• There are 4 Sections in each Demand viz., ceiling for individual schemes may
Revenue-Voted, Revenue-Charged, Capital- not be ordinarily permitted;
Voted and Capital-Charged. When there is a • If there is an amendment to the
saving in one of the Sections e.g. Revenue- existing scheme leading to

116
 requirements for additionality, expenditure it should be clearly mentioned
Ministries/Departments should that Supplementary Appropriation is being
explore and locate matching savings obtained.
from other schemes/projects in the • Write up or narration for each Supplementary
Demand; must be precise, unambiguous and without
• The mandatory cuts in terms of the any abbreviations.
austerity instructions should be
enforced before determining the To maintain uniformity following ‘Suffix
requirements for additionality; Sentences’ are suggested;
• The proposal for Supplementary Cash Supplementary
Demand should be made only when ‘………. This will entail cash outgo.’ OR
the programme/scheme for which ‘……As savings of ` ____are available within
additional provision is sought has the _______Section of the Grant this will
been approved by competent entail cash outgo of ` ____.
authority and should be limited to the Technical Supplementary
funding requirements within the …… As an equivalent amount will be
relevant financial year. surrendered from the _____ Section of the
Grant, there will be no cash outgo.
Apart from the above measures the Token Supplementary
Ministries/Departments should carefully …….. As savings are available within the
review the supplementary demands proposal same section of the grant, a token
to ensure that- supplementary is sought.
• In case of Contingency Fund of India
• Demand Number and Headings are Advance, the same must be indicated in
correctly entered; the write-up in terms of the Note-1 and 2
• Classification of Expenditure is made of Appendix-7 of GFR.
correctly viz., Capital/ Revenue or • CFI Advances must be regularized
Plan/Non Plan/Major Head WITHOUT FAIL.
Number/Nomenclature. • All supplementary proposals should be
• Ensuring the forwarding/submission sent with detailed background material
of a Nil Proposal to the Budget for requirements during the parliamentary
Division, if there is no proposal for discussion.
supplementary demand. • Approved Draft of Supplementary must
• Public Accounts Committee has be VETTED by the concerned
been repeatedly commenting Ministries/Departments.
adversely on the increasing • Items requiring to be reported to
incidence of obtaining Parliament must be carefully reviewed
Supplementary Demands which at and sent within the prescribed timelines.
times are much higher than the • Major Heads and their nomenclature
original budget provisions, and must be correctly indicated as per List of
thereby indicating at defects in Major and Minor Heads of Account
budgeting. Similarly, there are maintained by CGA.
instances of obtaining large
• In case of enhanced recoveries the same
provisions through Supplementary
should be clearly mentioned in the
demands but surrendering at the
Supplementary Demands for grants and
close of the financial year, and
similarly, in case of additional receipts or
therefore needs to be watched very
surrenders from other Demands due to
carefully before making any
transfer of work from that Ministry, the
demands for additionality through the
same should be indicated in the write-up.
Supplementary Demands for Grants.
• Limits up to which expenditure can be
met by re-appropriation of savings in a
5. Check list for printing of Supplementary
Grant subject to report to Parliament as
Demands for Grants
laid down in MOF’s OM No. F.1(23)-
B(AC)/2005 dated 25.5.2006, should be
• Budget Press printouts should be cross
scrupulously followed.
checked with the Approved Supplementaries.
• All the corrections/changes in the
• Presentation protocol should be maintained
approved Supplementaries must be
e.g. Charged Expenditure must be shown in
routed through US/DD of Supplementary
Italics.
Demands Section only.
• In case of voted expenditure it should be
clearly mentioned that Supplementary Grant
is being obtained and in case of Charged

117
 6. Format of Supplementary Demands necessary address as per the prescribed
for Grants format.
• Introductory Notes---a brief note is • Thereafter the Supplementary Demands
prepared on the nature of are taken up for discussion in Lok Sabha.
Cash/Technical/Token Supplementary to • In the meanwhile, Law Ministry sends the
enable MPs to have an idea of the proposed draft copy of the Appropriation Bill to
Supplementary. Budget Division for vetting purposes.
• Content---will briefly indicate the • The same is sent back to Lok Sabha
nature of expenditure in the Demand for Secretariat after vetting in the
which Supplementary is being obtained along Supplementary Demands section.
with the page number. • On conclusion of the Discussions on the
• Demand wise Supplementary Supplementary Demand, FM normally
Demands describing Revenue and Capital rises to reply to the debate, after which
Expenditure [Original + Supplementary Grant the Supplementary Demands for Grants
and Total] is also shown is put to the vote of Lok Sabha.
• Contains details of Major Head wise • Thereafter the connected Appropriation
Supplementary Demand Plan/Non-Plan wise; Bill is put for (a) Introduction, (b)
and each Demand contains a brief write-up Consideration & (c ) Passing by the Lok
explaining the purpose of the supplementary Sabha. [Speech as per normal template
demand. is prepared by Parliament Section,
• Annexure as reported by the Ministry of Finance].
Ministries/Departments are included for • Budget Division gets a copy of the
reporting to Parliament. Appropriation Bill passed by Lok Sabha
and seeks Hon’ble President’s
7. Legislative Business connected with the recommendations for making the
Supplementary Demands for Grants Demand to Rajya Sabha.
• Discussion takes place in Rajya Sabha
• Approval of Finance Minister is obtained as scheduled.
for the consolidated Supplementary • After discussions and reply by Finance
Demands for Grant, briefly indicating the Minister, the Bill is put for consideration
Plan/Non-Plan wise Cash, Technical and and Return by Rajya Sabha (necessary
Token Supplementary Demands (Format speeches for returning of Bill, etc is
is same as Introductory Notes and is prepared by Parliament Section, Ministry
required to be prepared by the SD of Finance).
Section of Budget Division). • The Bill is then sent to President by Lok
• Summary of Proposals is approved by Sabha Speaker for necessary assent.
Finance Minister for seeking • After the assent of President, the Bill
recommendations of President of India becomes an Act of Parliament and is
for making the Demands in the published in the Official Gazette.
Parliament. • After publication in the Official Gazette,
• After President recommends the making necessary notification is issued by
of Demand in the Parliament, necessary Budget Division to this effect.
notices for Discussion, Introduction, Expenditure as per the Supplementary
Consideration, Voting and Passing of the Demands for Grants can be incurred by
Demands are issued to Speaker, and the Ministries/Departments only after the
Secretary General, Lok Sabha. completion of this entire process of
• Notices are also issued by Budget Parliamentary approvals.
Division duly indicating the intention of (The letters to Lok Sabha and Rajya Sabha with
Finance Minister to table the regard to the Supplementary Demands for Grants are
Supplementary Demand for Grants in placed at Annexure I of Chapter VI).
Lok Sabha/Rajya Sabha.
• A brief for FM is prepared by Budget
Division to enable FM to facilitate reply to An excess over the sanctioned Grant or
the Members of Parliament. Appropriation may arise owing to either –
• A copy of the Appropriation Bill is sent to (a) an unforeseen emergency; or
Ministry of Law and Justice along with
the Schedules for vetting purposes. (b) under-estimated or insufficient allowance for
• Finance Minister tables the factors leading to the growth of expenditure.
Supplementary Demand for Grants both
In the case of an excess of either type the Head
in Lok Sabha and Rajya Sabha on the
of the Department or the Controlling Officer
appointed day. Parliament Section,
concerned should proceed as follows :-
Ministry of Finance prepares the

118
 (i) He should, in the first place, examine the (vii) On receipt of an application for a
allotments given to other Disbursing Officers supplementary grant, the Finance Ministry will review
under the same detailed head within the unit of the position of the grant of appropriation as a whole
appropriation, and transfer to the Disbursing Officer with reference to the known actual expenditure of the
who requires an additional allotment such sum as year (to date) and the actual and estimates for
can be permanently or temporarily spared. Since previous years. If after this examination, the Finance
appropriation audit is ordinarily conducted against Ministry comes to the conclusion that it should be
total allotments for a unit, re-appropriation in the possible for the Administrative Department to meet
technical sense of the word is not involved in such the expenditure from within the sanctioned grant
cases. The process amounts only to redistribution either from normal savings or by special economics
which the Controlling Officer can ordinarily effect or in the last resort by judicious postponement of
without reference to any other authority. other expenditure or in the last resort by judicious
postponement of other expenditure, the
(ii) Should he find such redistribution impossible Administrative Department will be so informed and no
he should examine the allotments against other supplementary demand will be presented to
detailed heads inside the primary units of Parliament. If, on the other hand, the Finance
appropriation, with the object of discovering probable Ministry considers that a supplementary grant will be
savings and effecting a transfer. Where such necessary, a demand will be placed before
redistribution is feasible, he should if he has been Parliament.
vested with the necessary powers, carry it out.
Otherwise, he should obtain the sanction of the (viii) If during the course of the year it is found
competent authority. necessary to incur expenditure on a ‘New Service’
not provided for in the annual budget the
(iii) If the provision of funds from within the Administrative Department shall explain to the
primary units proves to be impossible, an Finance Ministry why the expenditure was not
examination of the whole grant should be undertaken provided for in the original budget and why it cannot
to see whether there are likely to be savings under be postponed for consideration in connection with the
any of the other units of grant or appropriation which next budget. The Finance Ministry, if satisfied on
can be utilized to meet it. If so, he should proceed as these points, will consider whether it would not be
indicated in Clause (ii) above. reasonable to ask the department concerned to
(iv) If such savings are not available, it should be curtail its other expenditure so as to keep the total
seen whether special economies can be effected within the grant. Ordinarily, no “new service” or item
under other primary units of appropriation. If funds will be accepted by the Finance Ministry, unless the
cannot be provided by either of these methods, it will department concerned can guarantee that the extra
have to be considered whether the excess should be expenditure will be met from normal savings or by
met by postponement of expenditure or whether an special economies within the grant. Cases which
application for supplementary grant or appropriation involve additional grant will normally be accepted by
should be made. the Finance Ministry only if they relate to matters of
real imperative necessity or to the earning or
(v) The Supplementary Demand for Grants shall safeguarding of revenue. The demand for a
be presented to the Parliament in a number of supplementary grant of appropriation or a token vote
batches as decided by the Ministry of Finance, in respect of a “new service” will be presented to
Department of Economic Affairs. The first batch shall Parliament as soon as practicable after the need
normally consist of requirements of the following arises.
nature :-
NEW SERVICE/NEW INSTRUMENT OF SERVICE
(a) Cases where advances from Contingency (NS/NIS):
Fund of India have been granted, which are required
to be recouped to the Fund. The expression ‘New Service’ is available in
Article 115 and 205 of the Constitution, but the
(b) Payment against a court decree, which Constitution does not define the expression ‘New
cannot be postponed; and Service’. Expenditure on ‘New Service’ not
contemplated in the budget of that year, cannot be
(c) Cases of additional requirement of funds for
incurred in any financial year, except after obtaining a
making immediate payments, which can be met by
supplementary grant or appropriation or an advance
re-appropriation of savings in the Grant but attract the
from the Contingency Fund of India. It was decided
limitation of New Service / New Instrument of
by the Government of India in September 1975 that
Service.
‘Vote On Account’ would not be used for such
(vi) All applications for supplementary grants or expenditure since it has the limited purpose of
appropriations should be submitted by the enabling Government to continue incurring
Department of the Central Government expenditure at the beginning of the financial year on
administratively concerned to the Finance Ministry on existing establishments and continuing projects, etc.
such dates and in such forms / batches as may be till such time the annual budget is approved relevant
prescribed by the latter from time to time.

119
 Appropriation Acts are passed, while ‘New Fund of India should be taken only in cases of
Service’ requires a detailed scrutiny and extreme urgency; in such cases the following
consideration. procedure recommended by the Sixth Lok Sabha
Committee on paper laid on the Table in their 4th
The details in respect of any proposal for Report should be observed. “As far as possible,
inclusion of provision for a new service are required before such withdrawal is made, the concerned
to be furnished in the prescribed form called Minister may make a statement on the floor of the
‘Memorandum for Proposals Involving Expenditure Lok Sabha for information giving details of the
on New Service or New Instrument of Service’ amount and the scheme for which the money is
In accordance with the commitment made in the needed. In emergent cases, however, where it is not
Fiscal Policy Strategy Statement (Budget 2005-06) possible to inform the Members in advance, the
under the mandate of the Fiscal Responsibility and withdrawal may be made from the Contingency Fund
Budget Management (FRBM) Legislation and in and soon thereafter a statement may be laid on the
pursuance of the approval of Public Accounts Table of the Lok Sabha for the information of the
Committee (2005-2006) in the twenty third report Members”. It has been suggested by the Rajya
(Fourteenth Lok Sabha) on the proposal for review of Sabha Secretariat that the above procedure may also
Financial Limits to be observed in determining the be observed in Rajya Sabha.
cases relating to ‘New Service’/’New Instrument Of Checks to be Observed by the
Service’ for re-appropriation of funds (Annex), which Ministries/Departments to Ensure Compliance of the
has the concurrence of the C&AG, the revised Provisions of this Office Memorandum are as under:
guidelines for re-appropriation of funds were
conveyed vide O.M. No.F.1 (23)-B (AC)/2005, dated (i) By Integrated Finance Division/Budget
25th May, 2006, in modification of Finance Ministry’s Unit: A specific certificate should be recorded in each
Office Memorandum No.F.7(15)-B(RA)/82 dated 13th case involving augmentation of sanctioned provision
April, 1982. The broad guidelines in the revised O.M. on receipt of related proposals to the effect that the
are as follows- proposed augmentation attracts/does not attract
financial limits of ‘New Service’/’New instrument of
Definition: Service’.
(i) ‘New Service’, as appearing in article 115(1)(a) (ii) By PAOs: Each expenditure sanction to be
of the Constitution of India, this has been held as examined by PAOs from the ‘New Service’/’New
referring to expenditure arising out of a new policy Instrument of Service’ angle keeping in view the
decision, not brought to the notice of Parliament financial limits indicated in the Annex.
earlier, including a new activity or a new form of
investment. Where any doubt arises about the application of
financial limits of ‘New Service’/’New Instrument of
(ii) ‘New Instrument of Service’ refers to relatively Service’ the PAO would seek decision from CCA/FA
large expenditure arising out of important expansion of appropriate jurisdiction.
of an existing activity.
Circumstances For Obtaining Supplementary
(iii) While using these terms and applying the Grants For Expenditure Qualifying As ‘New
financial limits as indicated in the Annex.II of the Service’/’New Instrument Of Service’ And The
O.M., it needs to be noted that no expenditure can be Reporting Procedure Thereof Are As Follows:
incurred from the Consolidated Fund of India on a
‘New Service’/’New instrument of Service’ without (i) If sufficient savings are available within the
prior approval of Parliament through supplementary same section of the relevant grants for meeting
demands for grants. Further, the determination of additional expenditure to the extent mentioned in
these financial limits will be with reference to Primary column 2 of the annex, re-appropriation can be
Unit of Appropriation. made, subject to report to Parliament.
(iv) Where in an emergent case of ‘New (ii) The report to Parliament should ordinarily be
Service’/’New Instrument of Service’ it is not possible made through the ensuing batch of Supplementary
to wait for prior approval of Parliament, the Demands for Grants, failing which by adding an
Contingency Fund of India can be drawn upon for Annex in the Detailed Demands of the
meeting the expenditure pending its authorization by Ministry/Department for the ensuing year.
Parliament Recourse to this arrangement should
normally be taken only when Parliament is not in (iii) A suitable write up of such cases where
session. Such advances are required to be recouped possible, may also be made in the Notes on
to the Fund by obtaining a Supplementary Grant in Demands for Grants of the Ministry/Department.
the immediate next session of Parliament. However, (iv) Mere depiction of augmented provision in the
once Parliament is in session, a Supplementary Revised Estimates included in the Demands for
Grant should preferably be obtained before incurring Grants will not be adequate to meet the requirement
any expenditure on a ‘New Service’/’New Instrument to incur expenditure. In cases where the financial
of Service’. That is to say, recourse to Contingency limits of ‘New Service/’New Instrument of Service’ are

120
 attracted, approval of Parliament may be Note: The Table indicating the NS/NIS limits or at
obtained for incurring such expenditure through Annexure II of Chapter VI.
supplementary demands for grants.
EXCESS GRANTS:
(v) The provisions in the ‘Vote on Account’ are
not intended to be used for expenditure on any ‘New For additional allotment on account of Excess
Service’. In cases of urgency, expenditure on a ‘New Expenditure, Rule 58 of GFR lays the following
Service’ during Vote on Account period can, guidelines-
therefore, be incurred only by obtaining an advance (1) A subordinate authority incurring the
from the Contingency Fund in the manner expenditure will be responsible for seeing that the
recommended by the Sixth Lok Sabha Committee on allotment placed at its disposal is not exceeded.
the Papers Laid on the Table already referred to in Where any excess over the allotment is
Para 2(iv) of this OM. Such advances will be apprehended, the subordinate authority should obtain
resumed to the Contingency Fund on enactment of additional allotment before incurring the excess
Appropriation Act in respect of expenditure for the expenditure. For this purpose, the authorities
whole year. incurring expenditure should maintain a ‘Liability
Register’ in Form GFR 6.

Exceptions: (2) A Disbursing Officer may not, on his own

authority, authorize any payment in excess of the
(i) Having regard to the volume and nature of funds placed at his disposal. If the Disbursing Officer
Government transactions, it is not possible to list out is called upon to honour a claim, which is certain to
all such cases which are not attracted by ‘New produce an excess over the allotment or
Service’/’New Instrument of Service’ limits. Broadly, appropriation at his disposal, he should take the
however, expenditure on normal activities of orders of the administrative authority to which he is
Government (such as normal administrative subordinate before authorizing payment of the claim
expenditure – including that resulting from re- in question. The administrative authority will then
organization of Ministries/Departments, holding of arrange to provide funds either by re-appropriation or
conferences, seminars exhibitions surveyors by obtaining a Supplementary Grant or Appropriation
feasibility study etc. assistance to foreign contribution or an advance from the Contingency Fund.
to international bodies and fulfillment of Government
guarantee on its invocation) are not attracted by the However, if the total expenditure under a Grant
limits of ‘New Service’/’New Instrument of Service’. exceeds the provision allowed through its original
Grant and Supplementary Grant, if any, the excess
(ii) Transfers to State and Union Territory requires regularization by obtaining excess Grant
Governments are also exempt from these provided from the Parliament under Article 115 of the
the scheme is not new. Constitution, after going through the whole process
as in the case of the annual budget, i.e. through
(iii) Further, these limits are applicable only to presentation of Demands for Grants and passing of
expenditure, which is subject to Vote of Parliament. Appropriation Bills.
Doubtful Cases: OTHER BUDGET RELATED PROVISIONS OF THE
In cases of disagreement between the Integrated GENERAL FINANCIAL RULES (GFR):
Finance Wing and Pay and Accounts Office, the Some other budget related provisions of the
Ministry/Department may send a self contained General Financial Rules are as follows:
communication to the Budget Division, Ministry of
Finance bringing out the specific point of doubt Rule 53 of GFR, Maintenance of Liability Register
incorporating their Financial Advisor’s views thereon. for effecting proper control over expenditure:
The decision taken by the Budget Division in the
matter will be final. In order to maintain proper control over
expenditure, a Controlling Officer should obtain from
Conclusion: the spending authorities liability statements in Form
GFR 6-A every month, starting from the month of
While agreeing to the revision of norms for re- October in each financial year. The Controlling
appropriation of funds as annexed the Public Officer should also maintain a Liability Register in
Accounts Committee in its twenty third report Form GFR 6.
(Fourteenth Lok Sabha) has concluded by stating as
under: “The committee also expects the Financial Rule 54 of GFR, Personal attention of the Head of
Advisors of the Ministries/Departments to ensure that Department / Controlling Officer required for
there is no violation in implementation of the said estimating savings or excesses:
revised norms for re-appropriation of funds and any
slackness in complying with the said norms is strictly A Head of Department or Controlling Officer
dealt with”. should be in a position to estimate the likelihood of
savings or excesses every month and to regularize

121
 them in accordance with the instructions laid (2) An advance from the Contingency Fund shall
down in Rule 56. also be obtained to meet expenditure in excess of the
provisions for the service included in an Appropriation
Rule 55 of GFR, Control of expenditure against (Vote on Account) Act.
grant/appropriation and ultimate responsibility of
the authority administering it: (3) The application for an advance from the
Contingency Fund should indicate inter alia the
The Accounts Officer should report to the Head particulars of the additional expenditure involved and
of the Department concerned immediately on the first the sanction to the advance has also to indicate the
appearance of any disproportionate expenditure, sub-head and the primary unit of the Grant to which
particularly in respect of recurring items of the expenditure appropriately relates. In case,
expenditure under any grant or appropriation or a however, any difficulty is felt, the matter should be
primary unit of appropriation thereof. However, the referred to the Finance Ministry for clarification.
authority administering a grant/appropriation is
ultimately responsible for the control of expenditure (4) The procedure for obtaining an advance from
against the grant / appropriation and not the the Contingency Fund and recoupment of the Fund
Accounts Officer. shall be as laid down in the Contingency Fund of
India Rules, 1952, as amended from time to time. For
Rule 56 of GFR, Surrender of Savings: ready reference, rules have been placed at Appendix
(1) Departments of the Central Government shall – 7 to this volume. Annexure I of Chapter III.
surrender to the Finance Ministry, by the dates Rule 62 of GFR, Inevitable Payments:
prescribed by that Ministry before the close of the
financial year, all the anticipated savings noticed in (i) Subject to the provisions of Article 114 (3) of
the Grants or Appropriations controlled by them. The the Constitution, money indisputably payable by
Finance Ministry shall communicate the acceptance Government shall not ordinarily be left unpaid.
of such surrenders as are accepted by them to the
Accounts Officer, before the close of the year. The (ii) Suitable provision for anticipated liabilities
funds provided during the financial year and not should invariably be made in Demands for Grants to
utilized before the close of that financial year shall be placed before Parliament.
stand lapsed at the close of the financial year. Rule 64 of GFR, Duties and Responsibilities of
(2) The savings as well as provisions that cannot the Chief Accounting Authority:
be profitably utilised should be surrendered to The Secretary of a Ministry / Department who is
Government immediately when they are foreseen the Chief Accounting Authority of the Ministry /
without waiting till the end of the year. No savings Department shall
should be held in reserve for possible future
excesses. (i) be responsible and accountable for financial
management of his Ministry or Department.
(3) Rush of expenditure, particularly in the
closing months of the Financial year, shall be (ii) ensure that the public funds appropriated to
regarded as a breach of financial propriety and shall the Ministry or Department are used for the purpose
be avoided. for which they were meant.

Rule 57 of GFR, Expenditure on New Service: (iii) be responsible for the effective, efficient,
economical and transparent use of the resources of
No expenditure shall be incurred during a the Ministry or Department in achieving the stated
financial year on a “New Service” not contemplated in project objectives of that Ministry or Department,
the Annual Budget for the year except after obtaining whilst complying with performance standards.
a supplementary grant or appropriation or an
advance from the Contingency Fund during that year. (iv) appear before the Committee on Public
Accounts and any other Parliamentary Committee for
Rule 61(1) of GFR, Advance from Contingency examination.
Fund:
(v) review and monitor regularly the performance
When a need arises to incur unforeseen of the programmes and projects assigned to his
expenditure in excess of the sanctioned grant or Ministry to determine whether stated objectives are
appropriation or on a new service not provided in achieved.
Budget and sufficient time is not available for the
voting of the Supplementary Demand and the (vi) be responsible for preparation of expenditure
passing of the connected appropriation bill before and other statements relating to his Ministry or
close of the financial year by the Parliament, an Department as required by regulations, guidelines or
advance from the Contingency Fund set up under directives issued by Ministry of Finance.
Article 267 (1) of the Constitution shall be obtained
(vii) shall ensure that his Ministry or Department
before incurring the expenditure.
maintains full and proper records of financial

122
 transactions and adopts systems and of financial and accounting reports in
procedures that will at all times afford internal particular;
controls.
(iii) Identification and monitoring of risk factors
(viii) shall ensure that his Ministry or Department including those contained in the Outcome
follows the Government procurement procedure for Budget;
execution of works, as well as for procurement of
services and supplies, and implements it in a fair, (iv) Critical assessment of economy, efficiency
equitable, transparent, competitive and cost-effective and effectiveness of service delivery
manner; mechanism to ensure value for money; and

(ix) shall take effective and appropriate steps to (v) Providing an effective monitoring system to
ensure his Ministry or Department : - facilitate mid course corrections.

(a) collects all moneys due to the Government OTHER BUDGET RELATED PROVISIONS IN THE
and DELEGATION OF FINANCIAL POWERS RULES
(DFPR):
(b) avoids unauthorized, irregular and wasteful
expenditure Some other important and budget related
Delegation of Financial Rules (DFPR) provisions are
INTERNAL AUDIT: briefly as under-
It is recognised that the continuing Rule 6, Effect of Sanction: It provides that no
examination of the accounting and financial records, expenditure shall be incurred against a sanction
of systems and procedures, and of compliance with unless funds are made available to meet the
stated management policies, are essential elements expenditure or liability by valid Appropriation or
of public policy and internal audit in this direction is a Reappropriation.
tool of positive help to public administration.
Accordingly each ministry and department of the Rule 7, Provision of Funds by Parliament:
Union Government has a special unit under the direct This rule mentions that the Demands for Grants and
control and supervision of Financial Advisers. The Appropriations for charged expenditure are presented
important findings of this unit are submitted to the to Parliament on behalf of the appropriate Ministry or
Secretaries of the Ministries concerned for necessary authority concerned and that it is only after demands
corrective action. have been voted and the necessary Appropriation
Act passed by Parliament, that the amounts so
The scheme of departmentalization of Union authorized become available to the Ministry or
Government accounts provides for setting up of an authority concerned for Appropriation or
efficient internal audit organization to ensure Reappropriation to meet sanctioned expenditure.
accuracy in accounts and efficiency in the operation
of the accounts set up. Internal Audit organizations Rule 8, Primary Units of Appropriation: This
have accordingly been set up in most of the Rule lists the standardized list of the Primary Units of
Ministries/Departments. The guidelines issued by the Appropriation or the Object Heads and the six tier
Controller General of Accounts regulate the working classification system in the Government accounts.
of these organizations. These guidelines are Rule 9, Allotment of Funds: This Rule provides
however, broad in nature and have to be that the Ministry or authority on whose behalf a Grant
supplemented by detailed instructions issued by each or Appropriation for charged expenditure is
Ministry/Department. authorized by Parliament shall distribute the
INTERNAL AUDIT PROVISIONS AS PER NEW sanctioned funds, where necessary, among the
CHARTER FOR FINANCIAL ADVISERS: controlling and disbursing officers subordinate to it.

As per the new charter of duties and It also provides that subject to special rules or
responsibilities issued by the Secretary, Department orders issued by the President the whole or part of
of Expenditure, Ministry of Finance, as part of the provision under a primary unit may be placed at the
Revised Redefined Charter for Financial Advisers, disposal of a controlling or a disbursing officer, or the
the following functions in relation to Internal Audit will primary unit may be broken into a number of
be carried out by the Chief Controllers of Accounts as secondary units and the provision under any of these,
per the guidelines issued by the Controller General of wholly or in part, may be placed a the disposal of the
Accounts from time to time- controlling or the disbursing officers.

(i) The appraisal, monitoring and evaluation of Rule 10, Appropriation and Re-appropriation-
individual schemes; General Restrictions: This rule lists out the general
restrictions relating to the Appropriations and Re-
(ii) Assessment of adequacy and effectiveness appropriations.
of internal controls in general, and
soundness of financial systems and reliability Rule 13, Powers of Subordinate Authorities:
This rule provides for the delegations in respect of

123
 the subordinate authorities, including for previous actuals with known or reasonably
Appropriations and Re-appropriations. foreseeable facts which may modify that average.
Against the close and intimate knowledge of the
Rule 18, Expenditure on Schemes and estimating officers must be set the wider perspective
Projects: This rule provides for the delegation of of the administrative and Finance Wings and with a
powers in relation to the sanction of expenditure on right combination of these requisites of sound
schemes and projects and the procedures relating to budgeting, there is little possibility for normal
the Appraisal and Approval of Plan Schemes/Projects expenditure to differ widely from the budget provision.
and the sanction of Non Plan expenditure.
As regards defective control over expenditure,
COMMON TYPES OF BUDGETARY ERRORS: the statements for supplementary demands,
The main criticisms in the Audit Reports of recent surrenders, and re-appropriations are generally
years and recommendations of the Public Accounts based on mid-year revised estimates, or even later
Committees thereon on the irregularities noticed in i.e., at a stage when the figures of actuals of
Appropriation Accounts have been directed towards expenditure for a major part of the year are available
the following irregularities:- and it only remains for the controlling officers to
estimate the expenditure during the remaining portion
(1) Defective or inaccurate budgeting, necessitating of the year and allow for adjustments towards or at
large surrenders or excesses. the end of the year. Thus the scope for the
occurrence of any abnormal features is considerably
(2) Defective control of expenditure resulting in - reduced and consequently if the estimates are
prepared with the required care, attention and
(a) Unnecessary or excessive supplementary
foresight, the chances of excesses or savings should
grants,
be very small,
(b) Unnecessary or excessive re-appropriations,
The best remedy for avoiding these irregularities,
(c) Injudicious re-appropriations and surrenders therefore, is to devote considerable attention to the
causing excess over allotments, accuracy of the revised estimates. This cannot be
(d) Unspent amount and surrendered done unless the heads of departments are fully
appropriations, conversant with the month to month progress of
expenditure. For this purpose it is essential that they
(e) Un-remedied or uncovered Excess
should insist on their staff following strictly the
expenditure,
procedure laid down for the reconciliation of
(f) Delayed allocations. departmental accounts with the books of the
(3) Misclassification of expenditure. Accounts Wing (Controllers/Chief Controllers of
Accounts). It is also necessary that a careful watch
From a perusal of earlier chapters it will be seen should be kept of all liabilities for which debits may be
that if the instructions given therein are closely and raised by other departments or Governments and
carefully followed and if the controlling and disbursing due allowance for such adjustments should be made
officers give the necessary personal attention to the before surrenders or re-appropriations from an
control of expenditure, these irregularities can be allocation are decided upon.
avoided/satisfactorily reduced. To indicate how this is
possible, each irregularity indicated above is, even at When the need for surrender manifests itself, the
the cost of repetition dealt with seriatim. controlling officers should carefully estimate the
amounts that they can surrender. The aim should be
As regards defective or inaccurate budgeting, to surrender as much as they can so as to keep the
foresight may not always be possible; but where the expenditure just within the modified grant. Surrenders
omission or inaccuracy is the result of lack of are being made generally in the month of March, and
forethought, neglect of the obvious or slipshod a careful study of figures of expenditure incurred and
estimating, it is not readily excusable. There is no watch over the progress of last month’s expenditure
reason why heads of departments should not be able should enable a controlling officer to fix upon his final
to foresee the needs of their own departments. The requirements with a reasonable degree of exactness.
check of the administrative or Finance Department,
over the departmental estimates cannot be as close Re-appropriation is generally necessitated either
or as that of the estimating officers themselves and, due to excess requirements on items provided in the
therefore, accuracy in budgeting must start upwards budget or by additional expenditure not contemplated
from the lowest stage of estimating. The golden rule in the budget. In either case a re-appropriation should
for all estimating officers should be to provide in the not follow as a matter of course but after a careful
budget for everything that can be foreseen and to estimate of the likely actual expenditure. More
provide only as much as is necessary. especially, in the latter case, the possibility of savings
under the same head which can be utilized towards
The administrative and Finance Departments meeting the additional expenditure should be fully
should, in checking the estimates, apply unrelentingly and thoroughly investigated. In addition to these, it
the proven and well tried check of average of has been pointed out many times in the audit reports

124
 of the Comptroller and Auditor General that the (4) that the expenditure should be incurred with
necessary limits and restrictions relating to the due regard to broad and general principles of
Re-appropriations as laid down vide the Delegation of financial propriety;
Financial Powers Rules are not abided by the
Ministries/Departments. (5) Re-appropriations should be made in
accordance with the rules in Delegation of Financial
No object is served by keeping back savings Power Rules, 1978;
which should ideally be surrendered in time. For this
reason appropriations which are likely to remain (6) Expenditure on a service not covered by a
unspent must be reported for surrender as early as vote of the Parliament should not be incurred, unless
possible. If this is not done, other spending the requisite funds have been arranged by obtaining
Ministries/Departments are deprived of the funds an advance from the Contingency Fund of India;
which they could have utilized and thus avoidable (7) Drawing from Consolidated Fund of India
demands for supplementary grants are preferred. should not be resorted to if money is not required for
An uncovered excess is a serious irregularity. It is immediate use.
open to a competent authority to sanction re- (8) Abandonment of revenue without proper
appropriations even at a very late stage of the sanction e.g., sale of Government property below
financial year. There is, therefore, no reason market rates, or reduction of dues payable under a
whatsoever why large excesses should accrue. Large license or lease without the sanction of the
excesses unmistakably reveal a defective control of competent authority in each case, should not be
expenditure by the officer concerned and should be resorted to.
strictly avoided.
(9) Any large claim against another Government
Efforts should also be made to see, as far as local body or other outside party should not be
possible, that no expenditure is incurred in the allowed to remain outstanding for an unduly long
absence of an allocation. In this connection it is time.
useful to remember that phrases like “source will be
pointed out later” or “necessary re-appropriation of (10) Any irregularity connected with a grant-in-
funds will be sanctioned in due course” are no aid, such as neglect (i) by the sanctioning authority of
substitutes for definite allocations. At all events, conditions precedent to the grant or (ii) by the
allocations very late in the year should be avoided grantee of the conditions, expressed or implied,
unless they are inevitable. Funds placed at the attached to the grant by the sanctioning authority.
disposal of a disbursing officer late in the year may
(11) Any instance of the absence of
very often be looked upon as an invitation to
administrative regulations and procedure sufficient to
extravagance or rush of expenditure.
secure a proper and effective check upon monetary
Misclassification generally occurs, as a result of transactions.
reluctance to consider the relevant accounts
publications at the time of classification. In any case,
at the time of reconciliation of the departmental
accounts with the Chief Controllers of
Accounts/Controllers of Accounts books, it should be
possible to correct errors in classification. In cases of
real doubt, the matter of classification should be
settled with the Controller General of
Accounts/Budget Division.
SOME OTHER COMMON BUDGET RELATED
ISSUES THAT REQUIRES TO BE WATCHED
CLOSELY:
(1) That there should be provision of funds
authorized by competent authority fixing the limits
within which expenditure can be incurred;
(2) that the expenditure incurred should conform
to the relevant provisions of the Appropriation Act,
the Constitution and the laws made thereunder and
should also be in accordance with the financial rules
and regulations framed by competent authority ;
(3) that there should exist sanction, either special
or general, accorded by competent authority,
authorizing expenditure;

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 CHAPTER VII

BUDGET REPORTING AND EVALUATION

FRBM REVIEWS PLACED BEFORE PARLIAMENT:
The FRBM Act, 2003 is an Act providing for the delivery; decision-making; evaluating programme
responsibility of Central Government to ensure inter- performance and results; communicating programme
generational equity in fiscal management and long goals; and improving programme effectiveness. The
term macro-economic stability. This is sought to be Outcome Budget comprises of scheme- or project-
attained by achieving sufficient revenue surplus and wise outlays for all Central Ministries, Departments
removing fiscal impediments in the effective conduct and organisations listed against corresponding
of monetary policy. The Act also aims at prudential outcomes (measurable physical targets) to be
debt management consistent with fiscal sustainability achieved during the year. It measures the
through limits on the Central Government borrowings, development outcomes of all government
debt and deficits, greater transparency in fiscal programmes and whether the money has been spent
operations of the Central Government and for the purpose it was sanctioned including the
conducting fiscal policy in a medium term framework outcome of the fund-usage. The Outcome Budget,
and for matters connected therewith or incidental however, will not necessarily include information of
thereto. targets already achieved. The idea is to make
government representatives more result-oriented with
FRBM Act, 2003 stipulates that the Central the focus shifting from ‘outlays’ to ‘outcome.’
Government shall lay in each financial year before
both Houses of Parliament the following Statements The Outcome Budgeting System is intended to
of fiscal policy along with the Annual Financial help the Government make its budgets more cost
Statement and Demands for Grants, namely: effective, fix accountability and aid towards a better
scheme management. It also aids in ensuring that
(a) The Medium Term Fiscal Policy Statement; programmes and schemes do not continue
(b) The Fiscal Policy Strategy Statement; and indefinitely from one Plan period to the next, without
(c) The Macro-economic Framework Statement. an independent, in-depth evaluation.

(The detailed description of these statements (The detailed guidelines for the preparation of
and the other periodic reporting requirements Outcome Budget are placed at Annexure-II to
under FRBM Act/Rules are at Annexure I of Chapter VII).
Chapter VII).
MID-TERM EVALUATION OF INDIVIDUAL
OUTCOME BUDGET: SCHEMES BY DIFFERENT DEPARTMENTS:
From the fiscal year 2006-07, Outcome Budget The mid-term evaluation is a means to improve
has been a part of the budgetary process, wherein
every Ministry presents a preliminary Outcome the quality and relevance of the programmes and
Budget. All ministries send their Outcome Budgets to their implementation and to identify reorientations to
the Finance Ministry, which is responsible for the programming that may be needed to ensure the
compiling them. The procedure of Outcome achievement of the original objectives. It may also
budgeting aids the Government in examining the
help identify components of the programme that
expenditure proposals before it is made, and
therefore, putting in place a mechanism of checks would benefit from a follow-up outside the
and balances at the very stage of planning a programmes or in the following programming period.
programme, resulting in reduction of unnecessary
expenses. The Finance Ministry, together with the The Cabinet Secretary advised (December,
Planning Commission, through a Programme 2002) all the Ministries/ departments to carry out
Outcome and Response Monitoring Division, under evaluation of all the ongoing schemes/ programmes/
the Planning Commission, is responsible for projects which have not been evaluated so far. It has
coordinating the Outcome Budget. The Outcome
Budget, after its presentation in Parliament, is also been further advised that it would be decidedly more
put up on the Finance Ministry’s Web site. useful if the impact assessment of the ongoing
schemes is carried out by the Planning Commission
The Outcome Budget is also a kind of progress
card on what various Ministries and Departments or by an outside professional agency. In fact, the
have done with the outlays announced in the concept of periodic assessment should, henceforth,
previous annual budget. It is a performance be adopted and in-built as a standard feature of new
measurement tool that helps in better service schemes.

126
C&AG REPORTS: Government of India and Reports of the Comptroller
and Auditor-General of India thereon as also the
With the advent of the planned era in India Reports of the Comptroller and Auditor-General on
following national independence, there was a major Revenue Receipts mainly form the basis of the
growth of economic development and social welfare deliberation of the Committee. In scrutinising the
activities. This growth necessitated an attendant Appropriation Accounts and the Reports of the
increase in both revenue and capital expenditure, Comptroller and Auditor-General thereon, it is the
and in receipts and borrowings to match such duty of the Committee to satisfy itself:
expenditure. These new responsibilities of the
government and the complex nature of its expanded (a) that the money shown in the accounts as having
activities called for a change in the nature and scope been disbursed were legally available for and,
of audit. Consequently audit by the Comptroller & applicable to the service or purpose to which they
Auditor General of India has evolved from an have been applied or charged;
accountancy and regularity check to evaluation of the
end results of the operations of government, (b) that the expenditure conforms to the authority
including considerations of economy, efficiency and which governs it; and
effectiveness.
(c) that every re-appropriation has been made in
The audit by the C&AG is conducted under a accordance with the provisions made in this behalf
planned programme covering the accounts, systems, under rules framed by competent authority.
procedures, projects and programmes on the basis of
the documents and information submitted to the One of the duties of the Committee is to
ascertain that money granted by Parliament has been
Indian Audit and Accounts Department. Field audits
spent by Government within the scope of the
of the various organisations involved are an essential Demand. It considers the justification for spending
part of the overall programme. The initial audit more or less than the amount originally sanctioned. If
findings are taken up with the appropriate authorities any money has been spent on a service in excess of
for remedial action through audit notes and the amount granted by the House for the purpose,
the Committee examines with reference to the facts
inspection reports. Important audit findings, of each case, the circumstances leading to such an
performance reviews of projects and programmes, excess and makes such recommendations as it may
and comprehensive appraisals of public enterprises deem fit. The functions of the Committee extend
and other bodies and authorities are processed for however, “beyond, the formality of expenditure to its
wisdom, faithfulness and economy”. The Committee
inclusion in the reports of the C&AG which are laid
thus examines cases involving losses, nugatory
before the Parliament. Apart from the certification of expenditure and financial irregularities. While
the Appropriation Accounts and Finance Accounts of scrutinising the Reports of the Comptroller and
the Union Government and submission of separate Auditor-General on Revenue Receipts, the
audit reports on statutory corporations and other Committee examines various aspects of
Government’s tax administration. The Committee
autonomous bodies for which the C&AG is the sole thus examines cases involving under-assessments,
auditor, the C&AG brings out a large number of audit tax-evasion, non-levy of duties, misclassifications
reports every year. (The details relating to the etc., identifies the loopholes in the taxation laws and
various Union Audit Reports of C&AG are at procedures and makes recommendations in order to
check leakage of revenue.
Annexure III of Chapter VII).
Government take action on the recommendations
PUBLIC ACCOUNTS COMMITTEE: of the Committee and submit action taken notes to
The Committee on Public Accounts is the Committee. The Committee then present an
constituted by Parliament each year for examination Action Taken Report after considering the views of
of accounts showing the appropriation of sums the Government. The Government further submit an
granted by Parliament for expenditure of Government “Action Taken Statement” on the action taken by the
of India, the annual Finance Accounts of Government Government on the “Action Taken Report” of the
of India, and such other Accounts laid before Committee. The Action Taken Statement is generally
Parliament as the Committee may deem fit such as laid before the House without any further examination
accounts of autonomous and semi-autonomous by the Committee. Normally, almost all the
bodies (except those of Public Undertakings and recommendations of the Committee are implemented
Government Companies which come under the by the Government.
purview of the Committee on Public Undertakings). The detailed procedures relating to the Public
Accounts Committee are at Annexure I of Chapter
The Examination of the Appropriation
Accounts relating to the Railways, Defence Services, II.
P&T Department and other Civil Ministries of the

127
 PART-II

ANNEXURES

128
 ANNEXURE-I of CHAPTER-I
CONSTITUTIONAL PROVISIONS ON BUDGET AND BUDGET RELATED ISSUES

payment of moneys into or the withdrawal

109. Special procedure in respect of Money of moneys from any such Fund;
Bills.—(1) A Money Bill shall not be
introduced in the Council of States. (d) the appropriation of moneys out of the
Consolidated Fund of India;
(2) After a Money Bill has been passed by the
House of the People it shall be transmitted to (e) the declaring of any expenditure to be
the Council of States for its recommendations expenditure charged on the Consolidated
and the Council of States shall within a Fund of India or the increasing of the
period of fourteen days from the date of its amount of any such expenditure;
receipt of the Bill return the Bill to the House
of the People with its recommendations and (f) the receipt of money on account of the
the House of the People may thereupon Consolidated Fund of India or the public
either accept or reject all or any of the account of India or the custody or issue of
recommendations of the Council of States. such money or the audit of the accounts of
the Union or of a State; or
(3) If the House of the People accepts any of
the recommendations of the Council of (g) any matter incidental to any of the matters
States, the Money Bill shall be deemed to specified in sub-clauses (a) to (f).
have been passed by both Houses with the (2) A Bill shall not be deemed to be a Money
amendments recommended by the Council of Bill by reason only that it provides for the
States and accepted by the House of the imposition of fines or other pecuniary
People. penalties, or for the demand or payment of
(4) If the House of the People does not fees for licences or fees for services
accept any of the recommendations of the rendered, or by reason that it provides for the
Council of States, the Money Bill shall be imposition, abolition, remission, alteration or
deemed to have been passed by both Houses regulation of any tax by any local authority or
in the form in which it was passed by the body for local purposes.
House of the People without any of the (3) If any question arises whether a Bill is a
amendments recommended by the Council of Money Bill or not, the decision of the Speaker
States. of the House of the People thereon shall be
(5) If a Money Bill passed by the House of the final.
People and transmitted to the Council of (4) There shall be endorsed on every Money Bill
States for its recommendations is not when it is transmitted to the Council of States under
returned to the House of the People within article 109, and when it is presented to the President
the said period of fourteen days, it shall be for assent under article 111, the certificate of the
deemed to have been passed by both Houses Speaker of the House of the People signed by him
at the expiration of the said period in the form that it is a Money Bill.
in which it was passed by the House of the
People. 112. Annual financial statement.—(1) The
President shall in respect of every financial
110. Definition of “Money Bills’’.—(1) For year cause to be laid before both the Houses
the purposes of this Chapter, a Bill shall be of Parliament a statement of the estimated
deemed to be a Money Bill if it contains only receipts and expenditure of the Government
provisions dealing with all or any of the of India for that year, in this Part referred to
following matters, namely:— as the “annual financial statement’’.
(a) the imposition, abolition, remission, (2) The estimates of expenditure embodied in
alteration or regulation of any tax; the annual financial statement shall show
separately—
(b) the regulation of the borrowing of money or
the giving of any guarantee by the (a) the sums required to meet expenditure
Government of India, or the amendment of described by this Constitution as
the law with respect to any financial expenditure charged upon the
obligations undertaken or to be undertaken Consolidated Fund of India; and
by the Government of India;
(b) the sums required to meet other
(c) the custody of the Consolidated Fund or expenditure proposed to be made from the
the Contingency Fund of India, the Consolidated Fund of India, and shall

129
 distinguish expenditure on revenue subject to a reduction of the amount specified
account from other expenditure. therein.
(3) The following expenditure shall be (3) No demand for a grant shall be made
expenditure charged on the Consolidated except on the recommendation of the
Fund of India— President.
(a) the emoluments and allowances of the 114. Appropriation Bills.— (1) As soon as
President and other expenditure relating to may be after the grants under article 113
his office; have been made by the House of the People,
there shall be introduced a Bill to provide for
(b) the salaries and allowances of the
the appropriation out of the Consolidated
Chairman and the Deputy Chairman of the
Fund of India of all moneys required to
Council of States and the Speaker and the
meet—
Deputy Speaker of the House of the
People; (a) the grants so made by the House of the
People; and
(c) debt charges for which the Government of
India is liable including interest, sinking (b) the expenditure charged on the
fund charges and redemption charges, and Consolidated Fund of India but not
other expenditure relating to the raising of exceeding in any case the amount shown
loans and the service and redemption of in the statement previously laid before
debt; Parliament.
(d) (i) the salaries, allowances and pensions (2) No amendment shall be proposed to any
payable to or in respect of Judges of the such Bill in either House of Parliament which
Supreme Court; will have the effect of varying the amount or
altering the destination of any grant so made
(ii) the pensions payable to or in respect
or of varying the amount of any expenditure
of Judges of the Federal Court;
charged on the Consolidated Fund of India,
(iii) the pensions payable to or in respect of and the decision of the person presiding as to
Judges of any High Court which whether an amendment is inadmissible under
exercises jurisdiction in relation to any this clause shall be final.
area included in the territory of India or
which at any time before the (3) Subject to the provisions of articles 115
commencement of this Constitution and 116, no money shall be withdrawn from
exercised jurisdiction in relation to any the Consolidated Fund of India except under
area included in a Governor’s Province appropriation made by law passed in
of the Dominion of India; accordance with the provisions of this article.

(e) the salary, allowances and pension 115. Supplementary, additional or excess
payable to or in respect of the Comptroller grants.— (1) The President shall—
and Auditor-General of India; (a) if the amount authorised by any law made
(f) any sums required to satisfy any judgment, in accordance with120
decree or award of any court or arbitral the provisions of article 114 to be expended for a
tribunal; particular service for the current financial
(g) any other expenditure declared by this year is found to be insufficient for the
Constitution or by Parliament by law to be purposes of that year or when a need has
so charged. arisen during the current financial year for
supplementary or additional expenditure
113. Procedure in Parliament with respect upon some new service not contemplated
to estimates.—(1) So much of the estimates in the annual financial statement for that
as relates to expenditure charged upon the year, or
Consolidated Fund of India shall not be
submitted to the vote of Parliament, but (b) if any money has been spent on any
nothing in this clause shall be construed as service during a financial year in excess of
preventing the discussion in either House of the amount granted for that service and for
Parliament of any of those estimates. that year, cause to be laid before both the
Houses of Parliament another statement
(2) So much of the said estimates as relates showing the estimated amount of that
to other expenditure shall be submitted in the expenditure or cause to be presented to
form of demands for grants to the House of the House of the People a demand for
the People, and the House of the People shall such excess, as the case may be.
have power to assent, or to refuse to assent,
to any demand, or to assent to any demand (2) The provisions of articles 112, 113 and
114 shall have effect in relation to any such

130
statement and expenditure or demand and an amendment making provision for the
also to any law to be made authorising the reduction or abolition of any tax.
appropriation of moneys out of the
Consolidated Fund of India to meet such (2) A Bill or amendment shall not be deemed
expenditure or the grant in respect of such to make provision for any of the matters
demand as they have effect in relation to the aforesaid by reason only that it provides for
annual financial statement and the the imposition of fines or other pecuniary
expenditure mentioned therein or to a penalties, or for the demand or payment of
demand for a grant and the law to be made fees for licences or fees for services
for the authorisation of appropriation of rendered, or by reason that it provides for the
moneys out of the Consolidated Fund of India imposition, abolition, remission, alteration or
to meet such expenditure or grant. regulation of any tax by any local authority or
body for local purposes.
116. Votes on account, votes of credit and
exceptional grants.—(1) Notwithstanding (3) A Bill which, if enacted and brought into operation,
anything in the foregoing provisions of this would involve expenditure from the Consolidated
Chapter, the House of the People shall have Fund of India shall not be passed by either House of
power— Parliament unless the President has recommended
to that House the consideration of the Bill.
(a) to make any grant in advance in respect of
the estimated expenditure for a part of any 265. Taxes not to be imposed save by
financial year pending the completion of authority of law.—No tax shall be levied or
the procedure prescribed in article 113 for collected except by authority of law.
the voting of such grant and the passing of 266. Consolidated Funds and public
the law in accordance with the provisions accounts of India and of the States.—(1)
of article 114 in relation to that expenditure; Subject to the provisions of article 267 and to
(b) to make a grant for meeting an unexpected the provisions of this Chapter with respect to
demand upon the resources of India when the assignment of the whole or part of the net
on account of the magnitude or the proceeds of certain taxes and duties to
indefinite character of the service the States, all revenues received by the
demand cannot be stated with the details Government of India, all loans raised by that
ordinarily given in an annual financial Government by the issue of treasury bills,
statement; loans or ways and means advances and all
moneys received by that Government in
(c) to make an exceptional grant which forms repayment of loans shall form one
no part of the current service of any consolidated fund to be entitled “the
financial year; and Parliament shall have Consolidated Fund of India”, and all revenues
power to authorise by law the withdrawal of received by the Government of a State, all
moneys from the Consolidated Fund of loans raised by that Government by the issue
India for the purposes for which the said of treasury bills, loans or ways and means
grants are made. advances and all moneys received by that
(2) The provisions of articles 113 and 114 Government in repayment of loans shall form
shall have effect in relation to the making of one consolidated fund to be entitled “the
any grant under clause (1) and to any law to Consolidated Fund of the State”.
be made under that clause as they have
(2) All other public moneys received by or on
effect in relation to the making of a grant with
behalf of the Government of India or the
regard to any expenditure mentioned in the
Government of a State shall be credited to
annual financial statement and the law to be
the public account of India or the public
made for the authorisation of appropriation of
account of the State, as the case may be.
moneys out of the Consolidated Fund of India
to meet such expenditure. (3) No moneys out of the Consolidated Fund
of India or the Consolidated Fund of a State
117. Special provisions as to financial
shall be appropriated except in accordance
Bills.—(1) A Bill or amendment making
provision for any of the matters specified in with law and for the purposes and in the
sub-clauses (a) to (f) of clause (1) of article manner provided in this Constitution.
110 shall not be introduced or moved except 267. Contingency Fund.—(1) Parliament
on the recommendation of the President and may by law establish a Contingency Fund in
a Bill making such provision shall not be the nature of an imprest to be entitled “the
introduced in the Council of States: Contingency Fund of India” into which shall
Provided that no recommendation shall be be paid from time to time such sums as may
required under this clause for the moving of be determined by such law, and the said
Fund shall be placed at the disposal of the

131
President to enable advances to be made by (b) the expression “taxes on the consignment
him out of such Fund for the purposes of of goods” shall mean taxes on the
meeting unforeseen expenditure pending consignment of goods (whether the
authorisation of such expenditure by consignment is to the person making it or
Parliament by law under article 115 or article to any other person), where such
116. consignment takes place in the course of
(2) The Legislature of a State may by law inter-State trade or commerce.
establish a Contingency Fund in the nature of (2) The net proceeds in any financial year of
an imprest to be entitled “the Contingency any such tax, except in so far as those
Fund of the State” into which shall be paid proceeds represent proceeds attributable to
from time to time such sums as may be
Union territories, shall not form part of the
determined by such law, and the said Fund
Consolidated Fund of India, but shall be
shall be placed at the disposal of the
assigned to the States within which that tax is
Governor of the State to enable advances to
be made by him out of such Fund for the leviable in that year, and shall be distributed
purposes of meeting unforeseen expenditure among those States in accordance with such
pending authorisation of such expenditure by principles of distribution as may be
the Legislature of the State by law under formulated by Parliament by law.
article 205 or article 206. (3) Parliament may by law formulate
Distribution of Revenues between the Union principles for determining when a sale or
and the States purchase of, or consignment of, goods takes
place in the course of inter-State trade or
268. Duties levied by the Union but commerce.
collected and appropriated by the States.—
(1) Such stamp duties and such duties of
excise on medicinal and toilet preparations as 270. Taxes levied and distributed between
are mentioned in the Union List shall be the Union and the States.—(1) All taxes and
levied by the Government of India but shall duties referred to in the Union List, except
be collected— the duties and taxes referred to in articles
268 and 269, respectively, surcharge on
(a) in the case where such duties are leviable taxes and duties referred to in article 271 and
within any Union territory, by the any cess levied for specific purposes under
Government of India, and any law made by Parliament shall be levied
and collected by the Government of India and
(b) in other cases, by the States within which shall be distributed between the Union and
such duties are respectively leviable. the States in the manner provided in clause
(2).
(2) The proceeds in any financial year of any
such duty leviable within any State shall not (2) Such percentage, as may be prescribed,
form part of the Consolidated Fund of India, of the net proceeds of any such tax or duty in
but shall be assigned to that State. any financial year shall not form part of the
Consolidated Fund of India, but shall be
269. Taxes levied and collected by the assigned to the States within which that tax
Union but assigned to the States.—(1) or duty is leviable in that year, and shall be
Taxes on the sale or purchase of goods and distributed among those States in such
taxes on the consignment of goods shall be manner and from such time as may be
levied and collected by the Government of prescribed in the manner provided in clause
India but shall be assigned and shall be (3).
deemed to have been assigned to the States (3) In this article, “prescribed” means, —
on or after the 1st day of April, 1996 in the
manner provided in clause (2). (i) until a Finance Commission has been
constituted, prescribed by the President by
Explanation.—For the purposes of this order, and
clause,-
(ii) after a Finance Commission has been
(a) the expression “taxes on the sale or constituted, prescribed by the President by
purchase of goods” shall mean taxes on order after considering the
sale or purchase of goods other than recommendations of the Finance
newspapers, where such sale or purchase Commission.
takes place in the course of inter-State 271. Surcharge on certain duties and taxes
trade or commerce; for purposes of the Union.—

132
Notwithstanding anything in articles 269 and Constitution in respect of the administration
270, Parliament may at any time increase any of the tribal areas specified in Part I of the
of the duties or taxes referred to in those table appended to paragraph 20 of the
articles by a surcharge for purposes of the Sixth Schedule; and
Union and the whole proceeds of any such
(b) the costs of such schemes of development
surcharge shall form part of the Consolidated
as may be undertaken by that State with
Fund of India.
the approval of the Government of India for
272. [Taxes which are levied and collected by the purpose of raising the level of
the Union and may be distributed between the administration of the said areas to that of
Union and the States.]—Rep. by the the administration of the rest of the areas
Constitution (Eightieth Amendment) Act, of that State.
2000, s .4.
(1A) On and from the formation of the
273. Grants in lieu of export duty on jute autonomous State under article 244A,—
and jute products.—(1) There shall be (i) any sums payable under clause (a) of the
charged on the Consolidated Fund of India in second proviso to clause (1) shall, if the
each year as grants-in-aid of the revenues of autonomous State comprises all the tribal
the States of Assam, Bihar, Orissa and West areas referred to therein, be paid to the
Bengal, in lieu of assignment of any share of autonomous State, and, if the autonomous
the net proceeds in each year of export duty State comprises only some of those tribal
on jute and jute products to those States, areas, be apportioned between the State of
such sums as may be prescribed. Assam and the autonomous State as the
(2) The sums so prescribed shall continue to President may, by order, specify;
be charged on the Consolidated Fund of India (ii) there shall be paid out of the Consolidated
so long as any export duty on jute or jute Fund of India as grants-in-aid of the
products continues to be levied by the revenues of the autonomous State sums,
Government of India or until the expiration of capital and recurring, equivalent to the
ten years from the commencement of this costs of such schemes of development as
Constitution whichever is earlier. may be undertaken by the autonomous
(3) In this article, the expression “prescribed” State with the approval of the Government
has the same meaning as in article 270. of India for the purpose of raising the level
of administration of that State to that of the
275. Grants from the Union to certain administration of the rest of the State of
States.—(1) Such sums as Parliament may Assam.
by law provide shall be charged on the
Consolidated Fund of India in each year as (2) Until provision is made by Parliament
grants-in-aid of the revenues of such States under clause (1), the powers conferred on
as Parliament may determine to be in need of Parliament under that clause shall be
assistance, and different sums may be fixed exercisable by the President by order and any
for different States: order made by the President under this
clause shall have effect subject to any
Provided that there shall be paid out of the provision so made by Parliament:
Consolidated Fund of India as grants-in-aid of
the revenues of a State such capital and Provided that after a Finance Commission
recurring sums as may be necessary to has been constituted no order shall be made
enable that State to meet the costs of such under this clause by the President except
schemes of development as may be after considering the recommendations of the
undertaken by the State with the approval of Finance Commission.
the Government of India for the purpose of 280. Finance Commission.—(1) The
promoting the welfare of the Scheduled President shall, within two years from the
Tribes in that State or raising the level of commencement of this Constitution and
administration of the Scheduled Areas therein thereafter at the expiration of every fifth year
to that of the administration of the rest of the or at such earlier time as the President
areas of that State: considers necessary, by order constitute a
Provided further that there shall be paid out Finance Commission which shall consist of a
of the Consolidated Fund of India as grants- Chairman and four other members to be
in-aid of the revenues of the State of Assam appointed by the President.
sums, capital and recurring, equivalent to— (2) Parliament may by law determine the
(a) the average excess of expenditure over the qualifications which shall be requisite for
revenues during the two years immediately appointment as members of the Commission
preceding the commencement of this

133
and the manner in which they shall be Funds received by or on behalf of the
selected. Government of India, their payment into the
(3) It shall be the duty of the Commission to public account of India and the withdrawal of
make recommendations to the President as moneys from such account and all other
to— matters connected with or ancillary to matters
aforesaid shall be regulated by law made by
(a) the distribution between the Union and the Parliament, and, until provision in that behalf
States of the net proceeds of taxes which is so made, shall be regulated by rules made
are to be, or may be, divided between them by the President.
under this Chapter and the allocation
between the States of the respective (2) The custody of the Consolidated Fund of a
shares of such proceeds; State and the Contingency Fund of a State,
the payment of moneys into such Funds, the
(b) the principles which should govern the withdrawal of moneys there from, the custody
grants-in-aid of the revenues of the States of public moneys other than those credited to
out of the Consolidated Fund of India; such Funds received by or on behalf of the
(bb) the measures needed to augment the Government of the State, their payment into
Consolidated Fund of a State to the public account of the State and the
supplement the resources of the withdrawal of moneys from such account and
Panchayats in the State on the basis of the all other matters connected with or ancillary
recommendations made by the Finance to matters aforesaid shall be regulated by law
Commission of the State; made by the Legislature of the State, and,
until provision in that behalf is so made, shall
(c) the measures needed to augment the be regulated by rules made by the Governor
Consolidated Fund of a State to of the State.
supplement the resources of the
Municipalities in the State on the basis of 284. Custody of suitors’ deposits and
the recommendations made by the Finance other moneys received by public servants
Commission of the State; and courts.—All moneys received by or
deposited with—
(d) any other matter referred to the
(a) any officer employed in connection with the
Commission by the President in the
affairs of the Union or of a State in his
interests of sound finance.
capacity as such, other than revenues or
(4) The Commission shall determine their public moneys raised or received by the
procedure and shall have such powers in the Government of India or the Government of
performance of their functions as Parliament the State, as the case may be, or
may by law confer on them. (b) any court within the territory of India to the
credit of any cause, matter, account or
281. Recommendations of the Finance
persons, shall be paid into the public
Commission.—The President shall cause account of India or the public account of
every recommendation made by the Finance State, as the case may be.
Commission under the provisions of this
Constitution together with an explanatory 292. Borrowing by the Government of
memorandum as to the action taken thereon India.—The executive power of the Union
to be laid before each House of Parliament. extends to borrowing upon the security of the
Consolidated Fund of India within such limits,
282. Expenditure defrayable by the Union if any, as may from time to time be fixed by
or a State out of its revenues.—The Union Parliament by law and to the giving of
or a State may make any grants for any guarantees within such limits, if any, as may
public purpose, notwithstanding that the be so fixed.
purpose is not one with respect to which 293. Borrowing by States.—(1) Subject to
Parliament or the Legislature of the State, as the provisions of this article, the executive
the case may be, may make laws. power of a State extends to borrowing within
the territory of India upon the security of the
283. Custody, etc., of Consolidated Funds,
Consolidated Fund of the State within such
Contingency Funds and moneys credited
limits, if any, as may from time to time be
to the public accounts.—(1) The custody of fixed by the Legislature of such State by law
the Consolidated Fund of India and the and to the giving of guarantees within such
Contingency Fund of India, the payment of limits, if any, as may be so fixed.
moneys into such Funds, the withdrawal of
moneys there from, the custody of public (2) The Government of India may, subject to
moneys other than those credited to such such conditions as may be laid down by or

134
under any law made by Parliament, make unless before the expiration of that period it
loans to any State or, so long as any limits has been approved by resolutions of both
fixed under article 292 are not exceeded, give Houses of Parliament:
guarantees in respect of loans raised by any
State, and any sums required for the purpose Provided that if any such Proclamation
of making such loans shall be charged on the (not being a Proclamation revoking a previous
Consolidated Fund of India. Proclamation) is issued at a time when the
House of the People is dissolved or the
(3) A State may not without the consent of the dissolution of the House of the People takes
Government of India raise any loan if there is place during the period of two months
still outstanding any part of a loan which has referred to in this clause, and if a resolution
been made to the State by the Government of approving the Proclamation has been passed
India or by its predecessor Government, or in by the Council of States, but no resolution
respect of which a guarantee has been given with respect to such Proclamation has been
by the Government of India or by its passed by the House of the People before the
predecessor Government. expiration of that period, the Proclamation
shall cease to operate at the expiration of
(4) A consent under clause (3) may be thirty days from the date on which the House
granted subject to such conditions, if any, as of the People first sits after its reconstitution
the Government of India may think fit to unless before the expiration of the said
impose. period of thirty days a resolution approving
356. Provisions in case of failure of the Proclamation has been also passed by
constitutional machinery in States.—(1) If the House of the People.
the President, on receipt of a report from the (4) A Proclamation so approved shall, unless
Governor of a State or otherwise, is satisfied revoked, cease to operate on the expiration
that a situation has arisen in which the of a period of six months from the date of
Government of the State cannot be carried issue of the Proclamation:
on in accordance with the provisions of this
Constitution, the President may by Provided that if and so often as a
Proclamation— resolution approving the continuance in force
(a) assume to himself all or any of the of such a Proclamation is passed by both
functions of the Government of the State Houses of Parliament, the Proclamation shall,
and all or any of the powers vested in or unless revoked, continue in force for a
exercisable by the Governor or any body or further period of six months from the date on
authority in the State other than the which under this clause it would otherwise
Legislature of the State; have ceased to operate, but no such
Proclamation shall in any case remain in
(b) declare that the powers of the Legislature force for more than three years:
of the State shall be exercisable by or
under the authority of Parliament; Provided further that if the dissolution of
(c) make such incidental and consequential the House of the People takes place during
provisions as appear to the President to be any such period of six months and a
necessary or desirable for giving effect to resolution approving the continuance in force
the objects of the Proclamation, including of such Proclamation has been passed by the
provisions for suspending in whole or in Council of States, but no resolution with
part the operation of any provisions of this respect to the continuance in force of such
Constitution relating to any body or Proclamation has been passed by the House
authority in the State: of the People during the said period, the
Proclamation shall cease to operate at the
Provided that nothing in this clause shall expiration of thirty days from the date on
authorise the President to assume to himself which the House of the People first sits after
any of the powers vested in or exercisable by its reconstitution unless before the expiration
a High Court, or to suspend in whole or in of the said period of thirty days a resolution
part the operation of any provision of this approving the continuance in force of the
Constitution relating to High Courts. Proclamation has been also passed by the
House of the People:
(2) Any such Proclamation may be revoked or
varied by a subsequent Proclamation. Provided also that in the case of the
Proclamation issued under clause (1) on the
(3) Every Proclamation under this article shall 11th day of May, 1987 with respect to the
be laid before each House of Parliament and State of Punjab, the reference in the first
shall, except where it is a Proclamation proviso to this clause to “three years” shall be
revoking a previous Proclamation, cease to construed as a reference to five years.
operate at the expiration of two months

135
(5) Notwithstanding anything contained in (3) During the period any such Proclamation
clause (4), a resolution with respect to the as is mentioned in clause (1) is in operation,
continuance in force of a Proclamation the executive authority of the Union shall
approved under clause (3) for any period extend to the giving of directions to any State
beyond the expiration of one year from the to observe such canons of financial propriety
date of issue of such Proclamation shall not as may be specified in the directions, and to
be passed by either House of Parliament the giving of such other directions as the
unless— President may deem necessary and adequate
for the purpose.
(a) a Proclamation of Emergency is in
operation, in the whole of India or, as the (4) Notwithstanding anything in this
case may be, in the whole or any part of Constitution—
the State, at the time of the passing of such
resolution, and (a) any such direction may include—

(b) the Election Commission certifies that the (i) a provision requiring the reduction of
continuance in force of the Proclamation salaries and allowances of all or any
approved under clause (3) during the class of persons serving in connection
period specified in such resolution is with the affairs of a State;
necessary on account of difficulties in (ii) a provision requiring all Money Bills or
holding general elections to the Legislative other Bills to which the provisions of
Assembly of the State concerned: article 207 apply to be reserved for the
Provided that nothing in this clause shall apply to consideration of the President after
the Proclamation issued under clause (1) on the 11th they are passed by the Legislature of
day of May, 1987 with respect to the State of Punjab. the State;

360. Provisions as to financial (b) it shall be competent for the President

emergency.—(1) If the President is satisfied during the period any Proclamation issued
that a situation has arisen whereby the under this article is in operation to issue
financial stability or credit of India or of any directions for the reduction of salaries and
part of the territory thereof is threatened, he allowances of all or any class of persons
may by a Proclamation make a declaration to serving in connection with the affairs of the
that effect. Union including the Judges of the Supreme
Court and the High Courts.
(2) A Proclamation issued under clause (1)—
(a) may be revoked or varied by a subsequent
Proclamation;
(b) shall be laid before each House of
Parliament;
(c) shall cease to operate at the expiration of
two months, unless before the expiration of
that period it has been approved by
resolutions of both Houses of Parliament:
Provided that if any such Proclamation is
issued at a time when the House of the
People has been dissolved or the dissolution
of the House of the People takes place during
the period of two months referred to in sub-
clause (c), and if a resolution approving the
Proclamation has been passed by the Council
of States, but no resolution with respect to
such Proclamation has been passed by the
House of the People before the expiration of
that period, the Proclamation shall cease to
operate at the expiration of thirty days from
the date on which the House of the People
first sits after its reconstitution unless before
the expiration of the said period of thirty days
a resolution approving the Proclamation has
been also passed by the House of the
People.

136
 ANNEXURE-I of CHAPTER-II
THE DETAILED PROCEDURES RELATING TO THE PUBLIC ACCOUNTS COMMITTEE
:
5 copies of all Notes/Memoranda etc if not vetted
Submission of Notes/Statements to the PAC:
by the Audit, should be sent by the Ministries to their
Copies of all memoranda, notes etc. submitted to Principal Audit Officers while forwarding advance
the Public Accounts Committee in pursuant to action copies to the Lok Sabha Secretariat.
taken on the recommendations of the Committee or
All Notes etc. should be invariably shown to audit
undertakings given to the Committee by the
before their formal submission to the Committee. In
representatives of the Ministry at the time of
examination of the Accounts should invariably be case of the written information asked for on points
dated and signed by the Secretary or Joint Secretary arising from the evidence, when it is not possible for
in-charge of the Ministry in token of his having the Ministry to send the information duly vetted by
approved the same. Audit within the stipulated period, advance copies of
the Notes transmitted to Audit should simultaneously
It is required to be ensured that comments etc. be sent to the Lok Sabha Secretariat to enable the
furnished to the Parliamentary Committees are Committee to finalize their Report without delay.
couched in temperate language. The following
observation made by the Committee on Subordinate Proceedings of the Parliamentary Committees:
Legislation may be kept in view- No part of the evidence oral or written, report or
“The Committee impresses upon all Ministries proceedings of a Committee which has not been laid
and Departments of Government of India, to make it on the Table should be open to inspection by anyone
a point to ensure that comments/information except under the authority of the Speaker. Copies of
furnished to them for consideration of the Committee evidence or extracts there from cannot, therefore, be
from time to time are couched in temperate language supplied to anyone. However, in accordance with
conforming with the dignity and stature of a Direction 65 of Directions by the Speaker, pages of
Parliamentary Committee and are not incorrect in verbatim proceedings of the sitting of the Public
their content. Use of disrespectful and intemperate Accounts Committee, Estimates Committee,
language, in any manner whatsoever, should be Committee on Public Undertakings, Railway
avoided at all cost”. Convention Committee, Joint or Select Committee as
also other Parliamentary Committees, containing the
40 (forty) copies of English version and 10 (ten) speeches of the representatives of the Ministries who
copies of Hindi version of written information give evidence before the Committee are sent to them
pursuant to the advance questionnaire issued by the for confirmation and return. The corrections, if any,
Committee should be submitted within the stipulated shall be made neatly and legibly by the witness in ink
period and in any case at least one week before the in his own handwriting and shall be confined to either
date fixed for oral evidence. grammatical errors or such other patent errors as
wrong figures, etc. and inaccuracy which may have
Similar number of copies of written information
asked for on the points arising from the evidence occurred in the process of reporting and not for the
given before the Committee or in pursuant to the purpose of improving their literary form or altering
their substance by additions and deletions. The
undertakings given to the Committee at the time of
examination of the accounts should be submitted corrected copy bearing the signature of the witness
within the time stipulated in the communication sent concerned should be returned in a sealed cover
within 48 hours of its receipt failing which the copy as
to the Ministry by the Lok Sabha Secretariat.
Statements/Memos etc in pursuant to action taken on sent, is to be taken as authentic.
the recommendations of the Committee should be
submitted in the prescribed form (Annexure VII of the
Handbook of Parliamentary Procedure). It is not possible to take copies of these
proceedings, nor can they be quoted anywhere or
15 copies of English version and 10 copies of made use of in any manner without the permission of
Hindi version of the Statements/Memoranda etc, the Committee, as such an act would constitute a
showing action taken on the recommendations breach of privilege of the Committee. These
contained in Chapter I of Action Taken Report as also proceedings should be treated as SECRET.
final replies in respect of those recommendations in
respect of which interim replies/no replies had been
furnished earlier should be submitted within a period General Guidelines for Government Departments
of six months or less, as may be specified, from the and Public Undertakings:
date of presentation of the Action Taken Reports.
The following are some of the general guidelines
which may be kept in mind by the officers of the

137
Ministries/Departments/Public Undertakings while witnesses helps in the clear understanding of the
dealing with the Financial Committees of the facts of the case/problems and seeking clarifications
Parliament. wherever necessary. It is not to score point over the
executive by pinpointing their deficiencies or failures
• After the subjects are selected by the but to understand the difficulties of the administration
Committees the Ministries concerned are in implementing them and to discuss practical
required to designate Officers not below solutions to these problems.
the rank of Deputy Secretary, to act as
Liasion Officers for the purpose of Witnesses appearing before Parliamentary
collecting and supplying material required Committees have to observe proper conduct and
by the Committee and for co-ordinating etiquette and act with due decorum. They should
tour arrangements. show due respect to the Chairman and the
Committee by bowing while taking their seats. If so
• The Heads of Organizations should be asked by the Chairman, they should take the oath or
present in the meeting of Parliamentary make affirmation. All submissions to the Chair and
Committees/Study Groups, while the the Committee should be couched in courteous and
Heads of Organization under the control polite language. When the evidence is completed and
of Ministry of Finance are requested to the witness is asked to withdraw, he should, while
ensure that they are invariably present in leaving, bow to the Chair.
those meetings whether such meetings
Production of Secret Papers and Records:
are held in the Head Offices or in the
Regional/Zonal Offices and should be fully A Parliamentary Committee has the power to
prepared for answering questions raised send for papers and records. If any question arises
by the Members. whether the production of a document is relevant for
the purpose of the Committee, the question is to be
• All discussions held by the Committee referred to the Speaker whose decision shall be final.
with the representatives of Ministries, etc. Government may, however, decline to produce a
should be treated as secret and in no document on the ground that its disclosure would be
case should be disclosed to the press or prejudicial to the safety or interest of the State. In the
to any unauthorized persons.· case of secret documents required by the Committee
such papers may in the first instance, be made
• Whereas list of points for discussion available by the Ministry, etc. confidentially to the
during the tour are sent in advance, notes Chairman unless it is certified by the Minister
etc. thereon should be prepared in concerned that its disclosure would be prejudicial to
advance by the Heads of Organizations to the safety or interest of the State. The Chairman may
be visited and supplied to members give due consideration to the views of the concerned
before discussion, including Hindi version. Ministry etc. before making any secret document
The information in reply to the available to the Members of the Committee. Any
questionnaire should not be restricted to difference between the Ministry and the Chairman
the zone or Region. Heads of may be settled by discussion and if no satisfactory
Organizations must also ensure to send agreement is arrived at, the matter is to be placed
two sets of such papers to the Lok Sabha before the Speaker for his decision.
Secretariat in advance.
Coordination of Action Taken on
Evidence of Officers:
Recommendations:
Where a Ministry/Department or Undertaking is
Each ministry of Government of India is required
required to give evidence before the Committee on
to furnish the Committee with a Statement showing
any matter, it shall be represented by the Secretary
action taken on the recommendations contained in
or the Head of Undertaking as the case may be. The
the Report of the Committee pertaining to that
Chairman of the Committee may, on a request being
Ministry as soon as possible after it is presented to
made to him, permit any other senior officer to
the House. The Government has laid down a
represent the Ministry/Department. The
procedure for examination of the recommendations
Secretary/Head of Public Undertaking may bring with
and issue of replies thereto. The basic features of the
him senior officers not below the rank of Joint
procedure are as follows:
Secretaries to assist him in giving evidence before
the Committee. Financial Adviser may, if necessary (a) The recommendations of the Estimates
accompany the Head of Undertaking. Committee and Public Accounts
Committee have been divided into three
If a witness fails to appear before the Committee
categories, viz.
when summoned, refuses to produce any document
when so required by the Committee, his conduct (i) Recommendations of a purely
constitutes contempt of the House and may be administrative character relating to the
reported upon to the House. The evidence of official Ministry concerned;

138
 (ii) Recommendations relating to a single Action Taken Notes. It will be the
Ministry but involving financial issues; responsibility of the IFA to seek extension
and of time from the Lok Sabha Secretariat in
(iii) Recommendations which would respect of the Action Taken Notes which
concern not only the Ministry reported for unavoidable reasons, cannot be sent
upon but a number of other Ministries within the prescribed period of six months
or all the Ministries. from the date the relevant PAC Report is
presented to the Lok Sabha. Copies of all
So far as recommendations of the first two the communications addressed to the Lok
categories are concerned it has been provided that
Sabha Secretariat regarding action taken
they would be dealt with by the Ministry concerned
notes will also be endorsed to the
and in consultation with the officers of the Finance
Ministry accredited to it where financial issues are Monitoring Cell, Ministry of Finance,
involved. Department of Expenditure.

(b) Recommendations of the Estimates (b) The Ministry of Finance, Department of

Committee falling in the third category Expenditure (Monitoring Cell) will be
comprise two groups viz. the ’focal point’ for the Government as a
whole to co-ordinate and watch progress,
(i) Recommendations raising general monitor delays, etc. with the Ministries
questions of financial and budgetary
concerned.”
nature; and
Extension of Time for Submitting Action Taken
(ii) Recommendations dealing with more
general policy questions. Notes:

It has been provided that the first group of No extension of time beyond 6 months for
recommendations should be referred to the Ministry submitting Action Taken Reports on the Reports of
of Finance (Department of Expenditure) who would Financial Committees (PAC, EC, RCC, and COPU)
co-ordinate action in consultation with the Ministries shall ordinarily be granted except in very exceptional
concerned, the final reply being issued either by the circumstances upto another 3 months with the
Ministry reported upon or the Ministry of Finance as approval of the Chairman.
might be mutually agreed upon.
Nomination of Officers for dealing with
As regards the recommendations falling in the Parliamentary Committees:
second group, the Ministry concerned would prepare
draft replies and refer them to the Cabinet Secretariat A senior officer in each Department should be
for consideration. The Cabinet Secretariat would nominated to be responsible for furnishing
advise the Ministry reported upon as to the further information called for by the Committees, for taking
action to be taken. appropriate action or other requests and for dealing
with their recommendations. The name and
Timely Submission of Action Taken Notes:
designation of the officer nominated for the purpose
The institutional arrangements prescribed by the should be communicated to the Lok Sabha
Ministry of Finance with regard to the timely Secretariat. Any change in the incumbent should also
submission of Action Taken Notes on the be communicated immediately.
recommendations/observations made by the Public
Accounts Committee is reproduced below-
“The Public Accounts Committee have taken a
serious view of the delays on the part of the
Government in initiating and reporting Action Taken
on their recommendations/observations. It has been
decided to have the following institutional
arrangements to monitor timely submission of Action
Taken Notes on the recommendations of the Public
Accounts Committee.
(a) The Integrated Financial Adviser in each
Ministry would be responsible for
examining the PAC report as a whole and
would be ‘focal point’ responsible directly to
the Secretary. He would also coordinate
and watch progress, monitor delays and
take necessary action to expedite the

139
 ANNEXURE-I of CHAPTER-II

CONSTITUTIONAL PROVISIONS RELATING TO THE COMPTROLLER & AUDITOR GENERAL OF INDIA148.

Comptroller and Auditor-General of Parliament and, until provision in that behalf
India.—(1) There shall be a Comptroller and is so made, shall perform such duties and
Auditor-General of India who shall be exercise such powers in relation to the
appointed by the President by warrant under accounts of the Union and of the States as
his hand and seal and shall only be removed were conferred on or exercisable by the
from office in like manner and on the like Auditor-General of India immediately before
the commencement of this Constitution in
grounds as a Judge of the Supreme Court.
relation to the accounts of the Dominion of
(2) Every person appointed to be the India and of the Provinces respectively.
Comptroller and Auditor-General of India
150. Form of accounts of the Union and of
shall, before he enters upon his office, make
the States.—The accounts of the Union and
and subscribe before the President, or some
of the States shall be kept in such form as
person appointed in that behalf by him, an
the President may, on the advice of the
oath or affirmation according to the form set
Comptroller and Auditor-General of India,
out for the purpose in the Third Schedule.
prescribe.
(3) The salary and other conditions of service
151. Audit reports.—(1) The reports of the
of the Comptroller and Auditor- General shall
Comptroller and Auditor-General of India
be such as may be determined by Parliament
relating to the accounts of the Union shall be
by law and, until they are so determined,
submitted to the President, who shall cause
shall be as specified in the Second Schedule:
them to be laid before each House of
Provided that neither the salary of a Parliament.
Comptroller and Auditor-General nor his
(2) The reports of the Comptroller and
rights in respect of leave of absence, pension
Auditor-General of India relating to the
or age of retirement shall be varied to his
accounts of a State shall be submitted to the
disadvantage after his appointment.
Governor of the State, who shall cause them
(4) The Comptroller and Auditor-General shall to be laid before the Legislature of the State.
not be eligible for further office either under
the Government of India or under the
Government of any State after he has ceased
to hold his office.
(5) Subject to the provisions of this
Constitution and of any law made by
Parliament, the conditions of service of
persons serving in the Indian Audit and
Accounts Department and the administrative
powers of the Comptroller and Auditor-
General shall be such as may be prescribed
by rules made by the President after
consultation with the Comptroller and Auditor-
General.
(6) The administrative expenses of the office
of the Comptroller and Auditor- General,
including all salaries, allowances and
pensions payable to or in respect of persons
serving in that office, shall be charged upon
the Consolidated Fund of India.
149. Duties and powers of the Comptroller
and Auditor-General.—The Comptroller and
Auditor-General shall perform such duties
and exercise such powers in relation to the
accounts of the Union and of the States and
of any other authority or body as may be
prescribed by or under any law made by

140
 ANNEXURE I of CHAPTER-III
CONTINGENCY FUND OF INDIA RULES:
The provisions under the Contingency Fund of India session meeting immediately after the advance is
Rules are as follows: sanctioned unless such advance has been resumed
to the Contingency Fund in accordance with the
1. These rules may be called the Contingency Fund provisions of sub-rule (2).
of India Rules.
NOTE 1. -While presenting to Parliament Estimates
2. The Contingency Fund of India shall be held on for expenditure financed from the Contingency Fund,
behalf of the President by the Secretary to the a note to the following effect shall be appended to
Government of India, Ministry of Finance, such Estimates :-
Department of Economic Affairs.
‘A sum of ` ………………………… has been
3. From out of the Balance in the Fund, such
advanced from the Contingency Fund in
amounts as may be agreed upon from time to time
…………………………… and an equivalent amount
shall be placed at the disposal of the Financial
is required to enable repayment to be made to that
Commissioner of Railways for the purpose of meeting
Fund.’
the unforeseen expenditure of the Railways.
NOTE 2.- If the expenditure on a new service not
4. Subject to the provisions of Rule 5 below, all
contemplated in the Annual Financial Statement can
applications for advances from the Fund shall be
be met, ‘wholly or partly’ from savings available within
made to the Secretary to the Government of India,
the authorized appropriation, the note appended to
Ministry of Finance, Department of Economic Affairs.
the Estimates submitted shall be in the following
The applications shall give -
form:-
(i) brief particulars of the additional
expenditure involved. ‘The expenditure is on a new service. A sum of `
………………….. has been advanced from
(ii) the circumstances in which provision could Contingency Fund in ……………….. and an
not be included in the budget, equivalent amount is required to enable repayment to
(iii) why its postponement is not possible, be made to that Fund.’ The amount, viz., `
(iv) the amount required to be advanced from …………………………… can be found by
the Fund with full cost of the proposal for reappropriation. ‘A part of that amount, viz., `
the year or part of the year, as the case ……………………… of savings within the grant and a
may be, and token vote only is now required, viz., `
(v) the grant or appropriation under which ……………………. only. a vote is required for the
supplementary provision will eventually balance
have to be obtained.
(2) As soon as Parliament has authorized additional
5. Applications for advances required by Railways expenditure by means of a Supplementary
shall be made to the Financial Commissioner of Appropriation Act, the advance or advances made
Railways in the manner provided for in Rule 4. from the Contingency Fund, whether for meeting the
expenditure incurred before the Supplementary
6. Advances from the Fund shall be made for the
Estimates were presented to the Parliament or after
purpose of meeting unforeseen expenditure including
they were so presented, shall be resumed to the
expenditure on a new service not contemplated in the
Fund to the full extent of the appropriation made in
Annual Financial Statement.
Act.”
7. A copy of the order sanctioning the advance, which
8. A. If in any case, after the order sanctioning an
shall specify the amount, the grant or appropriation to
advance from the Contingency Fund has been issued
which it relates and give brief particulars by sub-
in accordance with Rule 7 and before action is taken
heads and units of appropriation of the expenditure
in accordance with Rule 8, it is found that the
for meeting which it is made, shall be forwarded by
advance sanctioned will remain wholly or partly
the Ministry of Finance or the Financial
unutilized, an application shall be made to the
Commissioner of Railways, as the case may be, to
sanctioning authority for cancelling or modifying the
the Audit and Accounts Officers concerned. In
sanction, as the case may be.
addition, the Ministry of Finance and the Financial
Commissioner of Railways shall forward copies of 8. B. All advances sanctioned from the Contingency
such orders to the Accountant-General, Central Fund to meet expenditure in excess of the provision
Revenues and the Director of Railway Audit for the service included in an appropriation (Vote on
respectively. Accounts) Act shall be resumed to the Contingency
Fund as soon as the Appropriation Act in respect of
8. (1) Supplementary Estimates for all expenditure so the expenditure on the service for the whole year,
financed shall be presented to Parliament at the first

141
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, shall forward copies
of such orders to the Accountant General, 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 the
prescribed 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.
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.

142
 ANNEXURE - II of CHAPTER III
DIVISIONS UNDER PUBLIC ACCOUNT- DEPOSITS & ADVANCES, REMITTANCES, SMALL SAVINGS, NSSF
AND VARIOUS OTHER FUNDS AND THE ACCOUNTING GUIDELINES RELATED TO PUBLIC ACCOUNTS

The Public Account of India has been divided other Government desires to retain some measure of
into following Sectors and Sub Sectors- control over expenditure from the grants made by it
the procedure will be as laid down in category 3
Sector- I: Small Savings, Provident Funds etc. below.
Sector- J: Reserve Funds.
2. Reserve Funds Fed By The Consolidated Fund
(a) Reserve Funds Bearing Interest; and Of India:
(b) Reserve Funds Not Bearing Interest. The amounts voted by the legislature for transfer
Sector- K: Deposits and Advances. to the Reserve Fund are taken to the Deposit head
(a) Deposits Bearing Interest; reserved for the purpose. A second vote for the
expenditure from the fund is not necessary but in
(b) Deposits Not Bearing Interest; and order to bring the expenditure from the fund into the
(c) Advances. Appropriation Accounts, it should be accounted for
Sector- L: Suspense and Miscellaneous. under the relevant Service head and an equivalent
amount transferred from the Deposit head concerned
Sector –M: Remittances. and shown as a deduct entry under the Service head
Small Savings, Provident Funds etc: concerned. Where, however, the legislature does not
All Deposits under small savings schemes are desire to retain any detailed control over the
credited to the ‘National Small Savings Fund’ expenditure from the fund, the expenditure may be
(NSSF), established in the Public Account of India adjusted by direct debit from the fund.
with effect from 1.4.1999. All withdrawals by the 3. Funds Fed By Grants By Outside Agencies:
depositors are made out of the accumulations in the
Fund. Balance in the Fund is invested in special The grants received from an outside agency will
Government Securities as per norms decided from be taken to the appropriate head in the Deposit
time to time by the Central Government. States’ Section of account. In cases where outside agencies
share of net collections under small savings (deposits retain control over expenditure from the grants made
minus withdrawals by subscribers) schemes under by them, the expenditure from these funds is
each State and Union Territory (with legislature) is adjusted directly against the Deposit head under
advanced to the concerned State/Union Territory as which the grants have been credited. If the outside
investment in its special Securities and the balance if agencies exercise no such control, then the
any, is invested in special Central Government expenditure will be entered under the relevant
Securities (forming part of the internal debt of the Service Major Head while an equivalent amount will
Government of India). be transferred to the corresponding Revenue head of
account by debit to the Deposit head.
Reserves and Reserve Funds: These principles and procedures do not apply to
There are a number of Reserve Funds in the certain Reserve Funds, which are governed by
Deposit Section of the accounts of the Union special arrangements.
Government, which have been created for specific
and well defined purposes and are fed by Deposits:
contributions or grants from the Consolidated Fund of In the case of moneys received to be held as
India or from outside agencies. The method of deposits with Government, it should be satisfied that
accounting applied to the three different classes of these moneys can be properly credited to the Public
Reserve Funds is as follows- Account of India by virtue of statutory provision or
1. Funds Accumulated From Grants Made By general or special orders of Government, since no
Another Government: item should be credited as deposit which should
otherwise be credited as revenue receipt or in
The grants from another Government in the first reduction of ordinary expenditure of the Government.
instance be taken to the relevant head in the Deposit It has to be ensured that the balances in deposit
Section of the accounts of the Government to which accounts are correctly carried over from year to year
the grant is made. The expenditure from the grants and that any deposit remaining unclaimed for such
accumulated in the fund, where the Government period as may be prescribed Government are duly
making the grant has not reserved any control to credited as revenue receipts of the Government.
itself, will be entered in the relevant Service head of
expenditure while an equivalent amount will be Advances:
transferred to the corresponding Revenue head of
account by debit to the Major/Minor Head to which Government occasionally makes loans and
the grants were originally taken. In cases where the advances to public and quasi-public bodies and to
individuals, some under special laws and others for

143
special reasons or as a matter of recognized policy. ‘8680-Miscellaneous Govt. Account’ will be closed
The Accounts officers are required to see that the annually to Govt. Account. Similarly, balances under
conditions of repayment of a loan or advance are ‘8675-Deposits with Reserve Bank’ held in the books
complied with by the debtor and should exercise a of Principal Accounts Offices will be closed annually
close watch over repayment of principal and to Government account, but those held in the books
realization of interest, if any. of the Controller General of Accounts will be
transferred to the head ‘8999-Cash Balance’, every
Suspense and Miscellaneous Accounts: month.
Under Suspense heads are recorded all such The Ledger for Debt Deposit Suspense and
transactions as are ultimately removed either by Remittance heads closing to balance viz. those under
payment or recovery in cash or by book adjustments. Sectors E, F, I, J, K, and L, may be prepared half-
Unless otherwise provided for by rules, the use of yearly for the first six months of April to September
Suspense heads for provisional adjustment of after the accounts of September are closed.
transactions ultimately adjustable under ordinary Thereafter, it will be prepared quarterly for October to
Revenue and Service heads should be avoided. It December and for January to March including March
has to be ensured by the accounting authorities Supplementary, by using the prescribed Form. (This
responsible- will however exclude major heads ‘8675 -Deposits
with Reserve Bank and “8680- Miscellaneous
1. That the unadjusted balance under these Government Account and “M” of the List of Major and
heads continue to represent bonafide Minor Heads of Account). The ledger is prepared by
assets or liabilities of Government capable the P.A.O. up to sub/detailed heads, as may be
of being realized or settled, as the case necessary, based on the figures of first six months
may be, and and subsequently for the two quarters as mentioned
2. That the satisfactory action towards such above, and sent to the Principal Accounts Office by
realization or settlement is being taken by the 5th November, 5th February and 5th July of each
officers responsible therefore. year respectively. The amounts of balances adopted
or transferred, on “Proforma” basis in terms are
All balances suspense heads must be reviewed at clearly indicated. The amounts adopted by transfer
short intervals and in reviewing the balances it should consequent to the Departmentalization of Accounts
be secured that no item remains unadjusted longer from Accountants General are similarly exhibited in
than is reasonably necessary to bring about its the Ledger of the year in which the ‘Proforma’
clearance in the ordinary course with due regard to transfer was carried out.
the rules applicable to each case, as prescribed by The Principal Accounts Office puts together and
the Controller General of Accounts in consultation prepares a Ledger incorporating the transactions of
with the C&AG. all P.A.Os under his jurisdiction. This is done with
minor head-wise details based entirely on the figures
Remittances:
furnished periodically by the PAOs. The Ledger is
In the case of Remittance transactions, it should then submitted to the respective Pr.CCA/CCA/CA for
be seen that debits and credits are cleared either by review by the 10th November, 10th February and
receipt or payment in cash or by book adjustment 10th July of each year. For the purposes of regular
under the relevant Service or Revenue heads of monitoring, a copy of the Periodical Statement along
accounts, or are paired off by corresponding credits with the comments of the respective Pr.CCA/CCA/CA
or debits within the same or in another accounting is sent to the Finance Accounts Section of the
circle. An important part of the accounting Controller General of Accounts by 15th November,
responsibility is the scrutiny of balances from month 15th February and 15th July respectively every year.
to month in order to effect their early clearance and to The Pr.CCAs/CCAs/CAs comments are specifically
determine the accuracy of the outstandings at the regarding the action initiated for liquidating the
end of the year. outstanding balances and settling adverse balances
under various Debt, Deposit Suspense and
The Accounting Guidelines Relating to Public Remittance Heads. It is also checked to ensure that
Account: the progressive figures for the year tally with those
The monthly figures posted in the various appearing in the Statement of Central Transactions,
broadsheets pertaining to debt, deposit, suspense including the effect of all Journal Entries incorporated
and remittance heads are to be compared with the therein. Balances under Public Sector Bank
figures of that month’s transactions under relevant Suspense head maintained by P.A.Os is not required
heads in the monthly account, to verify that the two to be included in the ‘Ledger’, since clearance
sets of figures tally. Discrepancy if any between the against this head for adjustment against Reserve
two sets of figures are to be analyzed forthwith to set Bank Deposits head of account is carried out at the
right errors, like un-posted item or misclassification. level of Principal Accounts Office itself. After this, the
Principal Accounts Office prepares a sector wise
The balances under debt, deposit, suspense and abstract of balances in the form prescribed by the
remittance heads are to be individually closed to Controller General of Accounts.
‘Balance’. However, the balances under the head

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 ANNEXURE - III of (CHAPTER III)
THE DETAILS RELATING TO THE MATERIAL OF FINANCE ACCOUNTS, THE PROCEDURES FOR ITS
COMPILATION AND VARIOUS STATEMENTS THEREIN
Material For Finance Accounts: At the end of the Statement, transactions of
Ministry of Railways are analyzed, showing their
The Finance Accounts is prepared on the basis Revenue Receipts and Revenue Expenditure, the net
of- surplus and the distribution of net revenue into
(1) Statement of Central Transactions; dividend for General Revenues and Appropriation to
the respective Reserve Funds. This write up is vetted
(2) Journal Entries; by the Ministry of Railways before incorporating in the
(4) Proforma Adjustments; and Statement.

(5) Progressive figures upto the end of the Statement No.2 – Summary of Debt Position:
previous year.
This statement has three parts-
While the first four inputs mentioned above are
received from the various accounting authorities, (i) Statement of Borrowings
progressive figures upto the end of previous year are This part contains the debt position at the
available in the records of Finance Accounts Section. commencement of the year, Receipts and
The Statements of Central Transactions constituting Repayments during the year, the debt position at
the base material are furnished by the designated the end of the year and the net increase during
authorities to the Controller General of Accounts. the year. This part of the statement includes
The Statement of Central Transactions: heads under Public Debt and Small Savings,
Provident Funds, etc with the components of
The Statement of Central Transactions includes Market Loans raised during the year also being
the progressive figures up to March (Supplementary) indicated. A new section depicting the correct
accounts and correcting entries made after that, until position of outstanding liability of the Central
the date of submission to the Controller General of Government has been inserted from the year
Accounts. After its submission to the Controller 2004-05.
General of Accounts, any further correction to the
Statement of Central Transactions that becomes (ii) Other Obligations
necessary, are carried out by proposing a Journal
This part of the statement gives similar
Entry after obtaining the approval of Controller
General of Accounts. information as mentioned in (i) above, in respect
of Reserve Funds and Deposits (separately for
COMPONENTS OF FINANCE ACCOUNTS: those bearing interest and not bearing interest).
Apart from introductory portion and the required (iii) Service of Debt
certificates, the Finance Accounts contains 17
Statements giving details as under- In this part of the statement, transactions of the
current year and the previous year are compared
Part-I:
in relation to total interest paid by the
Part I of Finance Accounts contains five Government indicating the interest on (a) Public
summarised statements (Statements No. 1 to 5). Debt and Small Savings and Provident Funds,
Statement No.1 – Summary of Transactions: (b) Reserve Funds and (c) other obligations. A
footnote showing the amount of Dividend
This statement shows a summary of all received on investments in the commercial
transactions of the Union Government for the current undertakings is also incorporated.
and the previous year, with the Receipts and
Expenditure transactions shown separately. Grand Statement No.3 – Loans and Advances by the Union
Total of Receipts should be equal to Grand Total of Government:
Disbursements. After the Summary of Transactions, This statement contains the following details: -
there is an Annexure which contains major headwise
details of Taxes and Duties assigned to States during (i) The balance of loans at the
the year. The total Revenue Receipts and commencement of the year, amount of
Expenditure for the current year are compared with loans paid and repaid during the year,
those of the previous year. The increase in respect of balance of loans at the end of the year and
Defence, Railways and Posts is shown as a single net addition/decrease during the year;
figure, while the reasons for increase in civil
(ii) The loans granted to State and UT
departments are explained for those major heads
Governments to cover gap in resources;
where the increase is substantial.

145
 (iii) Loans to State Governments written off in (ii) The significance of “Government Account”
terms of recommendations of Finance head and the closing balance under it;
Commission;
(iii) The debit or credit balance (as on 31st
(iv) The amount of loan paid as Ways and March of the year) for each sector of the
Means Advances to State Governments for account.
clearance/avoidance of overdrafts from RBI
and also the repayments made during the PART – II Detailed Accounts and Other
year; Statements:

(v) Details of loans sanctioned by the A – Receipts and Expenditure

Government where the terms and This part contains seven statements i.e.
conditions of the loans were not settled; Statements 6 to 12 of the Finance Accounts
(vi) Ministry wise and State/UT Government Statement No. 6- Statement showing Percentage
wise information on loans other than Distribution of Revenue Receipts and Revenue
rehabilitation loans in which repayment of Expenditure for the year:
loans and/or payment of interest was
defaulted; This statement is prepared with the information
furnished in three columns. In the first half of the
(vii) Ministry wise information on loans in which statement, the total Revenue Receipts is depicted
repayment of loans and /or payment of component wise, along with the percentage against
interest was defaulted by a loanee other the total Revenue Receipts. In the second half the
than State/UT Government. various components of Revenue Expenditure are
Statement No. 4 Guarantees Given by the Union similarly depicted.
Governments: Statement No. 7- Statement showing the distribution
As per requirements of the FRBM Rules, a new between Charged and Voted Expenditure:
format for disclosing guarantees given by the This statement depicts, in a nutshell, the
Government has been introduced in the Finance distribution of total expenditure between Charged and
Accounts from the year 2004-05. At the outset, the Voted expenditure and
purposes for which Government stands guarantee
are stated. The maximum amount of guarantee for (ii) The distribution of the expenditure under
which Government had entered into agreements and the Consolidated Fund; and
sums guaranteed outstanding at the end of the year
(ii) Breakup of disbursement under Public
are mentioned in crores of Rupees. The Ministry/
Debt, Loans and Advances, Inter-State
Department-wise details of guarantees under
Settlement and Transfer to Contingency
different categories (6 categories) are given.
Fund.
Statement No. 5-Summary of Balances:
Statement No. 8- Detailed Account of Revenue
Under the Indian Government Accounts book- Receipts and Capital Receipts by Minor Heads:
keeping system, the amounts booked under Receipts
This statement shows minor head wise details of
and Expenditure heads in Revenue and Capital
the following Revenue and Capital Receipts. (a) The
Account and those under major heads ‘7810 Inter-
totals at the Sub-Major, Major Head, and Sector
State Settlement’,‘7999- Appropriation to the
levels as also the, (b) Total Revenue Receipts, (c)
Contingency Fund’ and ‘8680 Miscellaneous
Capital Receipts and (d) The total of Revenue and
Government Account’, are closed to a single head
Capital Receipts. The reasons for minus transactions
with the nomenclature ‘Government Account’. The
at Minor head levels except those under deduct
balances under this head represent the cumulative
heads are recorded as footnotes at relevant pages.
result of all such transactions. The closing cash
balance at the end of the year can be worked out and Statement No. 9- Detailed Account of Revenue
proved by adding the balances under ‘Government Expenditure by Minor Head and Capital Expenditure
Account’ and those under Debt, Deposit, Suspense by Major Head:
and Remittance heads and the Contingency Fund.
This statement is prepared in thousands of Rupees This statement depicts the details of Revenue
having three parts, and shows the balances as at the expenditure by minor heads and Capital expenditure
end of the year under various sectors of account, with by major heads. The breakup, if any, of expenditure
the total debit balances. The information available in into Charged and Voted components is also shown,
this Statement in brief, is as follows- with the charged expenditure shown in italics. The
reasons for minus expenditure except those under
i) The sector-wise details of Prior Period deduct heads are recorded as footnotes at the
Adjustments (PPAs) made in the account, relevant pages.
along with the debit and credit totals of the
PPAs;

146
Statement No.10- Statement of Expenditure on (i) Details of Consolidated Fund at the
Capital Account during and to the end of the year: beginning of the statement, with the
Receipts and Disbursements under
The expenditure on Capital Account during and Revenue and Capital account are shown in
to the end of the year, is depicted minor headwise in respective columns. As these heads close
this statement. However, due to non – availability of to Government Account, there are no
progressive figures at minor head levels, the figures opening and closing balances of these
are shown at sub – major head level for major head heads;
4076 and at the major head levels for major heads
5002 and 5003. An Annexure is added indicating the (ii) The balances against Major Head 8000 –
minor head – wise details of expenditure incurred Contingency Fund of India;
during the year under the Major Heads 4076, 5002
and 5003. The reasons for minus expenditure except (iii) The details of transactions and balances
those under deduct heads are recorded as footnotes under Public Account, with the details for
at relevant pages. every minor head with sub-sector-wise
breakup;
Statement No.11- Statement showing the
Investments of the Union Government in Statutory (iv) Aggregate totals are made at all levels viz
Corporations, Government Companies, Other Joint sub – major head, major head, sub –
Stock Companies, Co-operative Banks and Societies, sector and sector levels. The total for the
etc. upto end of the year: Public Account is also depicted;

This statement, contains full details of (iv) Minor head wise details of the major head
investments made by the Government in Statutory 8999 Cash Balance under the ‘Sector N
Corporations, Government Companies, Other Joint Cash Balance’. The opening balance under
Stock Companies, Co-operative Banks and Societies, this major head is equal to the figure under
etc. upto the end of the year. Those enterprises the column for Receipts while the closing
which are under construction/expansion are included balance is equal to the figure under the
in Part I of the statement while the enterprises column for Disbursements. A footnote
already in operation are covered in Part II of the comparing the closing balance under head
statement. Dividend received during the year is 8999 – 102 Balance with Reserve Bank in
mentioned in column (9) of the statement, and if no this statement with the closing balance as
dividend is received, the reasons thereof are reported by RBI, CAS, Nagpur is also
recorded in the remarks column. Any PPA that recorded.
affects the investment is suitably explained in the Statement No. 14- Statement of Debt and other
footnote. interest bearing obligations of Government:
Statement No. 12 - Statement showing Capital and This Statement depicts:
Other expenditure (outside the Revenue Account) to
end of the year and the principal sources from which (1) Minor - head wise details under the - (i)
funds were provided for that expenditure: Sector E-Public Debt (ii) Sub-Sectors (iii)
State Provident Fund and (iv) Other
The figures depicted in this statement are shown Accounts below the Sector I Small
in two parts. The first part indicates the expenditure Savings, Provident Funds etc.
on Capital account and on Loans and Advances
while the second part indicates the sources of funds (2) A statement showing details of foreign
for that expenditure. The net provision of funds for loans in foreign Currencies/Rupees in
the current year should be equal to the total capital Crores and the exchange rate adopted (as
and loan expenditure during the current year. Figures on 31st March of the year) is appended to
in respect of investment heads are shown separately statement No.14.
and are not included in the concerned sectors.
This is furnished by CAAA.
B – Debt, Deposit, Remittances and Contingency
Statement No. 14 A- Details of Market Loans raised
Fund:
in India and securities issued to International
This part contains five statements i.e. Statement Nos. Financial Institutions:
13, 14, 14A, 15 & 16.
This statement supplements statement No. 14,
Statement No. 13- Statement of Receipts, furnishing details of each loan, under major head
Disbursements and Balances under heads of account “6001”, even below the minor head level. Head wise
relating to Debt, Deposits, Remittances and details of loans shown at minor head level in
Contingency Fund: statement No.14 are furnished in this statement,
which is obtained separately from the concerned
This statement contains the following: - department(s) and incorporated.

147
Statement No. 15- Statement of loans and advances
showing the amounts advanced and repaid, interest
received during the year and the balances of such
loans and advances at the commencement and close
of the year:
The Minor head wise figures of loans are given in
this statement. This statement also contains the
breakup of the State/UT Government wise under
major heads 7601 and 7602. In addition, an
Annexure is added to indicate the major head-wise
details of loans advanced during the year for “Plan”
purposes.
Statement No. 16- Statement showing the position of
National Small Savings Fund:
This statement was introduced in Finance
Accounts in the year 1999-2000 and depicts the
minor head-wise details of balances under National
Small Savings Fund that also includes Savings
Deposits and Savings Certificates etc. At the end of
the Statement, two Appendices are added – (i)
Showing the details of Income & Expenditure of
National Small Savings Fund and (ii) Showing State-
wise details of investments made by Government of
India in Special State Government Securities.

148
 ANNEXURE-IV of (CHAPTER- III)
THE VARIOUS STAGES AND THE PROCESSES INVOLVED IN THE PREPARATION OF APPROPRIATION
ACCOUNTS
The Appropriation Accounts are prepared in two per given norms e.g. saving/excess was
stages for expediting audit scrutiny: mainly due to...............................”
Stage - I: Grant Statement of Head wise c. In columns 1 & 2 of the Statement of
Appropriation Accounts: Recoveries, the original budget estimates
and the supplementary estimates, if any,
After the beginning of the new financial year, will also be given.
each Principal Accounts Office will complete Stage I
of the Head wise Appropriation Accounts. This shall Note: The actual recovery should be shown against
be done with the help of that year’s Main and the correct head from which the amount has actually
Detailed Demands for Grants, Supplementary been reduced while computing the ‘Statements for
Demands for Grants, Re-appropriation Orders issued Central Transactions’ (S.C.T.) figures. The
by the Ministry/Department controlling the nomenclature in Annexure II should be in conformity
grant/appropriation, and the Surrender Orders if any with those shown in the S.C.T. It may be noted that
issued by them, as accepted by Ministry of Finance. even if a head does not appear in the Detailed
The Budget Wing of the concerned Demands for Grants, it can still be adopted in
Ministry/Department shall verify the (Stage-I) Grant Annexure II to depict the actual recovery without
Statement before it is issued under the signatures of obtaining formal approval of the Ministry of Finance,
Pr.CCA/CCA/CA etc. The Principal Accounts Office Budget Division.
will furnish one copy of this Grant Statement to the
Principal Audit Officer i.e. Office of the Director Stage-II - Head wise Appropriation Accounts:
General of Audit, Central Revenues(DGACR), New After complying with all the observations made on the
Delhi, three copies to the accredited Audit Officer and Grant Statement (Stage I) by the accredited Audit
two copies to CGA, as per the annual time table Officer, Pr. Audit Officer, the Controller General of
issued each year by the Controller General of Accounts and the Pr. Accounts Office will initiate
Accounts. action for Stage II of the Head wise Appropriation
In Stage I, only the basic details are given as Accounts, indicating-
detailed below- In Col.3
In Col.1 The figures of actual expenditure.
a. Various sub-heads as per Detailed In Col.4
Demands for Grants; and
The variations of (+) Excess or (-) Savings
b. The appropriation/provision in respect of between the figures of Columns 2 and 3. The
each sub head, with Original denoted by reasons for variation in Col.4 will also be given in
letter ‘O’, Supplementary denoted by letter Column 4, for example, saving/excess was due to
‘S’ and the Surrender or Re-appropriations ........................................”. In the Statement of
denoted by letter ‘R’ for charged/voted Recoveries etc, the actual expenditure will be shown
appropriations and grants. The Plan and alongside the total estimates, as well as indicating
Non-Plan appropriations/grants are shown the variation (+) More or (-) Less.
together.
The Stage II Appropriation Accounts shall also be
In Col.2 rendered to Audit/CGA, as per the timetable issued
a. The figures of total grant or appropriation by the Controller General of Accounts every year,
indicating the net effect of Original, indicating that-
Supplementary & Re-appropriations. As (a) the statement is complete and contains all
surrendered amounts are accounted under the Re-appropriation/Surrender Orders
‘R’, the surrendered amounts as accepted issued in respect of the particular
by Ministry of Finance are shown by grant/appropriation during the financial
opening the head “Surrenders/Withdrawals year, and that
within Grant/Appropriation”. This is to
ensure that the actual grants including the (b) all Surrender Orders have been accepted
Original & Supplementary as voted by the by the Ministry of Finance vide its Audit
Parliament are shown under concerned Order No(s)............. dated ............
segment or section.
(i) Attested copies of all Re-appropriation
b. Explanations for the variation denoted by and Surrender Orders issued during
‘R’ should also be included in Column1, as the financial year and taken into

149
 account for preparing the Grant any advance remaining un-recouped, a nil
Statement. statement shall be furnished.
(ii) Statement of funds re-appropriated to (e) Account(s) of Earmarked Fund(s)
and from different sub-heads, in the containing the brief description of the Fund,
prescribed Form. (v) its accounting operation, the year’s receipts
and payments along with opening and
(iii) Statement of Recoveries adjusted in closing balances.
reduction of expenditure.
A certificate in the following form must also
(iv) Statement showing the distribution of be given on a separate sheet to be
Supplementary Demands for Grants up enclosed with the Head wise Appropriation
to sub-head level both for Gross and Accounts:
Deduct recoveries, as furnished by the
Administrative Ministries/Departments. (i) “Certified that the earmarked funds
included in the Union Government
(v) Certificate to the effect that there is (Civil) Appropriation Accounts for the
no/are case(s) that attract the year ....................... are eligible for
provisions of ‘New Service or New inclusion and have the prior
Instrument of Service’. concurrence of the C&AG of India”.
(vi) Certificate to the effect that “Increase of (ii) “Certified that there is/are no fund(s)
budget provision by ` five crore and which is/are eligible for inclusion in the
above under a sub-head has been Union Govt. Appropriation Accounts
made with the approval of Secretary (Civil) for the year .............”. (Deleting
Expenditure”. whichever is not applicable.)
Note: A few Demands would encompass provision (f) If the expenditure has exceeded the
for more than one Department under a Ministry. In sanctioned provision or appropriation in
such cases the provision would be made department any segment, viz. Revenue-Voted,
wise within the Revenue and Capital Section, and Revenue-Charged, Capital-Voted, or
thereafter the grand total would be struck under each Capital-Charged of the grant or
section. A separate sheet showing major head wise- appropriation, a certificate shall be
combined provision of all the departments will be furnished to the effect that the expenditure
attached after both Revenue and Capital sections. has not exceeded due to
Each account will be accompanied by the following misclassification/erroneous adjustment in
certificates and statements: the accounts, with the actual figures of
(a) “Certified to the best of my knowledge and excess amount in units also shown.
belief that all expenditure included in the
h) Reasons for variations between figures of
Head wise Appropriation Accounts: Union
total grant or appropriation in Column I
Government (Civil): for the year ...............
(Original + Supplementary) if any, and
has been sanctioned by the competent
actual expenditure in Column 3 under
authority (except for the cases mentioned
various sub-heads will be obtained by the
in the Annexure). This certificate shall be
Pr. Accounts Office from the Budget Wing
recorded at the end of the body of the
etc. of the Ministry/Department and
Account itself.
incorporated in the Head wise
(b) Statement showing Reconciliation of Appropriation Accounts. Such reasons will
expenditure figures included in the Head be obtained in the cases qualifying for
wise Appropriation Accounts and the comments. The copies of Appropriation
Statement of Central Transactions. Accounts will be sent for audit scrutiny to
the accredited Audit Officer, Pr. Audit
(c) Statement showing sub-head wise Officer (DGACR), and the Controller
Reconciliation of figures in the Head wise General of Accounts, duly signed by the Pr.
Appropriation Accounts as well as Accounts Officer.
Statement of Recoveries adjusted in
accounts in reduction of expenditure. This (i) Statement indicating major head wise
will be done up to and Minor Head wise in /grant wise totals of the Consolidated Fund
the Statement of Central Transactions. of India as appearing in SCT.

(d) Statement showing the “Amounts met from If any important feature is seen in the Head wise
Advances out of Contingency Fund of Appropriation Accounts, the Principal Accounts
India”, but remaining un-recouped at the Officer shall bring them to the notice of the Chief
end of the year. If there is no such case of Accounting Authority, through the Financial Adviser.

150
Stage-III Headwise Appropriation Accounts: Duly Original provision, and the Original and
Audited, And Approved By The Chief Accounting Supplementary provision taken
Authority On File: together, if both of them exist.
After the Appropriation Account of each (ii) Where the variation is a saving - This
grant/appropriation pertaining to the includes all cases where the savings
Ministry/Department is audited and “No Comments” exceed 10% of the original provision or
certificate is issued by the Audit Officer, the finalized `50.00 lakhs whichever is higher, if
Account would be put up on file to the Secretary, for there is no supplementary provision in
his approval. This shall be put up through the that sub-head. If there is a
Financial Adviser of the Ministry, bringing to notice supplementary provision in a sub-head
any important variations, points or features arising either with or without any original
out of the audit scrutiny. provision, all cases in which the
savings exceed 10% of the
Note: The Audited Head wise Appropriation
Accounts has to be submitted within one week of supplementary provision or `5.00 lakhs,
receiving ‘No Comments’ certificates from Audit. If whichever is higher, will be included.
the ‘No Comments’ Certificate received is subject to (c) If the Grant/Appropriation as a whole
some Audit Observations, the audit observations has been exceeded - This includes all
must be complied with and the accounts finalized at cases where excess has occurred in any of
the earliest, without waiting for a clear ‘No the four segments as a whole viz.
Comments’ Certificate from Audit. Revenue-Voted, Capital-Voted, Revenue-
The copies of the finalized Account will be Charged and Capital-Charged. In such
furnished for condensation at this stage as under : instances only the sub-heads that involve
an excess of over `1.00 lakh each, may be
a. To the Pr. Audit Officer (DGACR), 2 picked up. If none of the individual sub-
copies; and heads involve an excess of over `1.00 lakh,
b. To the Controller General of Accounts, 2 the sub-heads that mainly account for the
copies. overall excess may be included. The
criteria laid down in (a) and (b)(i) will also
The fact that the Chief Accounting Authority has be followed for the purpose.
approved the Accounts on file will also be indicated in
the forwarding letters sent with the copies. Note (1): Notwithstanding the working principles
mentioned in the preceding para, occasions may
Norms For Recording Reasons For Variations arise where it may be considered necessary at any
And Their Presentation: stage of the processing of the Appropriation
Accounts, to include any additional sub-heads for the
The sub-heads for which reasons for variations
purpose of explaining the variations. This may occur
of savings and excesses are required to be included
either during Audit, or after the completion of Audit of
in the Head wise Appropriation Accounts, will be
the Head wise Accounts, or even at the stage of
selected on the following laid down working
condensation. In such cases, explanations for
principles:
variations in those sub-heads shall also be included
(a) If the variation in a sub-head exceeds in the Head wise Appropriation Accounts, before they
`100.00 lakhs: are signed by the Secretary of the
Ministry/Department as the Chief Accounting
This includes all variations irrespective of Authority.
the percentage under both savings and
excesses, against the sanctioned provision Note (2): For the purpose of this para, variation
of Original or Supplementary implies the variations under column 1 (re-
grants/appropriations or both taken appropriation including surrender element only) and
together. column 4 taken together.

(b) If the variation in a sub-head does not The reasons for variations should be brief, lucid
exceed `100.00 lakhs: and analytical to be mentioned as per their
importance. Vague observations like ‘due to over
(i) Where variation is an excess - This estimates’, ‘based on actual expenditure’, ‘due to less
includes all cases where the excess (or more) expenditure’, ‘due to less (or more)
exceeds either 10% of the total demands’ etc. should be avoided and
sanctioned provision or `50.00 lakhs, Ministry/Department shall be requested to elucidate
whichever is higher. The total correct and specific reasons.
sanctioned provision in this clause The Public Accounts Committee (10th Lok
means Original provision if there is no Sabha, 1990-91) in its 60th Report vide paras 1.22
supplementary provision,
and 1.24 had observed that savings of `100.00 crores
Supplementary provision if there is no

151
or above are indicative of defective budgeting as well Principal Audit Officer (DGACR, New
as shortfall in performance in a Grant or Delhi), for obtaining final Audit clearance
Appropriation. It has therefore been decided by the from the Comptroller & Auditor General of
Public Accounts Committee, that each year a detailed India, before it is sent for printing.
Explanatory Note in respect of savings of `100 crores
(iii). In case the Controller General of Accounts
or above shall be furnished by the respective
is not in office on account of tour or leave,
Ministry/Department, to the Committee.
two copies of Condensed Accounts will be
Note: Explanatory Note for savings of `100.00 crores signed by the Addl. Controller General of
or more for all excess expenditure may be submitted Accounts. Ex-post-facto approval of the
to audit for vetting, with a copy to the Controller CGA will however be obtained in all such
General of Accounts by the concerned cases.
Ministries/Departments. It should be submitted along (iv). Ten (diglot) signatory copies bound in
with the Head wise Appropriation Accounts (of this Rexine with the Title embossed in Gold will
Stage), to enable the Controller General of Accounts be signed in manuscript by the Controller
to send it along with the condensed accounts. This General of Accounts, countersigned on
will facilitate both checking of facts and figures of the behalf of the Government by the Secretary
Notes as well as prevent delays in submission of the to the Government of India, Ministry of
detailed explanatory notes to PAC. Finance, Department of Expenditure.
Corrigendum To The Head Wise Appropriation (v). Seven of the signatory (diglot) copies,
Accounts: along with a certificate by the Assistant
Corrections necessitated in the Head wise Director (Official Language) to the effect
Appropriation Accounts after submission to that Hindi version is the true translation of
Audit/CGA whether due to reconciliation of the English version appended to it, will be
expenditure with departmental authorities or furnished to DGACR, New Delhi. DGACR
otherwise and carried out in the Statement of Central will obtain the signatures of the Comptroller
Transactions through Journal Entries, may be & Auditor General of India on the Audit
communicated to Audit/CGA in the prescribed format. Certificate, before the C&AG submits it to
the President through the Finance
Condensation Of Head Wise Appropriation Secretary to the Govt. of India.
Accounts In Accordance With The
Recommendations Of The Public Accounts (vi). The allotted Government of India Press is
Committee: simultaneously asked to go ahead with the
printing of the balance ordinary copies. A
As soon as the C&AG of India furnishes three certificate will also be recorded in the
signatory (diglot) copies of the Union Govt. forwarding letter addressed to DGACR, to
Appropriation Accounts (Civil) to the President, 10 the effect that the reconciliation of Grant
(diglot) copies will be supplied by the organization of wise/Major Head wise figures for the
Controller General of Accounts to the Budget Division purpose of Union Govt. Appropriation
of Ministry of Finance. This is done for advance Accounts (Civil) has been completed with
action towards presentation of the Accounts un nt. the Major and Minor Head wise figures of
This is done in accordance with the the Union Govt. Finance Accounts. Diglot
recommendations of the Public Accounts Committee copies will be supplied to Lok Sabha
on the subject and the changes advised from time to Secretariat and Rajya Sabha Secretariat,
time by the C&AG of India. on the specified date.
(i). The audited Head wise Appropriation (vii). When intimation is received by the
Accounts of various grants/appropriations Controller General of Accounts that the
will be condensed by the organization of Accounts have been laid on the Tables of
the Controller General of Accounts in the Parliament, diglot copies of the Union Govt.
form in which these are required to be Appropriation Accounts(Civil) as per
printed and presented to Parliament. This numbers indicated will be supplied to the
is done in accordance with the following authorities.
recommendations of the Public Accounts
Committee on the subject and the changes (i) Press Information Bureau; 50
advised from time to time by the C&AG of (ii) Public Accounts Committee; 40
India.
(iii) C&AG of India; 60
(ii). Two copies of the condensed accounts
shall be signed by Controller General of (iv) Director General of Audit, Central
Accounts and the balance three copies will Revenues; 88
be authenticated by the Jt.
CGA/Dy.CGA/Asstt. CGA, and furnished to

152
 (v) Pr. Director of Audit, Economic & Principal Chief Controllers/Chief
Service Ministries; 10 Controllers/Controllers of Accounts etc will carry out
the corrections in the Audited Head wise
(vi) Pr. Director of Audit, Scientific Appropriation Accounts, on receipt of intimation from
Departments; 5 CGA about any additions or alterations etc made in
(vii) Director General of Audit, Defence the Audited Head wise Appropriation Accounts. Such
Services; 5 corrections may be based on the Audit Comments
and are included in the Condensed Appropriation
The organization of Controller General of Accounts, before their final printing and presentation.
Accounts will simultaneously send intimation to the After carrying out such corrections, three copies of
Controller of Publications, Civil Lines, Delhi, to the Head wise Appropriation Accounts including the
release the remaining copies of the Union Govt. Statement of Recoveries adjusted in accounts in
Appropriation Accounts (Civil) to concerned reduction of expenditure, will be got signed by the
Ministries/Departments/Offices according to the free Chief Accounting Authority. The Pr. CCA/CCA/CA
mailing list already sent to him for the purpose. functioning as the Head of the Organization signs the
enclosures.
STAGE - IV - HEADWISE APPROPRIATION
ACCOUNTS:

153
 ANNEXURE-I (A to F) of (CHAPTER-V)

A. Four Letters to Lok Sabha for presentation of Finance Bill and making of Demands (to be issued
before the presentation of the Budget in the Parliament)

1.

D.O. No. February

Sir,

The President, having been informed of the subject matter of

the Demands for Grants for expenditure of the Central Government (Excluding Railways) for
the year _______________ recommends, under article 113(3) of the Constitution, the
making of the Demands to the Lok Sabha.

Yours sincerely,

Minister of Finance

To
The Secretary General
Lok Sabha
Parliament House
New Delhi.

154
2.

D.O. No. February

Sir,
The President having been informed of the subject matter of the Finance(No. ) Bill,
(Year), recommends , under clause (1) and (3) of article 117 read with clause (1) of article 274
of the Constitution of India, the introduction of the Finance (No. ) Bill, (Year) to the Lok
Sabha and also recommends to the Lok Sabha the consideration of the Bill.

2. The Bill will be introduced in the Lok Sabha immediately after the presentation of
the Budget on (Date).

Yours sincerely,

(Minister of Finance)
To
The Secretary General
Lok Sabha Secretariat
Parliament House
New Delhi.

155
3.

D.O. No. February ,

Sir,

I give notice of my intention to move the following motions during the

current Session of the Lok Sabha:

(i) To move for leave to introduce the Finance (No. ) Bill, (year); and
( ii ) Also to introduce the Bill.

Yours sincerely,

Minister of Finance

To
The Secretary General
Lok Sabha
Parliament House
New Delhi.

156
4.

D.O. No. February

Sir,

I give notice of my intention to move the following motions during the

current Session of the Lok Sabha:

(i) "That the Finance (No. ) Bill (year) be taken into consideration".
( ii ) "That the Bill be passed".

Yours sincerely,

Minister of Finance

To
The Secretary General
Lok Sabha
Parliament House
New Delhi.

157
5.

STATEMENT OF OBJECTS AND REASONS

The object of the Bill is to give effect to the financial proposals of the Central
Government for the financial year _______________. The notes on clauses explain
the various provisions contained in the Bill.

Minister of Finance

New Delhi, the February, (Year)

Note : to be printed at the end of the Finance Bill (before notes on clauses).

158
 B. Other Letters to be issued in connection with the presentation of the Budget in the Parliament.

1.
D.O. No.

Finance Secretary

Dear
The Government has scheduled to present the Regular Budget for the year __________ in the Lok Sabha
on (Day), February ___________ at _______ A.M.

2. As per tradition and practice, the Finance Minister seeks an audience with the Her Excellency the President
of India on the morning of February _________ before the meeting of the Cabinet, which is normally scheduled at
_______ A.M. on the same day. During the meeting, the Finance Minister will: (i) brief Her Excellency on the main
features of the Budget; (ii) seek her permission for making the Demands for Grants, (Year) under Clause (3) of
Article 113; and (iii) seek her permission for introduction and consideration by the Lok Sabha of the Finance Bill
(Year) under Clause (1) and (3) of Article 117 read with Clause (1) of Article 274 of the Constitution of India.

3. I request you to kindly confirm the convenience of Her Excellency the President of India for the proposed
audience on February __________________.

Yours sincerely,

(Finance Secretary)

Secretary to the President of India

Rashtrapati Bhawan
New Delhi .

159
 2.

D.O. No.

Finance Minister

New Delhi, the February,

Dear

The Budget for the fiscal __________ is to be presented to Parliament (Lok Sabha)

on February _____________ at 11.00 A.M. The Finance Bill (Year) will also be introduced.

2. In keeping with past precedent, I request you to please have the Question Hour on

February________________, suspended.

With regards,

Yours sincerely,

(Finance Minister)

Minister of Parliamentary Affairs,

Parliament House,
New Delhi.

160
3.
BUDGET MATTER

D.O. No.

Joint Secretary(Budget)

New Delhi, the

As you are aware, the Union Budget ___________ is scheduled to be presented on (Date), (Year).
In keeping with the practice of previous years, the Budget speech is to be web cast live through Internet.
This task has been assigned to National Informatic Centre (NIC).

2. I shall be grateful if you could kindly advise your office to extend necessary assistance to NIC for
transmitting the Budget Speech through video screening on internet as the feed for the web-cast will be
from Doordarshan.

Yours sincerely,

JS (Budget)
Secretary,
Ministry of Information & Broadcasting,
Shastri Bhavan,
New Delhi.

161
4.

BUDGET MATTER

D.O. No.

Joint Secretary(Budget)

New Delhi, the

Dear

As you are aware, the Union Budget ___________ is scheduled to be presented on February (__________
Year). In keeping with the practice of previous years, the task of web casting live, the Budget speech through
Internet, is to be entrusted to National Informatic Centre (NIC).

2. I shall be grateful if you could kindly advise the concerned officers to handle the task of transferring the Budget
Speech through video screening on internet. Ministry of Information & Broadcasting has separately been requested
for extending necessary assistance to NIC in this regard.

With regards,

Yours sincerely,

JS(Budget)

Director General,
National Informatic Centre, CGO Complex,
Lodhi Road, New Delhi.

162
5.
SECRET
MOST IMMEDIAT
No.
Government of India
Ministry of Finance
Department of Economic Affairs
(Budget Division)

New Delhi, the February,__________.

Subject: Audience of Finance Minister with Her Excellency, the President of India for briefing on the main
features of Budget (Year).

The undersigned is directed to refer to President Secretariat’s letter No. ___________ dated __________ addressed to
Finance Secretary on the above mentioned subject and to inform that the following Ministers/Officers will accompany the
Finance Minister at the time of audience with Her Excellency, the President of India at _____ A.M.on the February,
______________ for briefing on the main features of Budget __________

1. MOS (E&FS)
2. MOS (Revenue)
3. Finance Secretary
4. Secretary, Department of Expenditure
5. Secretary, Department of Revenue
6. Secretary, Department of Financial Services
7. Secretary, Department of Disinvestment
8. Chief Economic Adviser
9. Joint Secretary (Budget)

2. It is requested that necessary arrangements may kindly be made to facilitate the same.

3. This issues with the approval of Finance Minister.

Deputy Secretary (Budget)

Tel.No. ______________
President Secretariat,
(Atten: Shri ___________ Joint Secretary),
Rashtrapati Bhavan,
New Delhi.

163
6.

SECRET
MOST IMMEDIATE
No.
Government of India
Ministry of Finance
Department of Economic Affairs
(Budget Division)

New Delhi, the February,______________.

Subject: Union Budget (Year).

The Union Budget (Year) will be presented to the Parliament on February,__________. As per standard procedure,
Cabinet Meeting is held in connection with the Budget to be presented on the same day.

2. Considering that the President’s briefing has been scheduled at ________ A.M.,the Finance Minister has suggested
that the Cabinet Meeting may be scheduled at ________ A.M. on the February, ______________.
3. It is requested that the following officers of the Ministry of Finance may be permitted to remain present during the
Cabinet meeting:

1. Finance Secretary
2. Secretary (Expenditure)
3. Secretary (Revenue)
4. Secretary (Financial Services)
5. Secretary (Disinvestment)
6. Chief Economic Adviser
7. Joint Secretary (Budget)

4. This issues with the approval of Finance Minister.

Deputy Secretary (Budget)

Tel. No. ______________
Cabinet Secretariat,
(Atten: Shri _________ Director),
Rashtrapati Bhawan,
New Delhi.

164
7.

Most Immediate
Budget Matter

F.No.
Government of India
Ministry of Finance
Department of Economic Affairs
(Budget Division)

New Delhi, the February, _______

Subject:- Budget of the Central Government for (Year).

Finance Minister will be presenting the Annual Financial Statement for the financial year
_________________ and introducing the Finance Bill, (Year) in Lok Sabha on February, _____________ at
__________ A.M.

2. In addition, the following statements under Section 3(1) of the Fiscal Responsibility and Budget Management
(FRBM) Act, 2003 are also required to be laid in Lok Sabha on February, _____________ at ________ A.M.:

(i) Macro-Economic Framework Statement

(ii) Medium-term Fiscal Policy Statement
(iii) Fiscal Policy Strategy Statement

3. These statements being a part of the Budget Documents, it is requested that the laying of these statements
may be included in the List of the Business for February, ______________

4. It is requested that the above items may be included in the List of the Business for February,
______________.
.

Under Secretary to the Govt. of India

Lok Sabha Secretariat,

(Table Office),
Parliament House,
New Delhi.

165
 8.
Most Immediate
Budget Matter

F.No.
Government of India
Ministry of Finance
Department of Economic Affairs
(Budget Division)

New Delhi, the February, _______

Subject:- Budget of the Central Government for ______________.

Finance Minister will be laying the Annual Financial Statement for the financial year ________________ in
Rajya Sabha on February, _____________ at _______ P.M.

2. In addition, the following statements under Section 3(1) of the Fiscal Responsibility and Budget Management
(FRBM) Act, 2003 are also required to be laid in Rajya Sabha on February, ______________ at _________ P.M.:

(i) Macro-Economic Framework Statement

(ii) Medium-term Fiscal Policy Statement
(iii) Fiscal Policy Strategy Statement

3. These statements being a part of the Budget Documents, it is requested that the laying of these statements
alongwith the above items may be included in the List of the Business for February, _________________

Under Secretary to the Govt. of India

Rajya Sabha Secretariat,

(Leg.I Branch),
Parliament House,
New Delhi.

166
 C. Summary to President and 5 Letters ((In Finance Minister's official Letter Head) to Lok Sabha for
Appropriation Bill (Vote on Account) to be issued before the introduction of the bill (to be got
signed by Finance Minister in Advance).

1.
Government of India
Ministry of Finance
Department of Economic Affairs
(Budget Division)

SUMMARY

Subject:- Vote on Account for expenditure of the Central Government for (financial year) and
the Appropriation (Vote on Account) Bill, (year).

Pending detailed consideration of the Demands for Grants for (financial year), it is
proposed to seek Parliament’s approval for a “Vote on Account” (for an amount of
`_____________) under Article 116 of the Constitution. The Vote will be for two months’ supply,
viz. April to May, (year). The President’s recommendation is required for the introduction and
consideration of the Appropriation (Vote on Account) Bill by the Lok Sabha under clauses (1)
and (3) of Article 117 of the Constitution of India, read with clause (2) of Article 116 thereof and
may kindly be accorded.

Joint Secretary (Budget)

Minister
of Finance

President of India
MOF( DEA ) U.O. No, dated March, (year).

167
2.

D.O. No. Dated

Sir,

The President having been informed of the subject matter of the proposed Appropriation (Vote on
Account) Bill, ________ to provide for the withdrawal of certain sums from and out of the Consolidated
Fund of India for the services of a part of the financial year _______, recommends the introduction and
consideration of the Bill in the Lok Sabha under Article 117(1) and (3) of the Constitution of India read
with Article 116(2) thereof.

Yours sincerely,

(Finance Minister)

To
The Secretary General
Lok Sabha
Parliament House
New Delhi.

168
3.

D.O. No. Dated

Dear Speaker,

The demands ‘on account’ for (year) is likely to be put to the vote of the House on March,
(year). In view of the limited time available for the passage of financial business in both the Houses, I
would request that immediately after the demands ‘on account’ are voted by the Lok Sabha, you may
kindly allow the related Appropriation Bill to be introduced considered and passed by the House.

Yours sincerely,

(Finance Minister)

To
The Speaker
Lok Sabha
Parliament House
New Delhi.

169
4.

D.O. No. Dated

Sir,

I give notice of my intention to move the following motion during the current session of the Lok
Sabha:

“That the respective sums not exceeding the amounts on Revenue Account and Capital Account
shown in the third column of the Statement annexed, be granted to the President out of the Consolidated
Fund of India, on account, for or towards defraying the charges during the year ending on the 31st day of
March, (year) in respect of the heads of Demands entered in the Second column thereof against Demands
No. _______________________________________.

Yours sincerely,

(Finance Minister)
To
The Secretary General
Lok Sabha
Parliament House
New Delhi.

170
5.

D.O. No. March, _________

Sir,
I give notice of my intention to move the following motions during the current session of the Lok
Sabha:
(i) to move for leave to introduce the Appropriation (Vote on Account) Bill, _______ to
authorise payment and appropriation of certain sums from and out of the Consolidated
Fund of India for the services of a part of the financial year ______________, and

(ii) ALSO to introduce the Bill.

Yours sincerely,

(Finance Minister)

To
The Secretary General
Lok Sabha
Parliament House
New Delhi.

171
6.

D.O. No Dated

Sir,

I give notice of my intention to move the following motions during the current session of the Lok
Sabha:-

(i) to move that the Bill to authorise payment and appropriation of sums from and out of the
Consolidated Fund of India for the services of a part of the financial year ________ be
taken into consideration.

(ii) ALSO to move that the Bill be passed.

Yours sincerely,

(Finance Minister)

To
The Secretary General
Lok Sabha
Parliament House
New Delhi.

172
 STATEMENT OF OBJECTS AND REASONS

This Bill is introduced in pursuance of article 114(1) of the Constitution of India, read with
Article 116 thereof, to provide for the appropriation from and out of the Consolidated Fund of
India, of the moneys required to meet the expenditure charged on the Consolidated Fund and
the grants made in advance by the Lok Sabha in respect of the estimated expenditure of the
Central Government, excluding Railways, for a part of the financial year _______________.

Minister of Finance

Note: The above statement has to be accompanied with appropriation bill.

173
 Immediate

Government of India
Ministry of Finance
Department of Economic Affairs
(Budget Division)
***

Subject:- The Appropriation (Vote on Account) [No. ] Bill (Year).

Two advance copies of the draft Appropriation (No. ) Bill, (Year) connected with Demands for
Grants, _______________ of the Central Government (Excluding Railways) are enclosed herewith for
further necessary action. The Bill will be introduced in Lok Sabha soon after the Demands are voted by
the House.

2. The ‘Statement of Objects and Reasons’ signed by the Minister of Finance is also enclosed.

2. A copy of the President’s recommendation would be made available immediately after it is

received from the President Secretariat.

Under Secretary to the Government of India

The Ministry of Law & Justice(Legislative Department) , Leg.I Section, Shastri Bhawan, New Delhi
Min. of Fin.(DEA) U.O. No._______________ dated __________.

Note : To be issued immediately after the issue of Summary to the President.

174
 Immediate/By Hand

Government of India
Ministry of Finance
Department of Economic Affairs
(Budget Division)
***

Subject:- The Appropriation (Vote on Account) [No. ] Bill (Year).

In continuation of this Ministry’s U.O. note of even number dated ______________, a copy of the
President’s recommendation for introduction and consideration of the Bill by Lok Sabha is enclosed for
further necessary action.

Under Secretary(Budget)

The Ministry of Law & Justice(Legislative Department) Shastri Bhawan, New Delhi
Min. of Fin.(DEA) U.O. No_________________ dated ______________.

175
 D. Summary to the President and 3 Letters to Rajya Sabha for Appropriation Bill (Vote on account) to
be issued after the bill is passed by Lok Sabha (to be got signed by Finance Minister in Advance).

1.
Government of India
Ministry of Finance
Department of Economic Affairs
(Budget Division)
……

SUMMARY

Subject:- The Appropriation (Vote on Account) Bill, (year).

The Appropriation (Vote on Account) Bill, (year) providing for the withdrawal of `
_____________ crore from and out of the Consolidated Fund of India for the services of a part
of the financial year _________, appended to this Summary, having been passed by the Lok
Sabha on March, (year), President’s recommendation is required for the consideration
of the Bill by the Rajya Sabha under clause (3) of the Article 117 of the Constitution of India,
read with clause (2) of Article 116 thereof, and may kindly be accorded.

Joint Secretary (Budget)

Minister of Finance

President of India
MOF(DEA) Budget Divn. U.O. ,dated

176
2.

D.O. No. Dated:

Sir,
The President having been informed of the subject matter of the proposed Bill to provide for the
withdrawal of certain sums from and out of the Consolidated Fund of India for the services of a part of the
financial year ________________, recommends to the Rajya Sabha under clause (3) of Article 117 of the
Constitution of India read with clause (2) of Article 116 thereof, the consideration of the Appropriation
(Vote on Account) Bill, 2010 as passed by the Lok Sabha.

The aforesaid recommendation was made by the President on ________________.

Yours sincerely,

(Finance Minister)
To
The Secretary General,
Rajya Sabha,
Parliament House,
New Delhi.

177
3.

D.O. No. Dated:-

Sir,
The Appropriation (Vote on Account) Bill No. of (year) has been passed by the Lok Sabha.
However owing to shortage of time, it is not possible to circulate the Bill two days in advance before
consideration by the Rajya Sabha as required under Rule 123 of the Rules of procedure of Rajya Sabha.

2. It is, therefore, requested that applicability of this Rule 123 may kindly be relaxed in the case of
consideration of this Bill by the Rajya Sabha.

Yours sincerely,

(Finance Minister)
To
The Chairman,
Rajya Sabha,
Parliament House,
New Delhi.

178
4.

D.O. No. Dated:

Sir,
I give notice of my intention to move the following motions during the current session of the
Rajya Sabha:

(i) That the Bill to provide for the withdrawal of certain sums from and out of the
Consolidated Fund of India for the services of a part of the financial year
________________, as passed by the Lok Sabha, be taken into consideration.

(ii) ALSO to move that the Bill be returned.

Yours sincerely,

(Finance Minister)

To
The Secretary General,
Rajya Sabha,
Parliament House,
New Delhi.

179
 E. Summary to President and 5 Letters ((In Finance Minister's official Letter Head) to Lok Sabha for
Appropriation Bill (Main) to be issued before the introduction of the bill.

Ministry of Finance
Department of Economic Affairs
(Budget Division)
…..

1.
SUMMARY
Subject:- The Appropriation (No ) Bill, (year)

The recommendation of the President, under Article 113(3) of the Constitution for making
of the Demands for Grants, (year) relating to the expenditure of the Central Government (excluding
Railways), to the Lok Sabha was obtained before the presentation of the Budget on ____ February,
_____ The Demands for Grants are at present under consideration of the Lok Sabha. As soon as
these Grants are voted, an Appropriation Bill (for an amount of `_________________) is to be
introduced in the Lok Sabha to provide for the appropriation out of the Consolidated Fund of India of
the moneys required to meet the expenditure charged on the Consolidated Fund and the grants made
by the Lok Sabha for the services of the financial year _________. A draft of the Bill has been
prepared in advance and a copy thereof is enclosed. The amounts shown in the Bill are inclusive of
the two months’ supply obtained earlier under the Appropriation (Vote on Account) Act, ____
(No.___of year)

2. The recommendation of the President is required to the introduction and consideration of the
Bill by the Lok Sabha under Clause (1) and (3) of Article 117 of the Constitution of India and may
kindly be accorded.

Joint Secretary (Budget)

Minister of Finance

President of India_________________________________________________
Min. of Finance(DEA) U.O. No.. _______________ dated the

180
2.

D.O. No Dated:

Sir,

The President having been informed of the subject matter of the Appropriation (No. ) Bill,
(year) to authorise payment and appropriation of certain sums from and out of the Consolidated Fund
of India for the services of the financial year ___________, recommends under Article 117(1) and
(3) of the Constitution the introduction of the Appropriation ( No. ) Bill, (year) in the Lok Sabha
and also the consideration of the Bill.

2. The Bill will be introduced in the Lok Sabha after the Demands for Grants for expenditure of
the Central Government (Excluding Railways) for the year ___________ have been voted.

Yours sincerely,

( Finance Minister )

To
The Secretary General
Lok Sabha
Parliament House
New Delhi.

181
3.

D.O. No. Dated

Sir,

I hereby give notice of my intention to move the following motion during the current session
of the Lok Sabha:-

“That the respective sums not exceeding the amounts on Revenue Account and Capital
Account shown in the fourth column of the Statement annexed be granted to the President out of the
Consolidated Fund of India, to complete the sums necessary to defray the charges that will come in
course of payment during the year ending the 31st day of March (Year), in respect of the heads of
demands entered in the second column thereof, against Demands No.
______________________________________________.

Yours sincerely,

( Finance Minister )

To
The Secretary General
Lok Sabha
Parliament House
New Delhi.

182
4.

D.O. No. Dated

Dear Speaker,

The discussion on Ministries’ Demands for Grants is presently scheduled to conclude in Lok
Sabha on and immediately thereafter, the Appropriation (No. ) Bill, (year) to provide
for expenditure for the full year is proposed to be introduced. After the Appropriation Bill is passed,
the Finance Bill is to be taken up by the House.

2. Unless the Appropriation Bill is taken up for consideration and passing in Lok Sabha
immediately after its introduction, there may not be adequate time left for consideration and passing
of the Finance Bill in the Lok Sabha. I would, therefore, request that you may kindly allow, as a
special case, consideration and passing of the Appropriation (No. ) Bill, (year) immediately after the
Demands are voted by the House and the Bill is introduced.

Yours sincerely,

( Finance Minister )
To
The Speaker
Lok Sabha
Parliament House
New Delhi.

183
5.

D.O. No Dated:

Sir,

I hereby give notice of my intention to move the following motions during the current Session
of the Lok Sabha:-

(i) To move for leave to introduce the Appropriation ( No. ) Bill, (Year) to authorise payment
and appropriation of certain sums from and out of the Consolidated Fund of India for the services of
the financial year ________________; and

(ii) ALSO to introduce the Bill.

Yours sincerely,

( Finance Minister )
To
The Secretary General
Lok Sabha
Parliament House
New Delhi.

184
6.

D.O. No. Dated:

Sir,

I hereby give notice of my intention to move the following motions during the current
Session of the Lok Sabha:-

(i) to move that the Appropriation( No. ) Bill, (year) be taken into
consideration.

(ii) ALSO to move that the Bill be passed.

Yours sincerely,

( Finance Minister )
To
The Secretary General
Lok Sabha
Parliament House
New Delhi.

185
 STATEMENT OF OBJECTS AND REASONS

This Bill is introduced in pursuance of Article 114(1) of the Constitution of India to provide
for the appropriation out of the Consolidated Fund of India of the moneys required to meet the
expenditure charged on the Consolidated Fund and the grants made by Lok Sabha for expenditure of
the Central Government, excluding Railways, for the financial year __________________.

Minister of Finance

Note: The above statement has to be accompanied with appropriation bill.

186
 Immediate

Government of India
Ministry of Finance
Department of Economic Affairs
(Budget Division)
***

Subject:- The Appropriation ( No. ) Bill (Year).

Two advance copies of the draft Appropriation (No. ) Bill, (Year) connected with Demands for
Grants, _______________ of the Central Government (Excluding Railways) are enclosed herewith for
further necessary action. The Bill will be introduced in Lok Sabha soon after the Demands are voted by
the House.

2. The ‘Statement of Objects and Reasons’ signed by the Minister of Finance is also enclosed.

3. A copy of the President’s recommendation would be made available immediately after it is

received from the President Secretariat.

Under Secretary to the Government of India

The Ministry of Law & Justice(Legislative Department) , Leg.I Section, Shastri Bhawan, New Delhi
Min. of Fin.(DEA) U.O. No._______________ dated __________.

Note : To be issued immediately after the issue of Summary to the President.

187
 Immediate/By Hand

Government of India
Ministry of Finance
Department of Economic Affairs
(Budget Division)
***

Subject:- The Appropriation ( No. ) Bill,(Year).

In continuation of this Ministry’s U.O. note of even number dated April, ______________, a copy
of the President’s recommendation for introduction and consideration of the Bill by Lok Sabha is
enclosed for further necessary action.

Under Secretary(Budget)

The Ministry of Law & Justice(Legislative Department) Shastri Bhawan, New Delhi
Min. of Fin.(DEA) U.O. No_________________ dated ______________.

188
 F. Summary to the President and 3 Letters to Rajya Sabha for Appropriation Bill (Main) to be
issued after the bill is passed by Lok Sabha.

Government of India
Ministry of Finance
Department of Economic Affairs
(Budget Division)
***
1.

SUMMARY

Subject:- The Appropriation ( No. ) Bill, (year).

The Appropriation (No. ) Bill, year to authorise payment and appropriation of `__________
crore from and out of the Consolidated Fund of India for the services of the financial year __________,
appended to this Summary, having been passed by the Lok Sabha on ________, the recommendation of
the President is required for the consideration of the Bill by the Rajya Sabha under clause (3) of Article
117 of the Constitution of India, and may kindly be accorded.

Joint Secretary (Budget)

Minister of Finance

President of India_________________________________________________
Min. of Finance(DEA) U.O. No.. _______________ dated the

189
2.

D.O. No. _________________ Dated: ,

Sir,

The President having been informed of the subject matter of the proposed Bill to authorise
payment and appropriation of certain sums from and out of the Consolidated Fund of India for the
services for the financial year _________, recommends to the Rajya Sabha under Article 117(3) of the
Constitution, the consideration of the Appropriation ( No ) Bill, (year), as passed by the Lok Sabha.

The aforesaid recommendation was made by the President on ________

Yours sincerely,

( Finance Minister )

To
The Secretary General,
Rajya Sabha,
Parliament House,
New Delhi.

190
3.

D.O. No. _________________ Dated: ,

Sir,

The Appropriation (No. ) Bill, (year) has been passed by Lok Sabha. However owing to
shortage of time, it is not possible to circulate the Bill two days in advance before consideration by the
Rajya Sabha as required under Rule 123 of the Rules of procedure of Rajya Sabha.

2. It is, therefore, requested that applicability of this Rule 123 may kindly be relaxed in the case of
consideration of this Bill by Rajya Sabha.

Yours sincerely,

( Finance Minister )

To
The Chairman,
Rajya Sabha,
Parliament House,
New Delhi.

191
4.

D.O. No. _________________ Dated:

.

Sir,

I hereby give notice of my intention to move the following motions during the current session
of the Rajya Sabha:-

(i) That the Bill to authorise payment and appropriation of certain sums from and out of the
Consolidated Fund of India for the services of the financial year ___________ as passed
by the Lok Sabha, be taken into consideration.

(ii) ALSO to move that the Bill be returned.

Yours sincerely,

( Finance Minister )

To

The Secretary General,

Rajya Sabha,
Parliament House,
New Delhi.

192
 ANNEXURE-I of (CHAPTER-VI)
Summary to the President seeking recommendation for the making of the Supplementary
Demands for Grants in the Lok Sabha and Rajya Sabha together with requisite notices to Lok
Sabha (6 letters) and Rajya Sabha (3 letters) are approved and signed by the Finance Minister
in advance . The format of the same is appended below :

Ministry of Finance
Department of Economic Affairs
(Budget Division)

SUMMARY

Subject: Supplementary Demands for Grants, F.Y. ____________ (Month ______) and the
connected Appropriation Bill, _______________.

It is proposed to lay before both Houses of Parliament, in its ____________ Session, a

Statement of Supplementary Demands for Grants of a further sum of ` ______________ as
shown in the attached Schedule, to meet the additional requirements of various
Ministries/Departments, including those resulting from specific items of new service and new
instrument of service, which cannot be met from within the existing provisions. The
recommendation of the President of India is sought for the making of the Demands for
Supplementary Grants, as shown in the attached schedule, under clause (3) of article 113 of the
Constitution read with clause (1) (a) and (2) of article 115 thereof.

2. A copy of the Appropriation Bill providing for appropriation out of the Consolidated Fund of
India, for the moneys, which will be available through the Supplementary Grants, is also placed
below. The recommendation of the President of India is also solicited under clauses (1) and (3)
of article 117 of the Constitution read with clause (2) of article 115 thereof, to the introduction
and consideration of the Bill by Lok Sabha after the Supplementary Demands for Grants have
been voted.

Joint Secretary (Budget)

Minister of Finance

F.No. : ________________________________

To
The President of India

193
 STATEMENT OF OBJECTS AND REASONS

This Bill is introduced in pursuance of article 114 (1) of the Constitution of

India, read with article 115 thereof, to provide for the appropriation out of the
Consolidated Fund of India of the moneys required to meet the supplementary
expenditure charged on the Consolidated Fund of India and the grants made by the
Lok Sabha for expenditure of the Central Government, excluding Railways, for the
financial year____________________.

Minister of Finance

194
 Note : 6 letters to Lok Sabha as per format appended below is submitted after receipt of
the President's recommendation.

(In Finance Minister's official Letter Head)

F.No. _________________

Sir,

The President, having been informed of the subject matter of the proposed Supplementary
Demands for Grants for expenditure of the Central Government (excluding Railways) for the
year___________________, recommends under clause (3) of Article 113 of the Constitution read with
clauses (1) and (2) of the Article 115 thereof, the making of the Supplementary Demands for Grants in
the Lok Sabha.

Yours sincerely,

(Finance Minister)

The Secretary General,

Lok Sabha,
Parliament House,
New Delhi.

195
 (In Finance Minister's official Letter Head)

F.No. _________________

Sir,

The President, having been informed of the subject matter of the proposed Bill to
authorise payment and appropriation of certain further sums from and out of the
Consolidated Fund of India for the services of the financial year___________,
recommends under article 117 (1) and (3) of the Constitution, the introduction of the
Appropriation (No. ) Bill, __________ in the Lok Sabha and also the consideration of
the Bill.

The Bill will be introduced in the Lok Sabha after all the Supplementary Demands
for Grants for expenditure of the Central Government (excluding Railways) for the year
________________ have been voted.

Yours sincerely,

(Finance Minister)

The Secretary General,

Lok Sabha,
Parliament House,
New Delhi.

196
 (In Finance Minister's official Letter Head)

F.No. _________________

Sir,

I hereby give notice of my intention to move the following motions during the
current Session of the Lok Sabha:

(i) to move that the Bill to authorise payment and appropriation of certain further
sums out of the Consolidated Fund of India for the services of the financial
year ______________ be taken into consideration; and

(ii) also to move that the Bill be passed.

Yours sincerely,

(Finance Minister)
The Secretary General,
Lok Sabha,
Parliament House,
New Delhi.

197
 (In Finance Minister's official Letter Head)

F.No. _________________

Sir,

I hereby give notice of my intention to move the following motion during the
current Session of the Lok Sabha:

"That the respective sums not exceeding the amounts on Revenue

Account and Capital Account shown in the third column of the Statement annexed
be granted to the President out of the Consolidated Fund of India, of certain
further sums necessary to defray the charges that will come in course of payment
during the year ending the 31st day of March, _________ in respect of the heads
of demands entered in the Second column thereof, against Demand Nos.
________________________________________________________________.

Yours sincerely,

(Finance Minister)
The Secretary General,
Lok Sabha,
Parliament House,
New Delhi.

198
 (In Finance Minister's official Letter Head)

F.No. _________________

Dear Speaker,

The ___________ Batch of Supplementary Demands for Grants of the

Central Government (excluding Railways) which are likely to be presented to the
Lok Sabha on , (Year) are expected to be taken up for discussion soon
thereafter. In view of the limited time available and pressure of other legislative
work, I would request that immediately after the Supplementary Demands are
voted by the Lok Sabha, you may kindly allow the related Appropriation Bill to be
introduced, considered and passed by the House.

Yours sincerely,

(Finance Minister )

(Name)
Speaker,
Lok Sabha,
Parliament House,
New Delhi.

199
 (In Finance Minister's official Letter Head)

F.No. _________________

Sir,

I hereby give notice of my intention to move the following motions during the
current Session of the Lok Sabha:

(i) to move for leave to introduce the Appropriation (No. ) Bill, (Year) to
authorise payment and appropriation of certain further sums from and out of
the Consolidated Fund of India for the services of the financial year
____________; and

(ii) also to introduce the Bill.

Yours sincerely,

(Finance Minister)
The Secretary General,
Lok Sabha,
Parliament House,
New Delhi.

200
Note : President's recommendation is obtained for consideration of the Appropriation Bill after
Lok Sabha passes the same. Format for seeking President's recommendation is as follows :

Ministry of Finance
Department of Economic Affairs
(Budget Division)
***

SUMMARY

Subject: The Appropriation (No. ) Bill,(Year).

The Appropriation (No. ) Bill, (Year) to authorise payment and appropriation of further
sum of `_______________ from and out of the Consolidated Fund of India, for the services of
the year ending on the 31st day of March, _____________ appended to this summary, having
been passed by the Lok Sabha, the recommendation of the President is required for the
consideration of the Bill by the Rajya Sabha. The President may be pleased to accord such
recommendation under clause (3) of Article 117 of the Constitution read with Article 115
thereof.

Joint Secretary (Budget)

Minister of Finance

F.No. : ________________________________

To
The President of India

201
Note : 3 letters to Rajya Sabha as per format appended below is submitted after receipt
of the President's recommendation.

(In Finance Minister's official Letter Head)

F.No. _________________

Sir,

I hereby give notice of my intention to move the following motions during the
current Session of the Rajya Sabha:

(i) “That the Bill to authorise payment and appropriation of certain further sums from
and out of the Consolidated Fund of India for the services of the financial year ending on
the 31st day of March, (Year) , as passed by the Lok Sabha, be taken into consideration;
and

(ii) that the Bill be returned”.

Yours sincerely,

(Finance Minister)

The Secretary General,

Rajya Sabha,
Parliament House,
New Delhi.

202
 (In Finance Minister's official Letter Head)

F.No. _________________

Sir,

The President, having been informed of the subject matter of the

Appropriation Bill (No. ), (Year) to authorise payment and the Appropriation of
certain further sums from and out of the Consolidated Fund of India for the
services of the financial year ending on the 31st day of March, (Year),
recommends to the Rajya Sabha under Article 117 (3) of the Constitution read
with Article 115, the consideration of the Appropriation Bill (No. ), (Year) as
passed by the Lok Sabha.

Yours sincerely,

(Finance Minister)
The Secretary General,
Rajya Sabha,
Parliament House,
New Delhi.

203
 (In Finance Minister's official Letter Head)

F.No. _________________

Sir,

The Appropriation Bill (No. ), 2010 has been passed by the Lok Sabha.
However, owing to shortage of time, it is not possible to circulate the Bill two days
in advance before consideration by the Rajya Sabha as required under Rule 123
of the Rules of Procedure of Rajya Sabha.

2. It is, therefore, requested that applicability of this Rule 123 may kindly be
relaxed in the case of consideration of this Bill by the Rajya Sabha.

Yours sincerely,

(Finance Minister)
The Chairman,
Rajya Sabha,
Parliament House,
New Delhi.

204
 ANNEXURE-II of (CHAPTER-VI) Budget appropriation
Provision already voted
20% of
Financial limits to be observed in determining the appropriation or `20 crore,
cases relating to (b) Where already voted which ever is
‘NEW SERVICE/’NEW INSTRUMENT OF SERVICE’ or `20 less.
Budget
Provision crore,
Nature of transaction Limits upto Limits whichever is
which beyond exists for
investment less
expenditure which prior
can be met by approval of and/or
reappropriation Parliament loans
of savings in a is required for Paid up
Grant subject to expenditure capital of
report to from the the
Parliament Consolidated
Company
Fund
(i) Upto `
1 2 3 50 crore

I. CAPITAL ... All cases

EXPENDITUR
E (ii) Above
A. Departmental `50 crore
Undertakings Above Above ` 5 crore
(i) Setting up `2.50 crore
a new but not C. All bodies or authorities within the
undertaking, or exceeding ` 5 administrative control/management of
taking up a new crore. Central Government or substantially financed by
activity by an the Central Government.
existing undertaking.
(ii) Loans Upto 10% of More than
Additional the 10% over
investment in an appropriation the
existing undertaking already voted appropriation
or `10 crore, already voted
B. Public Sector Companies/Corporations by
whichever is
Parliament
(i) Setting up of a less
or `10
new Company,
crore,
or splitting up All cases whichever is
of an less
existing
Company, Note: Where a lumpsum provision is made for providing
or ‘Loans’ under a particular scheme, the details of substantial
amalgamation apportionment (10% of lumpsum or ` 1 crore, whichever is
of two or more Above `50 Above ` 1 crore higher) should be reported to Parliament, in the case of
Companies, or lumpsum provision of loans to States, the State-wise distribution
lakhs but
should be reported to Parliament.
taking up a new not exceeding
activity by an `1 crore
existing
Company Above 20% of
appropriation
(ii) Additional 20% of already voted
investment appropriation or `10 crore,
in/ loans to Nature of transaction Limits upto Limits beyond
already voted which ever is
which which prior
an existing or `10 less. expenditure approval of
company crore, can be met by Parliament is
(a) Where whichever is reappropriation required for
there is no less Above 20% of of savings in a expenditure from

205
 Grant subject to the Consolidated
report to Fund
Parliament
H. Other cases of Each case to
1 2 3 Government be considered
expenditure on merits.
D. Above `50 Above `2.5 crore or
Expenditur lakhs but not above 10% of I. Posts The aforesaid The aforesaid
e on new exceeding the limits, including limits, including
Works (Land, ` 2.5 crore appropriation Railways those those relating
Buildings and/or or not already voted. relating to to Works
Machinery) exceeding Works expenditure, will
Defence
10% of the expenditure, will also apply to these
appropriation also apply to Departments
already voted, these subject to
whichever is Departments considerations of
less. subject to security in the case
considerations of Defence
II REVENUE EXPENDITURE of security in Services
the case of Estimates.
E. Grants-in-aid to any body or authority Defence
Note: Where a lumpsum provision is made for providing Note 1: For investment in Ordnance Factories, the limit of `5
grants-in-aid under a particular scheme, the details of
crore mentioned in item A (ii) will be applicable with
substantial apportionment (10% of lumpsum or ` 1
reference to investment in all the factories as a whole.
crore, whichever is higher) should be reported to
Parliament. In the case of lumpsum provision of grants Note 2: Civil Works, which do not form part of any project of the
to States, the State-wise distribution should be departmental undertakings (Ordnance Factories)
reported to Parliament. should be treated as ordinary Defence works. As
such, prior approval of Parliament will be necessary if
F. Subsidies the cost of individual works exceeds `2.5 crore and in
cases where the individual works cost `50 lakhs or
(i) New Cases ... More than
more but not exceeding `2.5 crore, a report to
10% over the
(ii) Enhancement of appropriation Parliament will be required. A list of such works should,
Upto 10% of
provision in the already voted by however, be supplied to Director of Audit, Defence
the existing appropriation Parliament or Services.
appropriatio already `10 crore,
n approved whichever is less.
by the
Parliament
or `10
crore,
whichever is
less

Payments against Limits as All cases

cess collections applicable to
grants-in-aid
to statutory
or public
institutions will
apply

New Commissions … Above `20

or Committees of lakhs (total
Enquiry expenditure)

G. Write off of Above `50,000 Above `1 lakh

Governmen but not (individual
t loans exceeding cases)
`1 lakh

206
 ANNEXURE-I of (CHAPTER-VII)
FRBM RELATED STATEMENTS AND THE GUIDELINES FOR THEIR PREPARATION:

(b) Other Receipts; and

The Medium Term Fiscal Policy Statement:
(c) Borrowings- Public debt and other
The FRBM Act stipulates that the Medium Term
Fiscal Policy Statement shall set forth a three year liabilities.
rolling target for prescribed fiscal indicators with 3. Total Expenditure- Policy stance
specification of underlying assumptions. The FRBM
(a) Revenue Account
Rules notified on 2nd July 2004, further provides that
the Medium Term Fiscal Policy Statement will contain (i) Interest payments;
three year rolling targets in respect of revenue deficit (ii) Major subsidies; and
as a percentage of GDP; fiscal deficit as a
percentage of GDP; tax revenues as a percentage of (iii) Others.
GDP; and total outstanding liabilities of the Central (b) Capital Account
Government as a percentage of GDP.
(i) Loans and advances
The Statement is also required to provide an
assessment of sustainability relating to- (ii) Capital outlay.
(i) The balance between revenue receipts and 4. GDP Growth
revenue expenditures- the Statement may
Fiscal Policy Strategy Statement:
specify the tax-GDP ratio for the current
year and subsequent two years with an The FRBM Act provides that the Fiscal Policy
assessment of the changes required for Strategy Statement, shall, interalia contain-
achieving it. It may discuss the non tax
revenues and the policies concerning the (a) The policies of the Central Government for
same. An assessment of the capital the ensuing financial year relating to
receipts may be made, including the taxation, expenditure, market borrowings
borrowings and other liabilities, as per and other liabilities, lending and
policies spelt out. The Statement may also investments, pricing of administered goods
give projections for GDP and discuss it on and services, securities and description of
the basis of assumptions underlying the other activities such as underwriting and
guarantees which have potential budgetary
indicators. Expenditure on revenue
implications;
account, both Plan and Non Plan, may also
be made with particular emphasis on the (b) The strategic priorities of the Central
measures proposed to meet the overall Government for the ensuing financial year
objectives. in the fiscal area;
(ii) The use of capital receipts including market (c) The key fiscal measures and rationale for
borrowings for generating productive any major deviation in fiscal measures
assets- the Statement may specify the pertaining to taxation, subsidy,
proposed use of capital receipts for expenditure, administered pricing and
generating productive assets in different borrowings; and
categories. It may also spell out proposed
changes among these categories and (d) An evaluation as to how the current
discuss it in terms of the overall policy of policies of the Central Government are in
the Government in achieving the national conformity with the fiscal management
objective. principles set out in section 4 of the Act
and the objectives set out in the Medium
Finally, relating to the Assumptions underlying the Term Fiscal Policy Statement.
Fiscal Indicators, the following have been indicated:
The FRBM Rules notified on 2nd July 2004,
1. Revenue Receipts
further provides the form in which the Statement is
(a) Tax Revenue- Sectoral and GDP growth required to be prepared, which is as under-
rates;
A: Fiscal Policy Overview:
(b) Non Tax Revenue- Policy stance; and
This paragraph will present an overview of the
(c) Devolution to States- Finance Commission. fiscal policy currently in vogue.
2. Capital Receipts-Debt stock, repayment, fresh
B: Fiscal Policy for the Ensuing Financial Year:
loans and policy stance
(a) Recovery of loans;

207
 This paragraph shall have five sub-paragraphs 3) Rationale for changes, if any, proposed in
dealing with- the management of public debt shall be
indicated.
1) Tax Policy- In the sub-paragraph on tax
policy, major changes proposed to be 4) The need for changes, if any, proposed in
introduced in direct and indirect taxes in respect of pricing of administered goods
the ensuing financial year will be shall be spelt out.
presented. It shall contain an assessment
of income tax exemption limits and how far E: Targets for the Ensuing Year:
it relates to per capita income, principles At the end of the second quarter, a mid-year
regarding tax exemptions and target group assessment shall be made of the trends in receipts
for exemptions. and expenditures and achievement of targets of
2) Expenditure Policy- Under expenditure deficit reduction in relation to Budget Estimates. In
policy, major changes proposed in the case the total non-debt receipts are less than 40
allocation of expenditure shall be indicated. percent of Budget Estimates for that year; or the
It shall also contain an assessment of fiscal deficit is higher than 45 percent of the Budget
principles regarding the benefits and target Estimates for that year; or the revenue deficit is
group of beneficiaries. higher than 45 percent of the Budget Estimates for
that year, the Central Government shall take action
3) Government Borrowings, Lending and as required, under sub-sections (2) and (3) of section
Investment- In this sub-paragraph on 7 of the FRBM Act.
Government borrowings, the policy relating
to internal debt, external debt, Government F: Policy Evaluation:
lending, investments and other activities; This paragraph shall contain an evaluation of the
including principles regarding average changes proposed in the fiscal policy for the ensuing
maturity structure, bunching of repayments, year with reference to fiscal deficit reduction and
etc. shall be indicated. objectives set out in the Medium Term Fiscal Policy
4) Contingent and Other Liabilities- Any Statement.
change in the policy on contingent and Macro-Economic Framework Statement:
other liabilities and in particular guarantees
which have the potential budgetary As per the FRBM Act, the Macro-economic
implications shall be indicated. Framework Statement shall contain an assessment
of the growth prospects of the economy with
5) Pricing of Administered Goods- Any specification of underlying assumptions. In particular,
change proposed in the pricing of and without prejudice to the generality of the
administered products, including the foregoing provisions, the Macro-economic
progress towards market-based principles Framework Statement shall contain an assessment
shall be spelt out. relating to-
C: Strategic Priorities for the Ensuing Year: (a) The growth in Gross Domestic Product;
1) Resource mobilization for the ensuing (b) The fiscal balance of the Union
financial year through tax, non-tax and Government as reflected in the revenue
other receipts shall be spelt out. balance and gross fiscal balance;
2) The broad principles underlying the (c) The external sector balance of the
expenditure management during the economy as reflected in the current
ensuing year shall be spelt out. account balance of the balance of
3) Priorities relating to management of public payments.
debt proposed during the ensuing year The format of the Macro Economic Framework
shall be indicated. Statement as prescribed in the FRBM Rules is as
D: Rationale for Policy Changes: under-

1) The rationale for policy changes consistent 1. Overview of the Economy- This paragraph
with the Medium Term Fiscal Policy shall contain a synoptic analysis of trends
Statement, in respect of direct and indirect in growth rates, prices, output, external
taxes proposed in the ensuing budget shall sector, money and capital markets.
be spelt out. Information on key macro-economic
indicators will be presented in the format
2) The rationale for major policy changes in appended.
respect of budgeted expenditure including
expenditure on subsidies shall be 2. GDP Growth- This paragraph shall contain
indicated. an analysis of trends in overall GDP growth
and its sectoral composition.

208
 3. External Sector- Under this paragraph, (i) Any deviation in meeting the obligations
trends in exports, imports, foreign cast on the Central Government under this
exchange reserves, current account Act;
balance and balance of payments shall be
presented. (ii) Whether such deviation is substantial and
relates to the actual or the potential
4. Money, Banking and Capital Markets- This budgetary outcomes; and
paragraph shall present an account of the
trends in money supply, bank deposits and (iii) The remedial measures the Central
credit and developments in the capital Government proposes to take.
market. Mid Year Reviews:
5. Central Government Finances- Under this Mid Year Review under FRBM Act takes place in
paragraph, an analysis of trends in revenue terms of FRBM Rules (Rule 7), that lays down the
collections and expenditure shall be Measures to enforce compliance with regard to the
presented. Trends in important fiscal deficit Quarterly Review Statements. It provides that in case
and debt indicators shall be presented. the outcome of the quarterly review of trends in
Trends in Central Government finances receipts and expenditure, made under sub-section (1)
shall be presented in the format appended. of section 7, at the end of second quarter of any
6. Prospects- Based on the trends in major financial year beginning with the financial year 2004-
sectors presented in the previous sections, 05 shows that-
an assessment shall be made regarding (i) The total on-debt receipts are less than 40
the growth prospects, along with the percent of Budget Estimates for that year;
underlying assumptions. or
Quarterly Reviews: (ii) The fiscal deficit is higher than 45 percent
FRBM Act [sub-section 7 (1)] prescribes that the of the Budget Estimates for that year; or
Minister in charge of the Ministry of Finance shall (iii) The revenue deficit is higher than 45
review, every quarter; the trends in receipts and percent of the Budget Estimates for that
expenditure in relation to the budget and place before year, then,-
both the Houses of Parliament the outcome of such
reviews. The sub-section 7 (2) of the Act further (a) as required under sub-section (2) of
provides that, whenever there is either shortfall in that section (section) 7, the Central
revenue or excess of expenditure over the pre- Government shall take appropriate
specified levels mentioned in the Fiscal Policy corrective measures; and
Strategy Statement and the rules made under the
(b) as required under sub-section (3) of
FRBM Act, during any period in a financial year, the
that section,, the Minister in charge of
Central Government shall take appropriate measures
the Ministry of Finance shall make a
for increasing revenue or for reducing the
statement in both the Houses of
expenditure (including curtailing of the sums
Parliament during the session
authorized to be paid and applied from and out of the
immediately following the end of the
Consolidated Fund of India under any Act so as to
second quarter detailing the corrective
provide for the appropriation of such sums): provided
measures taken, the manner in which
that nothing in this sub-section shall apply to the
any supplementary demands for grants
expenditure charged on the Consolidated Fund of
are proposed to be financed and the
India under clause (3) of Article 112 of the
prospects for the fiscal deficit for that
Constitution or to any other expenditure which is
financial year.
required to be incurred under any agreement or
contract or such other expenditure which cannot be
postponed or curtailed.
Except as provided under the FRBM Act no
deviation in meeting the obligations cast on the
Central Government under this Act, shall be
permissible without approval of Parliament. Where
owing to unforeseen circumstances, any deviation is
made in meeting the obligations cast on the Central
Government under this Act, the Minister in charge of
the Ministry of Finance shall make a statement in
both Houses of Parliament explaining-

209
 ANNEXURE-II (CHAPTER- VII)
GUIDELINES FOR PREPARATION OF OUTCOME BUDGET:
As per the Department of Expenditure Office b) Standardizing unit cost of delivery;
Memorandum dated 30th December, 2005- a need
was felt to address certain weaknesses of the c) Benchmarking the standards/quality of
performance budget documents such as lack of clear outcomes and services;
one-to-one relationship between the Financial Budget d) Capacity building for requisite efficiency at
and the Performance Budget and inadequate target- all levels, in terms of equipment,
setting in physical terms for the ensuing year. It also technology, knowledge and skills;
mentions about growing concern to track not just the
intermediate physical “outputs” that are more readily e) Ensuring adequate flow of funds at the
measurable but the “outcomes”, which are the end appropriate time to the appropriate level,
objectives of State intervention, as articulated by the avoiding both delay and ‘parking’ of funds;
Finance Minister in Para 100 of his Budget Speech
f) Setting up effective monitoring and
(Budget 2005-06) and the Prime Minister’s letter,
evaluation systems, to indicate the
dated March 17, 2005 addressed to all Union
directions for further calibration and honing
Ministers urging them to examine the programmes/
the processes, to deliver the intended
schemes being implemented and convert their
outcomes;
financial outlays into physical outcomes with quarterly
targets in respect of each. g) Involving the community/target
groups/recipients of the service, with easy
Scope of coverage in Outcome Budget:
access and feedback systems.
The Outcome Budget documents are to be
prepared separately by each Ministry/Department in
respect of all Demands / Appropriations controlled by Revised Guidelines for Preparation of Outcome
them, except those exempted from this requirement Budget 2010-11.
and to the extent disclosures are not barred on
considerations of security etc. However, even the Introduction
Ministries/Departments and other authorities 1. Outcome budgets have become an integral part of
“exempted” from preparation of Outcome Budget and the budgeting process since 2005-06 OUTCOME
placing it in public domain have been requested to BUDGE, 2010-11 will broadly indicate the physical
carry out this exercise for internal use and voluntarily dimensions of the financial budgets as also the actual
deciding to place it in public domain, fully or partially. physical performance in 2008-09, performance for
the first 9 months of the year (2009-10) and the
Another important feature perceived for the
targeted performance curing 2010-11.
Outcome Budget is in terms of sub-targets for
coverage of women and SC/ST beneficiaries of State Scope of Coverage in Outcome Budget 2010-11
intervention and schemes for the benefit of the North-
Eastern Region. Without making it mandatory, the 2. The Outcome Budget documents will be prepared
Ministries/Departments are encouraged to attempt separately by each Ministry/Department in respect of
this as far as feasible. all Demands/Appropriations controlled by them,
except those exempted from this requirement and to
Identification Of ‘Outcomes’ And Process Of the extent disclosures are not barred on
Converting ‘Outlays’ Into ‘Outcomes’: considerations of security etc. A list of exempted
Demands/Appropriations is enclosed at Annexure. I.
Converting ‘outlays’ into ‘outcomes’ is a complex However, even the Ministries/Departments and other
process addressing “value for money” concerns; authorities ‘exempted’ from preparation of Outcome
being more a management process than merely a Budget and placing it in public domain are requested
financial process; and admitting possibilities of to carry out this exercise for internal use and
different approaches and modalities, which may differ voluntarily decide to place it in public domain fully or
from Ministry to Ministry and programme to partially.
programme. Preparation of the Outcome Budget is
an evolving and dynamic process, which will require 3. As far as feasible, sub-targets for coverage of
detailed scrutiny and examination on yearly basis, women and SC/ST beneficiaries under various
with value addition based on the preceding year’s developmental schemes and the schemes for the
experience. Some of the important steps in this benefit of the North-Eastern Regional should be
conversion process are as follows:- separately indicated.

a) Defining intermediate and final outcomes

specifically in measurable and monitorable
terms;

210
 performance relating to individuals should be sex-
Broad format Outcome Budget 2010-11 disaggregated.
Chapter V: Financial Review covering overall
4. The Outcome Budget 2010-11 will a prepared on trends in expenditure vis-a-vis Budget Estimates/
the basis of Budget 2010-11 in the form of a revised Estimates in recent years, including the
document, separate for each Ministry/Department,
current year. Data should be segregated scheme-
broadly consisting of the chapters detailed below: wise, object head-wise, and institution wise in the
Executive summary: Apart from summarizing case of autonomous institutions. Position of
relevant chapters, this portion should prominently outstanding utilization certificates and unspent
highlight the details of the monitoring mechanism and balances with States and implementation agencies
the public information system put in place by the shout also be brought out.
Ministry/ Department to regularly monitor physical
Chapter VI: Review of performance of
and financial progress during the course of the year Statutory and Autonomous Bodies under the
and inform the general public about it. administrative control of the Ministry/department. The
Chapter I: A brief introductory] note on the same principles as in reporting on the Ministry’s own
functions of the Ministry/Department, organizational performance should be followed. These principles
set up, list of major programmes/schemes include se desegregation of performance indicators
implemented by the Ministry/department, its relating to individuals.
mandate, goals and policy framework. This
introduction should highlight, in particular, if the
Ministry has goals, or major programmes or schemes 5. The following points may be noted in respect of the
in respect of women/gender equality. contents of Chapter II of Outcome Budget 2010-11
giving targets for 2010-11:-
Chapter II: This will contain a tabular format,
which may be visualized as “vertical compression a d i) The description of items should match with
horizontal expansion” of the Statement of Budget the description shown for the different items
Estimate (SBE) included in the Expenditure Budget in the Statement of Budget Estimates (SBE)
Vol. II (with suitably adapted format for Railways). as included in Expenditure Budget Vol. II of
There may be separate tables for separate the Budget 2010-11. However minor items
Demands/appropriations controlled by the may be clubbed to avoid cluttering up and
Ministry/Department. The main objective is to focusing attention on significant items.
establish a one-to-one correspondence between
ii) The terms “complementary extra-budgetary
(financial) Budget 2010-11 and Outcome Budget
resources” refers to the resources committed for the;
2010-11. The details will comprise of the financial
purpose by the entities other than the Central
outlays, projected physical outputs and
Government. Typically, it would include matching
projected/budgeted outcomes (intermediate/partial
share form the State Governments for Centrally
and final, as the case may be). Projected physical
Sponsored Schemes or resource contribution by
output should be disaggregated by sex, wherever
Public Sector Undertakings or by private parties in
possible and appropriate i.e. here delivery is to
the case of public private partnership projects.
individuals. An indicative format for these
Demand/appropriation -wise tables is enclosed iii) There should be a separate table for each Central
Annexure II. Explanatory notes may be liberally Public Sector. Enterprise (CPSE) under the
added, wherever necessary. administrative control of the Ministry, with itemized
listing of major projects in hand. The Outcome
Chapter III: This will detail reform measures Budget should be prepared on the basis of the
and policy initiatives, if any, taken by the Central Plan Outlay’ comprising of both the Gross
Ministry/department and how they relate to the Budgetary support component as well as the Internal
intermediate outputs and final outcome in areas such & Extra Budgetary Resources (IEBR) component of
as public private partnerships, alternate delivery the Central Plan Outlay. Thus, the Outcome Budget
mechanisms, social and women’s empowerment in respect of CPSEs maybe prepared even if there is
processes, greater decentralization, transparency no budgetary support.
etc.
iv) Wherever a Ministry/Department has large
autonomous Bodies substantially dependent upon
Chapter IV: Review of past performance: At Government for financial support, separate tables
the very least, this should indicate the performance
may also be considered for each such organization
during 008-09 and 2009-10 (i.e. upto 31 December, as per the assessment of the Ministry/Department.
2009) in terms of targets already set. The analysis of
physical performance should be Scheme-wise with
v) The tables concerning PSEs or Autonomous
the reasons for variations; explaining the scope and
Bodies should list out important projects in hand give
objectives of individual programs/schemes, giving
such details as sanctioned cost, scheduled date of
their physical targets and achievements. Indicators of
completion, total Cumulative expenditure till the

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beginning of the year, total expenditure planning Schemes/items in the Statement of Budget Estimates
during 2010-11, likely date of completion, and the having my non-Plan expenditures, which can be
related “outputs” and “outcomes”. The latter should linked to certain deliverable outputs, should find
be sex-disaggregated where they relate to projects mention in the Outcome Budget.
oriented to individuals.
6. The outcomes reflect the ultimate aims of
Government policy through budgetary support, tax
vi) The ‘final outcome’ need not necessarily be co-
exemption/concessions and preferential treatment in
terminus with the annual outlays and ‘intermediate’
procurement of goods and services. It would be
physical outputs’. ‘Final outcomes’ may span a
desirable if the Ministries/Departments may include a
longer time frame than the annual final outlays and
chapter in the Outcome Budget detailing such extra-
corresponding intermediate outputs. Wherever the
budgetary measures and their impact. The revenue
‘final outcomes’ are estimated to take longer than
forgone in promotion of certain policy objectives is
one year, he estimated time frame should be clearly
defined as ‘tax expenditures’ and it would be useful if
indicated. In case, the gestation is four to five years
the impact of this implicit expenditure is also
or longer, the ‘partial outcomes’ need to be tracked
assessed.
on an annual basis to ensure that the ‘final outcomes’
once indicated as achievable after five years are not
forgotten or mechanically repeated in the document
Certain presentational features :
from one year to the other, and that the progress
made towards achieving the final goal is reflected. 7. It is desirable that the above documents brought
Information should be provided whether the project is out by different Ministries/Departments have a
in the ‘initial’ stage, ‘intermediate’ stage or ‘final’ common level of detailing, at least for a minimum set
stage. of disclosure parameters; separately in Hindi and
English; be reader-friendly and adopt certain
vii) Wherever ‘physical outputs’ are in a sense the common printing formats. Accordingly, the following
‘final outcomes’, assessment of ‘quality of out put’ may be kept in view:
through ‘appropriate indicators of quality’ should be • In the case of Departments having total
brought out.
budget provision of less than `100 crore (as -
viii) Wherever ‘final outcomes, are not the direct per the netted figure shown in the
results of the annual outlays and are the cumulative Expenditure Budget Vol. II), all amounts may
effect of past several years’ outlays, this should be be shown in “Rs in lakhs” with two decimal
clearly explained. places For others, the amount may be shown
in “Rs in crore” with two decimal places. The
ix) The ‘final outcome’ component of the Outcome
amounts may be shown with comma
Budget need not necessarily have yearly targets, as
separators.
final outcomes will vary by Ministry and Programme
“Final Outcome’ wherever possible can be measured
in a five year time frame in line with five year Plans.
• Each page may be given a running header
The `partial outcome’ may be mentioned in these
giving the chapter number, title and page
cases in the Outcome Budget of that year.
number running for the whole document from
x) Where the final outcomes’ are not measurable and the 1st page of Chapter I. The documents
quantifiable, the likely benefit that will accrue may be may be printed on the size of paper used for
incorporated. Detailed Demands for Grants.
xi) The explanatory notes should attempt to bring out • Any other addition/alteration, inclusion of
the role and financial commitment of other agencies graphics/charts etc. to improve readability of
that is required to fructify the intended outcomes of a the document.
particular scheme of the Ministry/Department, even
though such agencies may or may not be directly
involved in the implementation and may be providing 8. However, the above guidelines, are not intended to
complementary services. prescribe a rigid format. These are indicative of
xii) Non-Plan expenditures are necessary to maintain minimum disclosure requirements and do not
the basic infrastructure without which the Plan preclude any value addition that the
interventions are bound to fail in meeting the Ministries/Departments decide to carry out on their
intended objectives. Role of non-Plan expenditure is own.
therefore supplementary and facilitative. Hence, Planning for future refinements
outcomes cannot be categorized as Plan outcomes
and non-Plan outcomes. The Outcome Budget 2010- 9. The Ministries / Departments are advised to put in
11 will cover non-Plan expenditure as far as possible. place, if not already there, systems of data
The column on Budget Support would have two sub- collection,, with the help of specialized agencies
columns “Plan” and “non-Plan” and the outcomes will wherever necessary, for the purpose of (i) developing
be related to the total budget provision. measurable ‘indices of performance’ to measure and

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assess quality of implementation; (ii) developing 13. The real value of Outcome Budget lies in its
norms of standard unit cost of delivery of a service; utility as a policy tool to establish effective linkage
(iii) quantification/factoring in of environmental with allocation and disbursement of public funds on
outcomes; (iv) quantification of community and the basis of measurable performance.
empowerment outcomes through social capital
14. As mentioned in paragraph 4 above, the
formation; (v) quantification of impact of funds
Ministries/Departments should indicate their
earmarked for publicity/awareness generation; and
monitoring mechanism and the public information
(vi) disaggregation, by sex and other relevant factors,
system in the Outcome Budget. This will result in
of indicators of performance and impact. This will not
periodic progress reports being made available to the
only involve collection of data on past trends but also
Ministry/Department by the implementing agencies.
on present developments in markets and technology.
This next logical step would be to link release of
The Ministries/Departments are encouraged to make
funds with progress in achieving monitorable physical
use of the services of the Cost Accounts branch of
progress against commitments made in the Outcome
this Department in addressing the costing issues.
Budget.
Independent Evaluation
15. As the Ministries are aware, Rule 212 of the
10. The Ministries / Departments may engage General Financial rule, 2005 introduced significant
independent evaluators and assessment agencies for changes in the system of “Utilization Certificates”.
scrutiny evaluation of the achievements against Besides financial certification of having fully spent the
physical outputs and final outcomes of major flagship amount for approved purposes, the Utilization
schemes. Due care may be taken to avoid duplication Certificate should also disclose whether the
of efforts with evaluation studies conducted by the specified, quantified and qualitative targets that
Planning Commission or the Department of should have been reached against the amount
Programme Implementation. utilized, were in fact reached, and if not, the reasons
therefore. Utilization Certificates would contain an
Time schedule and responsibility
output bases performance assessment instead of
11. The Outcome Budget 2010-11 documents input based performance assessment.
should be laid before both the Houses of Parliament,
16. Accordingly, the Ministries / Departments should
after final approval of the Minister-in-charge, latest by
revise the guidelines and practices applicable to their
March 20, 2010 or such date as may be necessary to
schemes to ensure a staggered and controlled
ensure that the process is complete before the
release of funds. In combination with other
Houses go into recess. In exceptional cases, where
expenditure management measures Ilk e-banking it
laying of documents is not feasible, these may be
should be feasible to ensure that funds are made
circulated to Hon. Members of Parliament through the
available in time for actual requirement and that the
Secretariat of the House. These should be available
funds are neither delayed, not diverted nor parked
to the Departmental Standing committees of
outside Government account.
Parliament for examination during the recess period.
The Ministries/Departments should also place these For preparation of the Outcome Budget, the latest
documents in the public domain by putting it on their guidelines issued by Ministry of Finance should be
website after presentation in Parliament. referred to.
12. Responsibility for preparation of this Independent Evaluation:
document will rest essentially with the
The Ministries/Departments may engage
Ministries/Departments. The Financial Adviser of the
independent evaluators and assessment agencies for
Ministry/Department will be the nodal officer for
scrutiny / evaluation of the achievements against
coordinating the whole exercise and organizing
physical outputs and final outcomes of major flagship
‘need-based consultations’ with various officers
schemes. Due care may be taken to avoid duplication
whether within the administrative
of efforts with evaluation studies conducted by the
Ministry/Department, or with the Ministry of Finance,
Planning Commission or the Ministry of Programme
the Planning commission and outside experts, with
Implementation.
due regard to the confidentiality of the budget
process. Head of various Divisions handling different Time Schedule And Responsibility:
schemes may be instructed to provide necessary The Outcome Budget and the Performance
draft write-ups and other material to the Financial Budget should be presented to both the Houses of
Advisor sufficiently in advance. The draft Outcome Parliament, after final approval of the Minister in
Budget 2010-11 in respect of “Flagship Programmes” charge, by the prescribed date (before the Houses go
may be got vetted from the Department of into recess) so that these are available to the
Expenditure as well as from the Planning Departmental Standing Committees of Parliament for
commission. examination during the recess period. The
Follow up action after presentation of Outcome Ministries/Departments should also place these
Budget documents in the public domain by putting it on their
website after presentation in Parliament.

213
 Responsibility for preparation of both these
documents will rest essentially with the
Ministries/Departments. The Financial Adviser of the
Ministry/Department will be the nodal officer for
coordinating the whole exercise and organizing
“need-based consultations” with various officers
whether within the administrative Ministry/
Department, or with the Ministry of Finance, the
Planning Commission and outside experts, with due
regards to the confidentiality of the budget process.
(Ministries/Departments may refer to the latest
instructions for the preparation of Outcome Budget
for a year).

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 ANNEXURE-III of (CHAPTER- VII)
UNION AUDIT REPORTS OF C&AG

The Union Audit Reports of the Comptroller and

Auditor General of India, contain the findings of • Report No. 6 - Indirect Taxes - Central
transaction audit and performance audit in the areas Excise, Service Tax & Customs
of:
The reports of the CAG after presentation to the
• Civil Audit Parliament are remitted to the related Committees of
Parliament for consideration and appropriate
• Audit of Autonomous Bodies recommendations to the executive for remedial action
which is further followed up by the Committees.
• Defence Services
Performance Audits:
• Railways
The concept and technique of audit has
• Receipts of the Government undergone a major change during the last fifty years.
Before India became independent, the
• Central Commercial
government audit was mostly confined to check
The Audit of the CAG is bifurcated into two against provision of funds, rules and orders and
streams namely Performance Audit and Regularity competence of authority concerned to sanction
expenditure. With the launching of the Five Year
(Compliance) Audit. While audit of the Civil
plans for economic and social development there has
Departments, Railways and Defence are conducted been change in the pattern of government
as per the direct mandate in the constitution and expenditure necessitating shift in the emphasis,
relevant provisions of the DPC Act, the Commercial concept and practice of audit as scrutiny of individual
Audit is conducted under the provisions of Company transactions became inadequate as it tended to
Act. Autonomous Bodies are audited as per the mistake wood for the tree. The Parliament and the
public are more interested to know whether various
mandate in the act establishing the body. The list of
development and welfare programmes are being
C&AG Audit Reports of 2008, for example, are executed efficiently and whether they were producing
indicated as under. the expected results. This led Audit department to
Compliance Audit- Year 2008: enter in the area of Performance Evaluation and
Value for Money Audit.
Civil:
The traditional audit conducted by the supreme
• Report No. 2 Autonomous Bodies audit institutions (SAI) known as Regularity audit
implies checking upon the legality of an action taken
• Report No. 3 - Scientific Departments by a public official or a person using public funds and
whether the decision or its implementation is
Direct Taxes:
according to the law, rules or regulations governing
• Report No. 8 - Direct Taxes that activity Gradually its dimension was extended to
Financial audit and now to Value for Money audit.
Indirect Taxes: Financial Audit basically means audit of financial
statement and whether they provide reasonable
• Report No. 7 - Indirect Taxes - Central
assurance that they present fairly the financial
Excise, Service Tax & Customs position, results of operations, and cash flows of an
Commercial Audit: audited entity in accordance with generally accepted
accounting principles. In Financial audit, State
• Report No. 9 - Financial Reporting by auditors do almost the same kind of job which the
Public Sector Undertakings Chartered Accountants do while auditing a public
limited company.
• Report No. 11 - Compliance Audit
Observations Value for Money or 3E’s Audit: also known as
Performance audit is an independent assessment of
• Report No. 12 - Telecommunications Sector the performance of an organisation, programme,
project or an activity in terms of its goals and
Performance Audit - Year 2008: objectives- how far expected results have been
Direct Taxes: achieved from the use of available resources of
money, men and material. Put it differently an
• Report No. 7 - Direct Taxes examination is made regarding economy, efficiency
and effectiveness of public spending, which has
come to be known as 3E’s audit, viz.

215
 • Economy: minimizing the cost of resources correction, and to improve systems and
used or required - spending less; guidance within the audited entity. Accordingly
the facts are generally agreed with the audited
• Efficiency : the relationship between the entity in order to ensure that they are complete,
output of goods and services and the resources to accurate and fairly presented in the audit report.
produce them- spending well; There may also be a need to include the audited
entity’s responses to the matters raised, either
• Effectiveness: the relationship between the verbatim or in summary, especially where an
intended and actual results of public spending - auditor presents its own views or
spending wisely. recommendations.
In contrast to regularity audit, which is subject to d. Performance reports should not concentrate
fairly specific requirements and expectations, solely on criticism of the past but should be
performance audit is wide-ranging in nature and is constructive. The auditor’s conclusions and
more open to judgment and interpretation; coverage recommendations are an important aspect of the
is also more selective and may be carried out over a audit and, where appropriate, are written as a
cycle of several years, rather than in one financial guide for action. Generally these
period; and it does not normally relate to particular recommendations suggest what improvements
financial or other statements. As a consequence are needed rather than how to achieve them,
performance audit reports are varied and contain though circumstances sometimes arise which
more discussion and reasoned argument. The warrant a specific recommendation, for example
Performance Audit Standards of the C&AG stipulates to correct a defect in the law in order to bring
that- about an administrative improvement.
a. The performance audit report should state e. In formulating and following up
clearly the objectives and scope of the audit. recommendations, the auditor should maintain
Reports may include criticism (for example objectivity and independence and thus focus on
where, in the public interest or on grounds of whether identified weaknesses are corrected
public accountability, matters of serious waste, rather than on whether specific
extravagance or inefficiency are drawn to recommendations are adopted.
attention) or may make no significant criticism
f. In formulating the audit opinion or report, the
but give independent information, advice or
auditor should have regard to the materiality of
assurance as to whether and to what extent
the matter in the context of the financial
economy, efficiency and effectiveness are being
statements audit or regularity audit as the case
or have been achieved.
may be or the nature of the audited entity or
b. The auditor is not normally expected to provide activity being audited where performance audit
an overall opinion on the achievement of is being conducted.
economy, efficiency and effectiveness by an
g. If the auditor concludes that, judged against the
audited entity in the same way as the opinion on
criteria most appropriate in the circumstances,
financial statements. Where the nature of the
the matter does not materially affect the view
audit allows this to be done in relation to specific
given by the financial statements, the opinion
areas of an entity’s activities, the auditor should
should not be qualified. Where the auditor
provide a report, which describes the
decides that a matter is material the opinion
circumstances and arrives at a specific
should be qualified, having determined the type
conclusion rather than a standardised statement.
of qualification.
Where the audit is confined to consideration of
whether sufficient controls exist to secure h. In the case of performance audits judgement will
economy, efficiency or effectiveness, the auditor be more subjective as the report does not relate
may provide a more general opinion. as directly to financial or other statements.
Consequently, the auditor may find that
c. Auditors should recognise that their judgement is
materiality by nature or by context is a more
being applied to actions resulting from past
important consideration than materiality by
management decisions. Care should therefore
monetary amounts involve.
be exercised in making such judgments, and the
report should indicate the nature and extent of Audit department is now producing a large
information reasonably available (or which ought number of performance reviews every year
to have been available) to the audited entity at covering almost every facet of Government’s
the time the decisions were taken. By stating working.
clearly the scope, objectives and findings of the
audit, the report demonstrates to the reader that
the auditor is being fair. Fairness also implies
the presentation of weaknesses or critical
findings in such a way as to encourage

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