Delegation of Financial Power Rules 1978

Delegation of Financial Powers Rules, 1978

Public Exchequer control

R.T.I.Jammu

1

Session Overview • In the previous session we discussed the General Financial Rules,, 2005 and their application in disciplining the financial and budgetary g y control in government g spending p g etc.

Public Exchequer control

R.T.I.Jammu

2

Session Overview • Another tool of public exchequer control is well defined p powers of different functionaries in the Government for incurring g expenditure p from public p funds.

Public Exchequer control

R.T.I.Jammu

3

Session Overview • The General Financial Rules, 2005 are supplemented pp by y the Delegation g of Financial Powers Rules, 1978, which lay down the financial p powers of different functionaries for incurring expenditure of ppublic funds for better and effective control and monitoring of Government spending out of the allotted funds. Public Exchequer control

R.T.I.Jammu

4

Session Overview • In this session we will discuss the main features of delegation g of financial ppowers as laid down in the Delegation of Financial Powers Rules,, 1978.

Public Exchequer control

R.T.I.Jammu

5

Learning Objective • At the end of the session the trainees will be able to state the p powers of various Government Officers and other functionaries as laid down in the Delegation g of Financial Powers Rules, 1978.

Public Exchequer control

R.T.I.Jammu

6

Delegation of Financial Powers Rules, 1978 • All powers to incur expenditure out of public funds (Consolidated Fund of India) vest with the Government in the Ministry of Finance. • The structure of governance in India and the area of governance is so vast that it is not possible for th Mi the Ministry i t off Finance Fi to t authorize th i all ll the th expenditure of Government of India. Public Exchequer control

R.T.I.Jammu

7

Delegation of Financial Powers Rules, 1978 • It was necessary to delegate financial ppowers to incur expenditure p out of public p funds to subordinate authorities of various p of other Ministries/Departments Government of India.

Public Exchequer control

R.T.I.Jammu

8

Delegation of Financial Powers Rules, 1978 • The Delegation of Financial Powers Rules, 1978 is the compendium p containing g all the orders delegating powers to authorities other than the Ministry y of Finance.

Public Exchequer control

R.T.I.Jammu

9

Delegation of Financial Powers Rules, 1978 • These Rules came in to force with effect from the 1st August, g , 1978 repealing p g the Delegation of Financial Powers Rules, 1958 • The Rules have been amended from time timeto-time since their publication in the Gazette of India, India dated the 22nd July, July 1978. 1978

Public Exchequer control

R.T.I.Jammu

10

Delegation of Financial Powers Rules, 1978 • The President has the powers under Rule 2 of these rules to: ¾relax all or any provisions of these rules in relation to any authority; ¾delegate to any authority powers in addition to the powers delegated under these rules;

Public Exchequer control

R.T.I.Jammu

11

Delegation of Financial Powers Rules, 1978 ¾reduce the powers delegated to any authority y to the extent specified p in the order;; ¾impose conditions in addition to those specified by these rules ;and ¾for specified reasons withdraw from any authority all/any of the powers delegated under these rules. Public Exchequer control

R.T.I.Jammu

12

Basic Concepts • The definitions of some of the frequently used terms in the Rules are as under;; ‘Appropriation’ means the assignment to p expenditure p of funds meet specified included in a primary unit of appropriation

Public Exchequer control

R.T.I.Jammu

13

Basic Concepts • ‘Contingent Expenditure’ means all incidental and other expenditure including expenditure on stores which is incurred for the management of an office, for the working of technical establishment, office eexpenses penses and the like bbutt does not incl include de any expenditure which has been specifically classified as falling under some other Head of expenditure, such as ‘Works’, ‘tools and Plant’.

Public Exchequer control

R.T.I.Jammu

14

Basic Concepts • ‘Head of the Department’ in relation to an office or offices under his administrative control, means an authority/person as the concerned department in the Central Government may, by order, specify, as a Head of the Department. Department Such S ch person has to be the Head of an identifiable organization and the minimum of his revised scale of pay should not be lower than that of a Deputy Secretary to Government of India. Public Exchequer control

R.T.I.Jammu

15

Basic Concepts • ‘Head of Office’ means a Gazetted Officer declared as such under Rule 14 of these rules (Rule 14 specifies that the Central Government, Administrators and Heads of Departments shall have power to declare any Gazetted Officer subordinate to them as Head of an Office for the purpose of theses rules, and not more than one Gazetted Officer shall be declared as Head of Office in respect of the same office/establishment office/establishment, unless such office/establishment is distinctly separated from one another). Public Exchequer control

R.T.I.Jammu

16

Basic Concepts • ‘Recurring expenditure’ means the expenditure p which is incurred at periodical p intervals. Expenditure other than recurring expenditure p is ‘Non-recurring g expenditure’. • ‘Primary Primary unit of Appropriation’ Appropriation means a primary unit of Appropriation referred to in Rule 8. 8 Public Exchequer control

R.T.I.Jammu

17

Basic Concepts • ‘Re-appropriation’ means the transfer of funds from one p primary y unit of appropriation to another such unit. • ‘Subordinate Subordinate Authority’ Authority means a Department of the Central Government or any authority subordinate to the President

Public Exchequer control

R.T.I.Jammu

18

General limitations on power to sanction expenditure • No expenditure shall be incurred from the public revenue except p p on legitimate g objects j of public expenditure, • The financial powers not specifically delegated to any authority (known as Residuary Financial Powers) vest in the Finance Ministry. (Vide Rules 4 and 5). Public Exchequer control

R.T.I.Jammu

19

Effect of sanction • Expenditure against a sanction shall be incurred only y when funds to meet the expenditure/liability are made available by valid Appropriation/Re-appropriation pp p pp p

Public Exchequer control

R.T.I.Jammu

20

Effect of sanction • In the case of a recurring expenditure/liability, sanction becomes operative when funds for the first year are made available by valid Appropriation/reappropriation i ti or by b an advance d from f the th Contingency Fund, as the case may be, and it remains effective for each subsequent year subject to appropriation in such years and subject to the terms of the sanction. Public Exchequer control

R.T.I.Jammu

21

Effect of sanction • It is not within the competence of a Department p of the Central Government to order/agree to re-appropriation without the concurrence of the Ministry y of Finance from the funds provided for new items in g ((Govt. of India decision under the budget. Rule 9) Public Exchequer control

R.T.I.Jammu

22

General restrictions on Appropriation/ Reappropriation (Rule 10)] • No funds will be appropriated/ reappropriated pp p to meet expenditure p which has not been sanctioned by an authority competent p to sanction it • Funds provided for charged expenditure shall not be appropriated/re-appropriated appropriated/re appropriated to meet votable expenditure and vice versa. Public Exchequer control

R.T.I.Jammu

23

General restrictions on Appropriation/ Reappropriation (Rule 10)] • Re-appropriation from one Grant/Appropriation pp p for Charged g Expenditure to another Grant/Appropriation for Charged g Expenditure p is also not permissible.

Public Exchequer control

R.T.I.Jammu

24

General restrictions on Appropriation/ Reappropriation (Rule 10)] • Funds shall not be appropriated /re-appropriated to meet expenditure on a new service/new instrument of service not contemplated in the budget as approved by Parliament. • The limits for deciding ‘New service/New I t Instrument t off Service’, S i ’ have h been b discussed di d vide id Government of India’s decisions under Rule 10 Public Exchequer control

R.T.I.Jammu

25

General restrictions on Appropriation/ Reappropriation (Rule 10)] • Prior approval of the Parliament for expenditure p from the Consolidated Fund is required, ¾for setting up a new undertaking ¾taking up a new activity by an existing departmental undertaking and involving Capital Expenditure or Public Exchequer control

R.T.I.Jammu

26

General restrictions on Appropriation/ Reappropriation (Rule 10)] ¾ for setting up a new public sector company ¾ splitting up of an existing company/amalgamation of two or more companies, or ¾ taking up a new activity by an existing company or ¾ in respect of investments to be made for the first time in private sector companies/private institutions except in units coming under Government Management (with the approval of Parliament) Parliament). Public Exchequer control

R.T.I.Jammu

27

General restrictions on Appropriation/ Reappropriation (Rule 10)] • Approval of the Parliament is also required in the cases of additional investments above rupees one crore in an existing undertaking/private sector companies/private i / i t institutions i tit ti andd in i the th case of additional investments in loans above rupees twenty lakhs to an existing public sector company, where there is no Budget Provision. Public Exchequer control

R.T.I.Jammu

28

General restrictions on Appropriation/ Reappropriation (Rule 10)] • In the cases where there is budget provision and ppaid upp capital p of the company p y is between Rupees 1crore to rupees 100 crore, the limit for seeking g approval pp of the Parliament ranges between above twenty lakh to rupees p 15 crores

Public Exchequer control

R.T.I.Jammu

29

General restrictions on Appropriation/ Reappropriation (Rule 10)] • The expenditure below the limits (shown for reference to the Parliament for approval) can be met from the re-appropriation re appropriation of savings in a grant subject to report to the Parliament. Expenditure above Rs.10 lakhs and upto p Rs.50 lakhs,, on new Works (Land, Buildings and/or Machinery) can be met from savings in a grant by re-appropriation subject to report to Parliament and with the prior approval of the Parliament if it exceeds Rs.50 lakhs. Public Exchequer control

R.T.I.Jammu

30

General restrictions on Appropriation/ Reappropriation (Rule 10)] • In the case of Grant-in aid to statutory and other ppublic/private p institutions under Revenue Expenditure, the prior approval of the Parliament for meeting g the expenditure p out of the Consolidated Fund of India is required q

Public Exchequer control

R.T.I.Jammu

31

General restrictions on Appropriation/ Reappropriation (Rule 10)] • the prior approval of the Parliament is required q above the following g limits: Institutions in receipt of grant in aid up to Rs.1 grant-in-aid Rs 1 crore

Public Exchequer control

Rs.10 lakh, (limits apply with reference to money disbursed by an individual Ministry/ y Department p and not by the Government as a whole. R.T.I.Jammu

32

General restrictions on Appropriation/ Reappropriation (Rule 10)] Institutions in receipt of grant-in-aid above Rs Rs.11 crore

10% of the Budget provision or Rs Rs. 2 crores, crores whichever is less.

Grants-in-aid to private institutions other than for Export Promotions Schemes, Recurring

Above Rs.5 lakhs

Public Exchequer control

R.T.I.Jammu

33

General restrictions on Appropriation/ Reappropriation (Rule 10)]

Grants-in-aid Grants in aid to private institutions other than for Export p Promotions Schemes, NonRecurring

Public Exchequer control

Above Rs Rs.10 10 lakhs

R.T.I.Jammu

34

General restrictions on Appropriation/ Reappropriation (Rule 10)] • Write off of Government loans above Rs.1 lakh ((individual case)) has to be referred to the Parliament.

Public Exchequer control

R.T.I.Jammu

35

General restrictions on Appropriation/ Reappropriation (Rule 10)] • Ministries/Departments have full powers for re-appropriation pp p of funds from one plan head to another plan head in a Grant, p in cases involving g foreign g exchange g except provided that ¾no re-appropriation re appropriation from Capital to Revenue and vice versa is made, Public Exchequer control

R.T.I.Jammu

36

General restrictions on Appropriation/ Reappropriation (Rule 10)] ¾commitments are not made beyond the allocations for the schemes during the plan period. • Savings in Revenue Section are not available for re-appropriation in Capital Section and vice versa in the same Demand for Grants. Public Exchequer control

R.T.I.Jammu

37

General restrictions on Appropriation/ Reappropriation (Rule 10)] • Funds from ‘salary’ cannot be re-appropriated to any other head. • The Financial Advisors have not to allow diversion of funds /re-appropriation of funds to augment provisions ii for f travell expenses. • The Administrative Ministries/Departments may enhance h provision i i under d travel t l Expenses E up to t 10%. Public Exchequer control

R.T.I.Jammu

38

Powers of subordinate authorities relating to creation of posts and abolition of posts. • Rule 11to 13 deals with powers of subordinate authorities relating g to creation of posts and abolition of posts. • Rule 11 provides that no post shall be created in the Secretariat office/department of the Central Government unless the scale/rate of pay on which the post is created has been approved by the President Public Exchequer control

R.T.I.Jammu

39

Powers of subordinate authorities relating to creation of posts and abolition of posts. • No post on permanent basis can be created without the p previous consent of the Finance Ministry.

Public Exchequer control

R.T.I.Jammu

40

Powers of subordinate authorities relating to creation of posts and abolition of posts.

• The subordinate authority authorized to create a permanent post may create similar supernumerary post (a shadow post i.e. no duties are attached to such post) for the purpose off accommodating d ti the th lien li off a Government servant who, though entitled to hold a lien against regular permanent post cannot be so accommodated because of non-availability non availability of such a post. Public Exchequer control

R.T.I.Jammu

41

Powers of subordinate authorities relating to creation of posts and abolition of posts.

• The supernumerary post has to be created only y if another vacant ppermanent post p is not available to provide lien. • The creation of supernumerary posts is guided by the principles given in Rule11 (5)

Public Exchequer control

R.T.I.Jammu

42

Powers of subordinate authorities relatingg to creation of posts and abolition of posts.

• Abolition of posts is covered under Rule 12,, which states that a subordinate authorityy may sanction the abolition of post which it is competent p to create.

Public Exchequer control

R.T.I.Jammu

43

Powers of subordinate authorities • The powers vested in the departments of the Central Government/Administrators and Heads of Departments in relation to, to ¾ creation of permanent posts, temporary posts, ¾ Appropriation and re re-appropriation, appropriation ¾ incurring of contingent or miscellaneous p , write off of losses expenditure, ¾ are specified in Schedules II to VII of these Rules. Public Exchequer control

R.T.I.Jammu

44

Powers of subordinate authorities • No powers can be delegated to any subordinate authority in respect of: ¾Creation of posts; ¾Write off of losses;; and ¾Re-appropriation of funds exceeding 10 ppercent of the original g budget g pprovision for either of the primary units of appropriation/sub head. Public Exchequer control

R.T.I.Jammu

45

Powers of subordinate authorities • Rule 16 provides that a Head of Office may have p power to authorize a Gazetted Officers serving under him to incur contingent/miscellaneous g expenditure p on his behalf subject to restrictions as may be laid down by y him.

Public Exchequer control

R.T.I.Jammu

46

Powers of subordinate authorities • The Administrator/Head of the Department shall,, however,, continue to be responsible p for the correctness, regularity and propriety of the decisions taken by y the Gazetted Officer to whom powers have been delegated. g

Public Exchequer control

R.T.I.Jammu

47

Insurance of the Government Property • Government property both movable and immovable is not to be insured and no expenditure has to be incurred/liability undertaken in connection with the insurance of such property without the previous y consent of the Finance Ministry.

Public Exchequer control

R.T.I.Jammu

48

Insurance of the Government Property • Motor vehicles owned by the Central Government used for purposes not connected with any commercial enterprise, are exempt from compulsory insurance against i t thirds thi d party t risk i k by b virtue i t off subb section (2) of Section 94 of the Motor Vehicle Act, Act 1939. 1939 Such vehicles shall not therefore be insured, with certain exceptions (Rule 15) Public Exchequer control

R.T.I.Jammu

49

Insurance of the Government Property • In cases where it has been decided to insure pproperties/goods p g under the direct/indirect control of the Central Government, the p shall affect the insurance onlyy departments with a Nationalized Insurance Organization y be laid and follow the pprocedure that may down by the Ministry of Finance from time to time. Public Exchequer control

R.T.I.Jammu

50

Remission of disallowances by Audit and writing off of overpayments to Government servants

• Rule 17 specifies the principles for remission of disallowances by y audit and writing off of overpayments made to ggovernment servants

Public Exchequer control

R.T.I.Jammu

51

Expenditure on Schemes or Projects • A Department of the Central Government may y sanction expenditure p on any y scheme/ project, the total outlay on which does not p one crore fifty y lakhs,, , if exceed rupees the scheme has been approved by the y Finance Ministry.

Public Exchequer control

R.T.I.Jammu

52

Expenditure on Schemes or Projects • The limit includes the entire cost of the scheme upto p the date of completion, p , both recurring/ non-recurring), cost of the works, even where the p provision for such work is made in a demand under the control of another Department p

Public Exchequer control

R.T.I.Jammu

53

Expenditure on Schemes or Projects • Approval of the Finance Ministry shall not be required q to sanction excess expenditure p over the original estimates of a sanctioned p to ten p per cent or rupees p five scheme up crores which ever is less (in the case of plan scheme), p ), and ten p percent or rupees p three crores which ever is less (in the case of non-plan p scheme Public Exchequer control

R.T.I.Jammu

54

Expenditure on Schemes or Projects • In relation to public works this is subject to the p provisions of the Central Public Works Department Code/ Central Public Works Account Code,, etc

Public Exchequer control

R.T.I.Jammu

55

Expenditure on Schemes or Projects • The powers to sanction expenditure on schemes in respect of the Departments of Central Government having Integrated Finance Advice System under plan schemes h h have been b enhanced h d tto schemes h costing less than Rs.50 crores (provided the scheme has been accepted by the Ministry of Finance at the pre-budget stage Public Exchequer control

R.T.I.Jammu

56

Expenditure on Schemes or Projects • The enhanced powers are, however, to be exercised subject j to the approval pp of the schemes of specified costs by the prescribed authorities. ((Rule 18))

Public Exchequer control

R.T.I.Jammu

57

Expenditure on Schemes or Projects • The increase in the cost will be approved by the Administrative Ministry/Department in consultation with the Planning Commission, where such increases are due to: • (a) ( ) Increase in i statutory levies; l i • (b) Exchange rate variations within the originally approvedd project j t time ti scale. l Government G t off India’s decision 2 below Rule 18 Public Exchequer control

R.T.I.Jammu

58

Expenditure on Schemes or Projects • Where the Revised Cost Estimates exceed 5% of the approved pp completion p cost (excluding changes in statutory levies and g rate variation)) due to scope p exchange change, addition deletion etc., the same shall be submitted to the Public Investment Board (PIB)/Cabinet Committee on pp Economic Affairs ((CCEA)) for approval. Public Exchequer control

R.T.I.Jammu

59

Expenditure on Schemes or Projects • Any further increases above 3 % is also required q to be ggot approved pp byy the PIB/CCEA. • The powers for preparation of Feasibility Report in all cases involving cost of less than Rs. Rs 10 crores is delegated to the Administrative Ministries [GOI decision 3 Public Exchequer control

R.T.I.Jammu

60

Sanction of Non-Plan Expenditure • The Secretary of a Department with Integrated g Finance Scheme can sanction Non-plan expenditure on schemes costing up p to Rs.5 crores,, but no Non-plan p ppost would be created under this power.

Public Exchequer control

R.T.I.Jammu

61

Major works costing up to Rs.5 Rs 5 lakhs • Ministries/Departments of the Central Government may y issue expenditure p sanction in respect of Major Works costing up to Rs.5 lakhs without consulting g the Ministryy of Finance.

Public Exchequer control

R.T.I.Jammu

62

Power to Release Funds • The Departments of the Central Government have powers to release funds for investment as equity capital of statutory corporations/ companies wholly owned by th Central the C t l Government, G t within ithi the th allotment in the Budget/Appropriation/Reappropriation of funds or advance sanctioned for the purpose from the Contingency Fund. (Rule 19) Public Exchequer control

R.T.I.Jammu

63

Grants and Loans • Rule 20 prescribes the principles as regards ppowers to sanction grants-in-aid g including g scholarships and loans.

Public Exchequer control

R.T.I.Jammu

64

Indents, Contracts and Purchases •

¾ ¾

A department of the Central Government shall have full powers to sanction expenditure for purchase and execution of contracts subject to the: Delegation of financial powers in the DFP Rules, 1978; Purchasing powers delegated from time-to-time to the indenting departments for making purchases directly and not through the Central Purchase Organization Organization.

Public Exchequer control

R.T.I.Jammu

65

Indents, Contracts and Purchases •

Previous consent of the Finance Ministry is required q in the following g cases: a) any purchase or contract the value of which exceeds Rs Rs. 5 crore , b) any negotiated or single tender contract exceeding Rs Rs. 1 crore in value, value a limited or open tender Public Exchequer control

R.T.I.Jammu

66

Indents, Contracts and Purchases c) any indent for stores of a propriety nature , the value of which exceeds Rs. 60 lakh;; d) any agreement or contract for technical collaboration or consultancy services with firms or foreign governments

Public Exchequer control

R.T.I.Jammu

67

Indents, Contracts and Purchases e) any purchase which has normally to be affected through g the Central Purchasing g Organization, but which is proposed to be made direct on the ggrounds of emergency, g y, if the value exceeds Rs. 50 lakh.

Public Exchequer control

R.T.I.Jammu

68

Indents, Contracts and Purchases • In the case of Department of Supply, the monetary y limits under (a), ( ), ((b)) and ((c)) shall be Rs. 5 crore for purchases made by the Central Purchasing g Organization g in India or abroad.

Public Exchequer control

R.T.I.Jammu

69

Cases where the consent of the Finance Ministry is essential Sl No Sl.

Details

1

Lump provisions in budget Govt. of India’s for certain urgent schemes Decision under not ready in sufficient detail Rule 7 at the pre budget stage. Public Exchequer control

Reference (DFP Rules, 1978)

R.T.I.Jammu

70

Cases where the consent of the Finance Ministry is essential 2 3

Re-appropriation from the G.O.I’s decision funds pprovided for new items under Rule 9 Excess of expenditure beyond Rule 10(5) 15 per cent over the approved/ sanctioned amount for a work where savings are available under d appropriate i t words d head. h d

Public Exchequer control

R.T.I.Jammu

71

Cases where the consent of the Finance Ministry is essential

4

Re-appropriation for a new public Rule 10 workk costing i rupees 10 lakhs l kh or above but less than rupees 50 lakhs

5

Re-appropriation from and to the Rule provisions for the Secret Service 10(6) Expenditure

6

Re-appropriation of funds to augment the secretariat expenditure di

Public Exchequer control

R.T.I.Jammu

G.O.I’s decision under d Rule 10 72

Cases where the consent of the Finance Ministry is essential

7

8

Re-appropriation of funds between direct expenditure in the Revenue Section to Grants-in-Aid Grants in Aid to States/Union territories in the same Section and vice versa Re-appropriation of funds between Capital p Outlayy and loans or vice versa.

Public Exchequer control

R.T.I.Jammu

G.O.I’s decision under Rule 10 G.O.I’s decision under Rule 10 73

Cases where the consent of the Finance Ministry is essential

9

10

All cases of re-appropriation involving savings of more than Rs.10 lakhs under individual plan schemes and more than Rs.100 Rs 100 lakh for the plan heads relating to the Ministry/department as a whole Any purchase/contract the value of which exceeds rupees p five crores,, any negotiated/single tender contract exceeding rupees one crore, etc Public Exchequer control

R.T.I.Jammu

GOIs decision below Schedule V

Rule 21

74

Delegation of Financial Powers in IA&AD • Under Article 148(5) of the Constitution of India,, the conditions of service of ppersons serving in the Indian Audit and Accounts Department p and the administrative powers p of the Comptroller and Auditor General may y be prescribed p byy rules made byy the President after consultation with the Comptroller p and Auditor General. Public Exchequer control

R.T.I.Jammu

75

Delegation of Financial Powers in IA&AD • The financial and administrative powers of the Comptroller and Auditor General of India under the provisions of the ‘Delegation of Financial powers Rules, 1978’, and the ‘General Financial R les 2005 and the po Rules, powers ers delegated to the subordinate authorities in the Indian Audit and Accounts Department are compiled in the ‘Comptroller and Auditor General’s Manual of Standing Orders (Administrative) Volume II’ Public Exchequer control

R.T.I.Jammu

76