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REVIEW OF NORMS FORRE-APPROPRIATIONOF FUNDS
MINISTRY OF FINANCE(DEPARTMENT OF EXPENDITURE)
PUBLIC ACCOUNTSCOMMITTEE2005-2006
TWENTY-THIRD REPORT
FOURTEENTH LOK SABHA
LOK SABHA SECRETARIATNEW DELHI
TWENTY-THIRD REPORT
PUBLIC ACCOUNTS COMMITTEE(2005-2006)
(FOURTEENTH LOK SABHA)
REVIEW OF NORMS FORRE-APPROPRIATION OF FUNDS
MINISTRY OF FINANCE(DEPARTMENT OF EXPENDITURE)
Presented to Lok Sabha on 22.12.2005
Laid in Rajya Sabha on 22.12.2005
LOK SABHA SECRETARIATNEW DELHI
December, 2005/Agrahayana, 1927 (Saka)
PAC No. 1802
Price: Rs. 32.00
© 2005 BY LOK SABHA SECRETARIAT
Published under Rule 382 of the Rules of Procedure and Conduct of Business inLok Sabha (Eleventh Edition) and Printed by the Manager, Government of IndiaPress, Minto Road, New Delhi.
CONTENTS
PAGE
COMPOSITION OF THE PUBLIC ACCOUNTS COMMITTEE (2005-2006) . . . . . . . . . . . (iii)
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (v)
REPORT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
APPENDICES
I-II. Notes received from the Ministry of Finance (Departmentof Expenditure) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
III. Statement of Observations and Recommendations . . . . . . . . . . 23
PART-II
Minutes of the sitting of Public Accounts Committee held on12th December, 2005.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
COMPOSITION OF PUBLIC ACCOUNTS COMMITTEE(2005-2006)
Prof. Vijay Kumar Malhotra — Chairman
MEMBERS
Lok Sabha
2. Shri Ramesh Bais
3. Shri Khagen Das
4. Dr. M. Jagannath
5. Shri R. L. Jalappa
6. Shri Raghunath Jha
7. Shri Brajesh Pathak
8. Shri Magunta Sreenivasulu Reddy
9. Dr. R. Senthil
10. Shri Madan Lal Sharma
11. Shri Brijbhushan Sharan Singh
12. Dr. Ramlakhan Singh
13. Kunwar Rewati Raman Singh
14. Shri K.V. Thangkabalu
15. Shri Tarit Baran Topdar
Rajya Sabha
16. Shri Prasanta Chatterjee
17. Shri R. K. Dhawan
18. Dr. K. Malaisamy
19. Shri V. Narayanasamy
20. Shri C. Ramachandraiah
21. Shri Jairam Ramesh
22. Prof. R. B. S. Varma
SECRETARIAT
1. Shri S. K. Sharma — Additional Secretary
2. Shri A. Mukhopadhyay — Joint Secretary
3. Shri Ashok Sarin — Director
4. Smt. Anita B. Panda — Under Secretary
(iii)
INTRODUCTION
I, the Chairman of Public Accounts Committee having been authorised by theCommittee to submit this Report on their behalf, do present this Twenty-third Report(Fourteenth Lok Sabha) on "Review of norms for Re-Appropriation of funds".
2. Pursuant to Fiscal Policy strategy statement laid by Finance Minister beforeParliament under Fiscal Responsibility and Budget Management Act, 2003, the Ministryof Finance (Department of Expenditure) had submitted proposals seeking approval ofthe Public Accounts Committee for review of norms for re-appropriation of funds.
3. According to the Ministry, these proposals were finalized in consultation withthe Office of the Comptroller and Auditor General of India.
4. The Committee considered and approved the proposals submitted by theMinistry of Finance (Department of Expenditure) at their sitting held on 12th December,2005. Minutes of the sitting form Part II of the Report.
5. For facility of reference and convenience, the Observations andRecommendations of the Committee have been printed in thick type in the body of theReport and have also been reproduced in a consolidated form in Appendix-III to theReport.
6. The Committee would like to place on record their appreciation of the assistancerendered to them in the matter by the Office of the Comptroller and Auditor General ofIndia.
NEW DELHI; PROF. VIJAY KUMAR MALHOTRA,13 December, 2005 Chairman,22 Agrahayana, 1927 (Saka) Public Accounts Committee.
(v)
REPORT
REVIEW OF NORMS FOR RE-APPROPRIATION OF FUNDS
Re-appropriation of funds
A grant or appropriation for disbursements is distributed by Sub-heads or standardobjects under which it is accounted. The competent executive authorities can approvere-appropriation of funds between primary units of appropriation within a grant orappropriation before the close of the financial year to which such grant or appropriationrelates. Re-appropriation of funds should be made only when it is known or anticipatedthat the appropriation for the unit from which funds are to be transferred will not beutilized in full or that unspent provision can be affected in the unit of appropriation.
2. All re-appropriations which would have the effect of increasing the budgetprovision by Rs. 1 crore or more under a sub-head should be made only with the priorapproval of Secretary (Expenditure) even if the amount re-appropriated is within25 percent of the provision covered under the limit governing re-appropriation.
Expenditure on "New Service/New Instrument of Service"
3. Government have prescribed financial limits for different categories ofexpenditure beyond which any additional expenditure constitutes "New Service/NewInstrument of Service" and requires prior approval of Parliament. The term New Servicerefers to the expenditure arising out of a new policy decision not brought to the noticeof Parliament earlier, including a new activity or a new form of investment. Likewise,relatively large expenditure arising out of an important expansion of an existing activityhas been termed as a New Instrument of Service.
4. Under the Fiscal Responsibility and Budget Management (FRBM) Act, 2003and Fiscal Responsibility and Budget Management Rules, 2004, a Fiscal Policy StrategyStatement was laid in the Parliament by Finance Minister on 26th February, 2005 whereinseveral initiatives in Public Expenditure Administration were proposed to beimplemented. One of the initiatives proposed is as under:—
"A review of norms governing re-appropriation will be carried out and specificproposal will be placed before the Public Accounts Committee for considerationwith a view to giving the Ministries/Departments greater flexibility in managingtheir departmental budgets with concomitant incentives and disincentives".
5. Accordingly, the Ministry of Finance (Department of Expenditure) submitteda note seeking approval of the PAC for the proposals to review the norms forre-appropriation of funds pursuant to Fiscal Policy strategy statement laid by FMbefore Parliament under Fiscal Responsibility and Budget Management Act, 2003. TheNote is reproduced in Appendix- I of this Report.
1
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6. In their note, the Ministry of Finance (Department of Expenditure) have statedthat the provisions of the Rule 10 and Government of India Decisions (GIDs) issuedthere under have been revisited and the following proposals have been made in thisregard:—
“(i) According to the existing provisions, all re-appropriations, which havethe effect of increasing budget provision under a sub-head by Rs. 1 croreand more, require approval of Secretary (Expenditure), Ministry of Finance.It is proposed that this limit of Rs. 1 crore or more, which was delegatedway back in 1990, may be enhanced to Rs. 5 crore or more. This would ineffect mean that re-appropriation of funds under a sub-head below Rs. 5crore can be made by the Administrative Ministries/Departments withoutthe approval of this Ministry (i.e. M/o Finance).
(ii) In view of their committed nature of expenditure, it is prposed to give fullpowers to Administrative Ministries/Departments for augmenting theprovisions for the heads, Salary, Wages, Pensionary Expenses, MedicalExpenses and Rent, rate and Taxes through re-appropriation, provided theapproved ceiling of the Grant is not exceeded and re-appropriation doesnot involve transfer of funds from Capital to Revenue and Plan to Non-Plan sections of the Grant or vice-versa. It is also proposed to delegate fullpowers to Ministries/Departments to re-appropriate funds from the headsalary for augmentation of head salary across the schemes (sub-heads)within a grant, which under extant orders require approval of this Ministry[Presently, any re-appropriation from the head Salary (even to the headsalary) requires prior approval of this Ministry].
(iii) Budget Division, Department of Economic Affairs vide its OM No. 7(15)-B (RA)/82 dated 13.4.1982 had laid down guidelines for New Service(NS)Service refers to the expenditure arising out of a new policy decision,not brought to the notice of Parliament earlier, including a new activityor a new form of investment. Likewise, relatively large expenditure arisingout of an important expansion of an existing activity has been termed asa New Instrument of Service (A copy of OM is enclosed). Annexure tothis OM prescribes the financial limits for NS/NIS in two categories viz.(a) limits upto which expenditure can be met by re-appropriation of savingsin a Grant subject to it being reported to Parliament (b) limits beyondwhich prior approval of Parliament is required for the expenditure. As itwas felt that the flexibility on re-appropriation of funds to be delegatedunder the revised norms may not in actual practice, be available to theAdministrative Ministries unless the financial limits for obtainingapproval of Parliament under NS/NIS are revised, it is proposed toenhance/revise these limits as per column 2a and 3a of the Statementenclosed herewith at Flag ‘A’ ”.
3
7. According to the Ministry, existing limit in case of re-appropriations and Newservice/New Instrument of Servicement upward revision in the light of normal increasein price index and inflation.
Justification for the review
8. At the instance of the Committee, the Ministry have explained as under as towhy the need for such a review arose:—
"Presently, though the administrative Ministries have been given full powersfor re-appropriation under Schedule IV of delegation of Financial Power Rules(DFPRs), 1978, exercise of these powers by the Administrative Departmentsis subject to the various restrictions imposed under Rule 10 of these Rulesand the Government of India Decisions (GIDs) issued thereunder. Some ofthese limits/restrictions imposed under the above rule-like the existing limit of'Rs. 1 crore or more' for proposals requiring approval of Secretary (Expenditure)[mentioned in para 2(i) of our OM ibid], and the norms for "New Service(NS)/New Instrument of Service (NIS)" [mentioned in para 2 (iii) of our letter]were delegated/framed way back in 1990 and in 1982 respectively. Theselimits merit upward revision in the light of normal increase in price index andinflation since then.
While, the upward revision of limits of NS/NIS, as recommended, wouldensure that Administrative Ministries have greater flexibility/accountabilityin the delegation of powers for re-appropriation, dicipline of meaningful andrealistic budgeting would be maintained, and the original objective of thebudgeted scheme would not be substantially altered by the exercise ofdelegated powers without prior approval of the Parliament.In the revisedlimits, powers of administrative Ministries have been rationalized and recastas per contemporary requirements.
Furthermore, it has been observed that with the imposition of variousrestrictions under Rule 10 ibid and GIDs issued thereunder, Ministries arerequired to seek approval of this Department even for re-appropriation offunds for their 'committed' liabilities viz. expenditure towards Salary, Wages,Pensionary Charges, Medical Expenses and Rent Rate and Taxes. As theexpenditure on these heads is of 'committed' nature, it has been proposed togive full powers of re-appropriation to Administrative Departments forexpenditure towards these heads, within the budgeted amount placed at theirdisposal."
9. In their subsequent note, (Appendix-II) submitted to the Committee, theMinistry have justified the proposed norms by stating that these are intended to givegreater delegation of authority and flexibility to the Administrative Ministries inmanaging their departmental budgets and their financial affairs.
Proposed benefits of the proposal
10. According to the Ministry, the delegation through the proposed revisednorms is not in view of any irregularities noticed under the existing norms, but is in fact
4
aimed at enabling Administrative Department in having efficient management of theirdepartmental budgets with a view to improving the quality of implementation, andenhancing the 'efficiency' and 'accountability' of delivery mechanism through quickerdecision making. It is also intended to reduce references to the Ministry of Finance onmatters affecting day to day routine affairs so that expenditure control is enforcedthrough scales of expenses and budgetary ceilings rather than getting involved inmicromanagement of the departmental affairs. Greater delegation would also implygreater responsibility to manage the affairs within the budget with consequent greateraccountability.
11. According to the Ministry of Finance (Department of Expenditure ), theproposed revised norms, have been finalized after consulting various Ministries, andafter obtaining the concurrence of Office of C & AG.
12.The proposal of the Ministry of Finance (Department of Expenditure ) wasconsidered by the Committee at their sitting held on 12th December, 2005. The Committeealso heard the views of the officers of the C&AG on the subject. The ADAI informedthe Committee that while formulating the said proposals, their views on the subjectswere sought by the Ministry of Finance (Department of Expenditure) which have beensuitably incorporated therein. The Committee then considered and approved theproposals.
5
OBSERVATIONS/RECOMMENDATIONS
13. The Committee have been given to understand that a Fiscal Policy StrategyStatement was laid before the Parliament by the Finance Minister on 26th February,2005 under Fiscal Policy Strategy Statement Responsibility and Budget ManagementAct, 2003. Pursuant to this, the Ministry of Finance (Department of Expenditure)have sought approval of the PAC for revision of norms for re-appropriations offunds.The proposals inter-alia include that the limit of Rs. 1crore or those for re-appropriation of funds under various sub-heads of the Grant, which require approvalof Secretary (Expenditure), may be enhanced to Rs. 5 crore or more. Also, full powersare sought to be delegated to the Ministries/ Departments to re-appropriate fundsfrom the head 'Salary' for augmentation of head 'Salary' across the schemes (sub-heads) within a grant. It is further proposed that financial limits for obtaining approvalof Parliament under New Service/New Instrument of Service may be enhanced/revised.
14. The Ministry have explained that there is an imperative need for such areview in view of inflation and price rise since 1990s. According to the Ministry, theproposed norms are intended to give greater delegation of authority and flexibility tothe Administrative Ministries in managing their departmental budgets and theirfinancial affairs. The revised norms are stated to be aimed at enabling AdministrativeDepartments in having efficient management of their departmental budgets with aview to improving the quality of implementation, and enhancing the 'efficiency' and'accountability' of delivery mechanism through quicker decision making. It is alsointended to reduce references to the Ministry of Finance on matters affecting day today routine affairs so that expenditure control is enforced through scales of expensesand budgetary ceilings rather than getting involved in micro-management of thedepartmental affairs. Greater delegation would also imply greater responsibility tomanage the affairs within the budget with consequent greater accountability.
15. As these proposals have been finalized after consulting various Ministriesand obtaining the concurrence of the Office of the Comptroller & Auditor General ofIndia, and there is adequate justification and need therefor, the Committee are inagreement with the proposed revision in the norms for re-appropriation of funds. Atthe same time, the Committee would like to impress upon the Ministry of Finance(Department of Expenditure) to devise an effective mechanism for proper and continuousmonitoring of the revised norms in order to ensure strict adherence to the same byeach and every Ministry/Department. The Committee also expect the FinancialAdvisors of all the Ministries/Departments to ensure that there is no violation inimplementation of the said revised norms for re-appropriation of funds and anyslackness in complying with the said norms is strictly dealt with.
NEW DELHI; PROF. VIJAY KUMAR MALHOTRA,13 December, 2005 Chairman,22 Agrahayana 1927 (Saka) Public Accounts Committee.
APPENDIX I
Note received from m/o Finance (Deptt. of Exp.)
F.No. 1(4)/E.II(A)/05Ministry of Finance
Department of Expenditure****
New Delhi dated 30th August, 2005
OFFICE MEMORANDUM
SUBJECT: Review of norms for re-appropriation of funds pursuant to Fiscal PolicyStrategy Statement laid before Parliament under Fiscal Responsibility andBudget Management Act, 2003.
*******
Under the Fiscal Responsibility and Budget Management (FRBM) Act, 2003and Fiscal Responsibility and Budget Management Rules, 2004, a Fiscal PolicyStrategy Statement was laid in the Parliament by FM on 26th February, 2005 whereinseveral initiatives in Public Expenditure Administration were proposed to beimplemented (reference para 13 of the Statement). One of the initiatives proposed is asunder:
"A review of norms governing re-appropriation will be carried out and specificproposal will be placed before the Public Accounts Committee by Sept., 2005for consideration with a view to giving the Ministries/Departments greaterflexibility in managing their departmental budgets with concomitant incentivesand disincentives."
2. The norms regulating re-appropriation (i.e. transfer of funds from one primaryunit of appropriation to another such unit) are given in Rule 10 and Government ofIndia Decisions (GIDs) issued there under, of Delegation of Financial Power Rules(DFPRs), 1978. Pursuant to the Statement mentioned in para 1 above, the provisionsof the above Rule and GIDs have been re-visited and the following proposals are nowsubmitted for consideration of the PAC:—
(i) According to the existing provisions, all re-appropriations, which havethe effect of increasing budget provision under a sub-head by Rs. 1 croreand more, require approval of Secretary (Expenditure), Ministry of Finance.It is proposed that this limit of Rs. 1 crore or more, which was delegatedway back in 1990, may be enhanced to Rs. 5 crore or more. This would ineffect mean that re-appropriation of funds under a sub-head belowRs.5 crore can be made by the Administrative Ministries/Departmentswithout the approval of this Ministry (i.e. MoF).
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(ii) In view of their committed nature of expenditure, it is proposed to give fullpowers to Administrative Ministries/Departments for augmenting theprovisions for the heads, Salary, Wages, Pensionary Expenses, MedicalExpenses and Rent rate and Taxes through re-appropriation, providedthat approved ceiling of the Grant is not exceeded and re-appropriationdoes not involve transfer of funds from Capital to Revenue and Plan toNon-Plan sections of the Grant or vice-versa. It is also proposed to delegatefull powers to Ministries/Departments to re-appropriate funds from thehead salary for augmentation of head salary across the schemes (sub-heads) within a grant, which under extant orders require approval of thisMinistry [Presently, any re-appropriation from the head Salary (even tothe head salary) requires prior approval of this Ministry].
(iii) Budget Division, Department of Economic Affairs vide its OM No. 7(15)-B(RA)82 dated 13.4.1982 had laid down guidelines for New Service(NS)/New Instrument of Service(NIS). As per the OM, the term New Servicerefers to the expenditure arising out of a new policy decision, not broughtto the notice of Parliament earlier, including a new activity or a new form ofinvestment. Likewise, relatively large expenditure arising out of a importantexpansion of an existing activity has been termed as a New Instrument ofService (A copy of OM is enclosed). Annexure to this OM prescribes thefinancial limits for NS/NIS in two categories viz (a) limits upto whichexpenditure can be met by re-appropriation of savings in a Grant subjectto it being reported to Parliament (b) limits beyond which prior approval ofParliament is required for the expenditure. As it was felt that the flexibilityon re-appropriation of funds to be delegated under the revised norms maynot, in actual practice, be available to the administrative Ministries unlessthe financial limits for obtaining approval of Parliament under NS/NIS arerevised, it is proposed to enhance/revise these limits as per column2a and 3a of the statement enclosed herewith at Flag 'A'.
3. The above proposals have been framed in consultation with O/oComptroller &Auditor General of India (C&AG) and have been approved by theFinance Minister. It is requested that these proposals as stated in para 3(i), (ii) and incolumns 2a and 3a of the statement placed at Flag 'A' be placed before the PAC for itsconsideration and approval.
sd/-
(Rubina Ali)Under Secretary to the Govt. of India
Shri Ashok Sarin,Director (PAC),Room No. 415,Parliament House Annexe,New Delhi.
IMMEDIATE
No. F. 7 (15)-B (RA)/82Ministry of Finance
Department of Economic Affairs
New Delhi, the 13th April, 1982
OFFICE MEMORANDUM
SUBJECT: Revised guidelines on 'New Service'/'New Instrument of Service'
The financial limits to be observed in determining cases relating to 'New Service'/'New Instrument of Service' prescribed in this Ministry's O.M.No. F. 8(60)-B/69 datedthe 27th July, 1970 have been reviewed in pursuance of the recommendations of thePublic Accounts Committee (Seventh Lok Sabha) in their 41st report. The revisedlimits, which have been drawn up in consultation with the Comptroller and AuditorGeneral of India and have been approved by the Public Accounts Committee in their70th report are annexed.
2. As the Ministry of Agriculture, etc. are aware, the term 'New Service', appearingin article 115(I)(a) of the Constitution, has been held as referring to expenditure arisingout of a new policy decision, not brought to the notice of Parliament earlier, includinga new activity or a new form of investment. Like-wise, relatively large expenditurearising out of important expansion of an existing activity is treated as a 'New Instrumentof service' which is a slight variant of the term 'New Service'. The basic principle is thatno expenditure can be incurred from the Consolidated Fund of India on a 'New Service'/'New Instrument of Service' without prior approval of Parliament through aSupplementary Grant. That is to say, the powers of Ministries/Departments to re-appropriate savings available under some sub-head(s) in a Grant for meeting additionalrequirements under other sub-head (s) within that Grant are subject to the aforesaidlimits. As any non-observance of these limits reflects laxity in financial control,Ministries/Departments are requested to ensure strict adherence of these instructionsin examining proposals for augmentation of sanctioned provisions.
3. Where in an emergent case of 'New Service/'New Instrument of Service' it isnot possible to wait for prior approval of Parliament, the Contigency Fund of India canbe drawn upon for meeting the expenditure pending its authorisation by Parliament.Recourse to this arrangement should normally be taken only when Parliament is not insession. Such advances are required to be recouped to the Fund by obtaining asupplementary. Grant in the immediately next session of Parliament. However, when aParliament is in session, a Supplementary Grant should preferably be obtained beforeincurring any expenditure on a 'New Service'/'New Instrument of Service'. That is tosay, recourse to Contingency Fund of India should be taken only in cases of extremeurgency; in such cases the following procedure recommended by the Sixth Lok SabhaCommittee on Papers Laid on the Table in their 4th Report should be observed:
8
SERVER5\5162LS\5162LS 8
9
"As far as possible, before such withdrawal is made, the concerned Ministerymay make a statement on the floor of the Lok Sabha for information givingdetails of the amount and the scheme for which the money is needed. Inemergent cases, however, where it is not possible to inform the Members inadvance, the withdrawal may be made from the Contingency Fund and soonthereafter a statement may be laid on the Table of the Lok Sabha for theinformation of the Members".
It has been suggested by the Rajya Sabha Secretariat that the above proceduremay also be observed in Rajya Sabha.
4. The following checks may be observed by the Ministries/Departments toensure that any expenditure likely to attract limits of 'New Service'/'New Instrument ofService' is not incurred by re-appropriation.
(i) A specific certificate should be recorded in each case involvingaugementation of sanctioned provision by the IF/Budget Section of theMinistry/Department on receipt of related proposals, to the effect that theproposed augmentation attracts/does not attract limits of 'New Service'/'New Instrument of Service'. Where the proposal is held to attract theselimits the procedure indicated in paragraphs 2 or 3 above depending uponthe circumstances of the case, have to be followed.
(ii) Subject to Paragraph 5 below, the Pay and Accounts Officers should examineeach expenditure sanction from the 'New Service/'New Instrument ofService' angle, especially those involving investments, loans, grants-in-aid, subsidies, new works, etc. All doubtful cases should be put up to theControllers of Accounts/Financial Advisers.
If in any exceptional cases, the expenditure, whether partly or fully on a 'Newservice'/'New Instrument of Service' has been incurred inadvertently and this factcomes to notice within the financial year, an advance from the Contingency Fundshould be obtained during the year itself to cover the expenditure already incurred asalso for the expenditure likely to be incurred before a Supplementary Grant for thatservice becomes available.
5. Having regard to the volume of Government transactions it is not possible tolist out those which are not attracted by 'New Service'/New Instrument of Service'limits. Broadly, however expenditure on normal activities of Government (such asnormal administrative expenditure—including that resulting from reorganisation ofMinistries/Departments, holding of conferences, seminars, exhibitions, surveys,feasibility studies etc., assistance to foreign Governments, contributions to internationalbodies and transfers to State and Union Territory Governments) is not attracted by thelimits of 'New Service'/'New Instrument of Service'. Further, these limits are applicableonly to expenditure which is subject to Vote of Parliament.
6. It should be noted that additional expenditure to the extent mentioned incolumn 2 of the annexed statement can be met by re-appropriation, subject to report toParliament, only if savings are available in the relevant Grant; otherwise a SupplementaryGrant has to be obtained.
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Report to Parliament should ordinarily be made through the ensuing batch ofSupplementary Demands and failing this by adding an Annexure in the Detailed Demandsof Ministry/Department for the ensuing year. Where possible a suitable mention of suchcases may be made in the Notes on Demands for Grants of the Ministry/Department.Mere exhibition of augmented provisions in the Revised Estimates included in theDemands for Grants will not be adequate to meet the requirement.
7. Where a doubt arises about the application of limits of 'New Service/'NewInstrument of Service', a reference may be made to the Budget Division for clarification.
8. A mention may also be made here about the 'New Service' Annexure which isappended to the main Demands for Grants. The purpose of this Annexure is somewhatdifferent. It is intended to bring to the notice of Parliament the details of new schemesi.e. schemes for which the Budget includes provision for the first time so that these canreceive special attention of Parliament. These schemes are normally to be taken upafter the passing of Budget; the Vote on Account provisions are not intended to beutilised therefor. In cases of urgency, expenditure on a 'New Service' during Vote onAccount period can, therefore, be incurred only by obtaining an advance from theContingency Fund in the manner recommended by the Sixth Lok Sabha Committee onthe Papers Laid on the Table, mentioned in paragraph 3 above. Such advances will beresumed to the Contingency Fund on enactment of Appropriation Act in respect ofexpenditure for the whole year.
Hindi version will follow.
(M.D. PAL)DIRECTOR (BUDGET)
To
(1) All Ministries/Departments of the Government of India.
(2) Financial Commissioner (Railways), Financial Advisor (Defence), FinancialAdviser (Communications) and all other Financial Advisers.
(3) Finance Secretaries of Union Territory Administrations (Delhi, Chandigarh,Andaman and Nicobar Islands, Dadra and Nagar Haveli and Lakshadweep).
(4) Controller General of Accounts, Controller General of Defence Accountsand Chief Controllers/Controllers of Accounts.
No. F. 7 (15)-B (RA)/82
Copy forwarded for information to:—
1. Lok Sabha Secretariat (PAC Branch)/Rajya Sabha Secretariat.
2. Comptroller and Auditor General of India and all Directors of Audit/Accountants General.
3. Finance Secretaries of all State and Union Territory Governments.
sd/-
(O.P. KAPUR)DEPUTY DIRECTOR (BUDGET)
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Incorporated as GOI Decision No. 1 below Rule 10 of the DFA
ANNEXURE to O.M. No. F. 7(15)-B(RA)/82 dated 13.4.1982
Financial limits to be observed in determining cases relating to'NEW SERVICE'/‘NEW INSTRUMENT OF SERVICE'
Limits upto which Limits beyond whichexpenditure can be prior approval of
Nature of Transaction met by re-appro- Parliament is re-priation of savings quired for expendi-in a Grant subject to ture from the Report to Parliament Consolidated Fund
1 2 3
I. CAPITAL EXPENDITURE
A: Departmental Undertakings.
(i) Setting up a new undertaking, or taking All casesup a new activity by an existingundertaking
(ii) Additional investment in an Above Rs. 50 lakhs Above Rs. 1 croreexisting undertaking but not exceeding
Rs. 1 crore
B: Public Sector Companies/Corporations
(i) Setting up of a new Company, or splitting up of All casesan existing Company, or amalgamation of twoor more Companies, or taking up a new activityby an existing Company
(ii) Additional investment in/loans to anexisting company
(a) Where there is no Budget Provision Above Rs. 10 lakhs Above Rs. 20 lakhsbut not exceedingRs. 20 lakhs
(b) Where Budget Provision exists for investment and/or loans
Paid up Capital of the Company
Upto Rs. 1 crore Above Rs. 10 lakhs Above Rs. 20 lakhsbut not exceedingRs. 20 lakhs
Above Rs. 1 crore and Above Rs. 1 crore Above Rs. 2 crore.upto Rs. 25 crore but not exceeding
Rs. 2 crore.
Above Rs. 25 crore and Above Rs. 5 crore Above Rs. 10 croreupto Rs. 100 crore but not exceeding
Rs. 10 crore.
Above Rs. 100 crore Above Rs. 7.5 crore Above Rs. 15 croresbut not exceeding
Rs. 15 crore.
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Note 1: In computing additional requirements for applying the abovelimits, loan and capital investments, over and above the budgetprovisions therefor, should be taken together.
Note 2: For additional fund requirements of term lending institutionswhich are under the audit of the Comptroller and AuditorGeneral of India, the limits will be twice those specified above.
Where an institution does not have paid up capital, the limitswill be applied with reference to Central loans outstandingagainst it at the end of the previous financial year.
Note 3: For financing projects under construction, within the approvedcost estimates already brought to the notice of Parliament,augmentation of budget provisions beyond the monetary limitsprescribed above will be permissible subject to availability ofsavings in the Grant. A report of such cases to Parliament will,however, be necessary.
Note 4: Short term (working capital) loans, repayable within five years,will not be treated as 'New Instrument of Service' but willrequire to be reported to Parliament.
C: Port Trusts, Delhi Municipal Corporation,Khadi and Village Industries Commission,Tea Board and Coffee Board.
Loans: The limits prescribed for public sectorcompanies will apply with reference tocentral loans outstanding against them atthe end of the previous financial year.
D: Private sector Companies/Private Institutions:
(i) Investments to be made for the first time All cases.except in Units coming under GovernmentManagement with the approval of Parliament.
(ii) Additional investments in or loans to an Above Rs. 50 lakhs Above Rs. 1 crore.existing company/institution including privatebut not exceedingsector units coming under Government Rs. 1 crore.Management with the approval of Parliament:
Note 1: While applying these limits loans and capital investments areto be taken together.
Note 2: In the case of loans to statutory and other public institutions(other than those mentioned under item C above) substantiallyfinanced by grants-in-aid from Government e.g. UniversityGrants Commission to Indian Institute of Technology andjoint sector enterprises, limits as applicable to private sectorcompanies/institutions should be applied.
Note 3: Where there is no Budget provision for investment/loans to acompany/institution, prior approval of Parliament will benecessary for investment/loans exceeding Rs. 10 lakhs exceptin the case of units brought under Government Management.
1 2 3
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E: Expenditure on new Works (Land, Buildings Above Rs. 10 lakhsAbove Rs. 50 lakhsand/or Machinery) but not exceeding
Rs. 50 lakhs.
II. REVENUE EXPENDITURE
F: Grants-in-aid to statutory and other public institutions:
(i) Institutions in receipt of grant-in-aid upto .. Rs. 10 lakhsRs. 1 crore
(ii) Institutions in receipt of grant-in-aid of .. 10% of the Budgetmore than Rs. 1 crore. provision or Rs. 2
crores, whicheverless.
Note 1: These limits will apply with reference to moneys disbursed byan individual Ministry/Department and not by the Governmentas a whole.
Note 2: The above limits will also apply to institutions which aresubstantially financed by grants-in-aid from Government andto public sector undertakings in receipt of grants-in-aid.
Note 3: Where a lumpsum provision is made for providing grant-in-aidunder a particular scheme in the absence of institution-wisebreak up at the time the provision is made, the aforesaid limitswill not apply to releases to such institutions within the budgetedprovision. The details will, however, be reported to Parliament.
G: Grants-in-aid to Private institutions other thanfor export promotion Schemes
(i) Recurring .. Above Rs. 5 lakhs
(ii) Non-recurring .. Above Rs. 10 lakhs
Note 1: In the case of recurring grants exceeding Rs. 5 lakhs per annumthe financial implications should be reported to Parliamentwhere the grant is to be made for 2 years or more.
Note 2: The limits for non-recurring and recurring grants-in-aid willapply with reference to moneys disbursed by an individualMinistry/Department and not Government as a whole.
Note 3: Where a lumpsum provision is made for providing grant-in-aidunder a particular scheme in the absence of institution-wisebreak up at the time the provision is made, the aforesaid limitswill not apply to releases to such institutions within the budgetedprovision. The details will, however, be reported to Parliament.
H: Subsidies and Grants under Export The budget provision should be split up as under:—Promotionless Schemes.
(i) Product Promotion and CommodityDevelopment (this sub-head will accommodatepayments of cash compensatory support onall items of exports including textiles).
(ii) Grants-in-aid to Export Promotion and MarketDevelopment Organisations (this sub-headwould accommodate grants to Export
1 2 3
14
Promotion Councils and other organisationslike Trade Development Authority, IndianInstitute of Foreign Trade, etc. for theirestablishment expenditure as well asdevelopmental activities and also to recognisedexport houses for specified export promotionactivities).
(iii) Export Credit Development (This sub-headwill cover payments made to commercial bankstowards interest subsidy under the Export Creditsubsidy Scheme).
Limits for augmentation of total provisionunder the Export Promotion Schemes:
Above Rs. 50 lakhs Above Rs. 2 croresbut not exceeding Rs. 2 crores.
I: Food subsidy Above Rs. 50 lakhs Above Rs. 2 crores.but not exceedingRs. 2 crores.
J: Other subsidies .. Above Rs. 10 lakhs.
K: Payments against cess collections Limits as applicable to grants-in-aid tostatutory or public institutions will apply.
L: New Commissions or Committees .. Above Rs. 4 lakhs of Enquiry (total
expenditure)
M: Write off of Government loans Above Rs. 50,000Above Rs. 1 lakhbut not exceeding (individual cases)Rs. 1 lakh(individual cases)
Note: This limit will also apply where it is decided to sanction grantto a private institution/individual for repayment of loan.
N: Other Cases of Government expenditureEach case to be considered on merits.
O: P & T The aforesaid limits, including those relatingRailways to Works expenditure, will also apply to theseDefence Departments subject to considerations of
security in the case of Defence.
Note 1: For investment in Ordance Factories, the limit of Rs. 1 crorementioned in item A (ii) will be applicable with reference to
investment in all the factories as a whole.
Note 2: Civil Works, which do not form part of any project of thedepartmental undertakings (Ordnance factories) should betreated as ordinary Defence works. As such, prior approval ofParliament will be necessary if the cost of individual worksexceeds Rs. 50 lakhs and in cases where the individual workscost Rs. 10 lakhs or more but not exceeding Rs. 50 lakhs, areport to Parliament will be required. A list of such worksshould, however, be supplied to Director of Audit, DefenceServices.
1 2 3
15N
atu
re o
f tr
an
sact
ion
Lim
its u
pto
whi
ch e
xpen
ditu
re c
an b
eLi
mits
bey
ond
whi
ch p
rior
appr
oval
of
Par
liam
ent
Rem
arks
w.r.
t. pr
opos
als
me
t b
y re
ap
pro
pri
atio
n o
f sa
vin
gs
is
req
uir
ed
fo
r e
xpe
nd
iture
fro
m t
he
in c
olu
mn
s 2
a a
nd
3a
.in
a G
ran
t su
bje
ct t
o r
ep
ort
to
Co
nso
lida
ted
Fu
nd
Pa
rlia
me
nt
(Exi
stin
g)
Lim
its
pro
po
sed
(Exi
stin
g)
Lim
its p
rop
ose
d a
fte
r ta
kin
ga
fte
r ta
kin
g i
nto
into
acc
ou
nt
vie
ws
of
view
s of
C&
AG
C&
AG
12
2a
33
a4
I. C
AP
ITA
L E
XP
EN
DIT
UR
E
A.
De
pa
rtm
en
t U
nd
ert
aki
ng
s
(i)
Se
ttin
g u
p a
ne
w u
nd
ert
aki
ng
...
...
All
case
sA
ll ca
ses
No
chan
ge f
rom
exi
stin
gta
king
up
a ne
w a
ctiv
ity b
y an
pro
visi
on
exi
stin
g u
nd
ert
aki
ng
(ii)
Ad
diti
on
al
inve
stm
en
t in
Ab
ove
Rs.
50
Ab
ove
Rs.
2.5
0A
bo
ve R
s. 1
cro
reA
bo
ve R
s. 5
cro
reL
imit
s b
ein
g e
nh
an
ced
exi
stin
g U
nd
ert
aki
ng
lakh
s b
ut
no
tcr
ore
bu
t n
ot
to
five
times
the
exi
stin
ge
xce
ed
ing
exc
ee
din
glim
its
as
pe
rR
s. 1
cro
reR
s. 5
cro
re.
O/o
C&
AG
's v
iew
s.
B.
Pu
blic
Se
cto
r C
om
pa
nie
s/C
orp
ora
tion
s
(i)
Se
ttin
g u
p o
f a
ne
w C
om
pa
ny,
or
...
...
All
case
sA
ll ca
ses
No
ch
an
ge
fro
msp
littin
g u
p o
f a
n e
xist
ing
Co
mp
an
y,e
xist
ing
pro
visi
on
.o
r a
ma
lga
ma
tion
of
two
or
mo
reC
om
pa
nie
s, o
r ta
kin
g u
p a
ne
wa
ctiv
ity b
y a
n e
xist
ing
Co
mp
an
y
(iii)
Ad
diti
on
al
inve
stm
en
t in
/loa
ns
to a
n e
xist
ing
co
mp
an
y
(a)
Wh
ere
th
ere
is
no
Ab
ove
Rs.
10
Ab
ove
Rs.
50
la
khs
Ab
ove
Rs.
20
la
khs
Ab
ove
Rs.
1 c
rore
Lim
its
be
ing
en
ha
nce
dB
ud
ge
t P
rovi
sio
nla
khs
bu
t n
ot
bu
t n
ot
to f
ive
times
the
exi
stin
ge
xce
ed
ing
exc
ee
din
glimit
s as
per
O/o
C&
AG
'sR
s. 2
0 l
akh
sR
s. 1
cro
revi
ew
s.
161
22
a3
3a
4
(b)
Wh
ere
Bu
dg
et
Pro
visi
on
exi
sts
for
inve
stm
en
t a
nd
/o
r lo
an
s
Pa
id u
p C
ap
ital
of
the
Ab
ove
Rs.
10
la
khs
bu
tA
bo
ve R
s. 2
0 l
akh
sC
om
pa
ny
Up
ton
ot
exc
ee
din
gR
s. 1
cro
reR
s. 2
0 l
akh
s
(Pro
po
sed
) U
pto
Rs.
50
cro
re2
0%
of
ap
pro
pri
ati
on
Ab
ove
20
% o
f a
pp
rop
ria
tio
nRa
tion
alis
atio
n p
rop
ose
da
lre
ad
y vo
ted
or
alr
ea
dy
vote
d o
rB
udge
t D
ivis
ion
by r
edu-
Rs.
10
cro
re,
wh
ich
Rs.
10
cro
re,
wh
ich
eve
nci
ng
th
e
nu
mb
er
of
ever
is
less
is le
ssca
tego
ries f
rom
4 t
o 2
ispr
opos
ed t
o be
acc
cept
ed.
Pro
po
sal
als
o c
on
form
sto
C&
AG
's v
iew
s (b
eing
with
in 5
tim
es)
Ab
ove
Rs.
1 c
rore
an
dA
bo
ve R
s. 1
cro
re b
ut
Ab
ove
Rs.
. 2
cro
reu
pto
Rs.
20
cro
ren
ot
exc
ee
din
g R
s. 2
cro
re
Ab
ove
Rs.
25
cro
re a
nd
Ab
ove
Rs.
5 c
rore
bu
tA
bo
ve R
s..
10
cro
reu
pto
Rs.
10
0 c
rore
no
t e
xce
ed
ing
Rs.
10
cro
re
Ab
ove
Rs.
10
0 c
rore
Ab
ove
Rs.
7.5
cro
re b
ut
Ab
ove
Rs.
15
cro
ren
ot
exc
ee
din
g R
s. 1
5 c
rore
(Pro
po
sed
) Ab
ove
Rs.
50
cro
re2
0%
of
the
ap
pro
-A
bo
ve 2
0%
of
ap
pro
-R
at
ion
ali
sa
tio
np
ria
tion
alr
ea
dy
pri
atio
n a
lre
ad
yp
rop
ose
d
Bu
dg
et
vote
d o
r R
s. 2
0vo
ted
or
Rs.
20
Div
isio
n
by
cro
re,
wh
ich
eve
rcr
ore
, w
hic
h e
ver
red
uci
ng
th
e n
um
be
r o
fis
less
is le
ssca
tego
ries
from
4 t
o 2
ispr
opos
ed t
o be
acc
epte
d.P
rop
osa
l a
lso
co
nfo
rms
to
C&
AG
's
vi
ew
s(b
ein
g w
ithin
5 t
ime
s).
C.
All
bo
die
s o
r a
uth
ori
ties
with
inth
e a
dm
inis
tra
tive
co
ntr
ol/
ma
na
ge
me
nt
of
Ce
ntr
al
Go
vern
me
nt
or
sub
sta
ntia
llyfin
an
ced
by
th
e C
en
tra
lG
ove
rnm
en
t.
17L
oa
ns:
Up
to 1
0%
of
the
ap
pro
-M
ore
th
an
10
% o
ver
the
Ce
ilin
g o
f R
s. 1
0 c
rore
pri
atio
n a
lre
ad
y vo
ted
ap
pro
pri
atio
n a
lre
ad
yh
as
pro
po
sed
as
pe
ro
r R
s. 1
0 c
rore
wh
ich
-vo
ted
by
Pa
rlia
me
nt
O/o
C&
AG
vie
ws.
ever
is
less
or R
s. 1
0 c
rore
wh
ich
-ev
er i
s le
ss
No
te:W
he
re a
lu
mp
sum
pro
visi
on
is
ma
de
fo
r p
rovi
din
g '
Lo
an
s' u
nd
er
ap
art
icu
lar
sch
em
e,
the
d
eta
ils
of
sub
sta
nti
al
ap
po
rtio
nm
en
t (1
0%
o
flu
mp
sum
or
Rs.
1 c
rore
, w
hic
he
ver
ish
igh
er)
sh
ou
ld
be
re
po
rte
d
toP
arl
iam
en
t. I
n t
he
ca
se o
f lu
mp
sum
pro
visi
on
of
loa
ns
to S
tate
s, t
he
Sta
te-
wis
e d
istr
ibu
tion
sh
ou
ld b
e r
ep
ort
ed
to
Pa
rlia
me
nt.
D.
Exp
en
ditu
re o
n n
ew
Wo
rks,A
bo
ve R
s. 1
0 l
akh
sA
bo
ve R
s. 5
0 l
akh
sA
bo
ve R
s. 5
0 l
akh
sA
bo
ve R
s. 2
.5 c
rore
Bu
dg
et
Div
isio
n's
(la
nd
, B
uild
ing
s a
nd
/or
bu
t n
ot
exc
ee
d-
bu
t n
ot
exc
ee
d-
or
ab
ove
10
% o
fp
rop
osa
l w
hic
hM
ach
ine
ry)
ing
Rs.
50
la
khs
ing
Rs.
2.5
cro
reth
e a
pp
rop
ria
tio
nco
nfo
rms
to O
/oo
r n
ot
exc
ee
d-
alr
ea
dy
vote
dC
&A
G v
iew
s is
ing
10
% o
f th
ep
rop
ose
d t
o b
ea
pp
rop
ria
tio
na
cce
pte
d.
alr
ea
dy
vote
d,
wh
ich
eve
r is
less
181
22
a3
3a
4
II. R
EV
EN
UE
EX
PE
ND
ITU
RE
E.
Gra
nts
in
aid
to
an
ybo
dy
or
au
tho
rity
All
case
s
No
te:
Wh
ere
a l
um
psu
m p
rovi
sio
n i
sm
ade
for
prov
idin
g “g
rant
s-in
-aid
”u
nd
er
a p
art
icu
lar
sch
em
e,
the
de
tail
s o
f su
bst
an
tia
la
pp
ort
ion
me
nt
(10
% o
f lu
mp
sum
of R
s. 1
cro
re,
whi
chev
er is
hig
her)
sho
uld
be
re
po
rte
d t
o P
arl
iam
en
t.In
th
e c
ase
of
lum
psu
m p
rovi
sio
no
f g
ran
ts t
o S
tate
s, t
he
Sta
te-w
ise
dis
trib
utio
n s
ho
uld
be
re
po
rte
d t
oP
arl
iam
en
t.
F.
Sub
sidi
es
(i)
New
Cas
esN
EW
IT
EM
—N
EW
IT
EM
All
case
s
(ii)
En
ha
nce
me
nt
of
pro
visi
on
NE
W I
TE
MU
pto
10
% o
f th
eN
EW
IT
EM
Mo
re t
ha
n 1
0%
of
the
Ce
ilin
g o
f R
s. 1
0 c
rore
in t
he
exi
stin
g a
pp
rop
ria
tion
ap
pro
pri
ati
on
ap
pro
pri
ati
on
ha
s b
ee
n i
mp
ose
da
lre
ad
y a
pp
rove
da
lre
ad
y vo
ted
acc
ord
ing
to
O/o
by
the
Pa
rlia
me
nt
by
Pa
rlia
me
nt
C&
AG
’s
view
s.o
r R
s. 1
0 c
rore
or
Rs.
10
cro
rew
hic
he
ver
isw
hic
he
ver
isle
ssle
ss
Pa
yme
nts
ag
ain
st c
ess
Lim
its a
s a
pp
lica
ble
All
case
sco
llect
ion
sto
gra
nts
-in
-aid
to
sta
tuto
ry
or
pu
blic
in
stitu
tion
s w
ill a
pp
lyN
ew
Co
mm
issi
on
s o
r—
—A
bo
ve R
s. 4
la
khs
Ab
ove
Rs.
20
la
khs
Co
mm
itte
es
of
En
qu
iry
(to
tal
exp
en
dit
ure
)(t
ota
l e
xpe
nd
itu
re)
19G
.W
rite
off
of
Go
vern
me
nt
Ab
ove
Rs.
50
,00
0A
bo
ve R
s. 5
0,0
00
Abo
ve R
s. 1
lak
hs A
bove
Rs.
1 l
akhs
No
ch
an
ge
fro
mb
ut
no
t e
xce
ed
ing
bu
t n
ot
exc
ee
din
g(i
nd
ivid
ua
l ca
ses)
(in
div
idu
al
case
s)e
xist
ing
pro
visi
on
.R
s. 1
lak
hsR
s. 1
lak
hs(i
nd
ivid
ua
l ca
ses)
(in
div
idu
al
case
s)
H.
Oth
er
Ca
ses
of
Go
vern
me
nt
Ea
ch c
ase
to
be
co
nsi
de
red
on
me
rits
. e
xpe
nd
iture
I.P
&T
Th
e a
fore
said
lim
its,
incl
ud
ing
th
ose
re
latin
g t
o W
ork
sT
he
afo
resa
id l
imits
, in
clu
din
g t
ho
seR
ailw
ays
exp
en
ditu
re,
will
als
o a
pp
ly t
o t
he
se D
ep
art
me
nts
rela
ting
to
Wo
rks
exp
en
ditu
re,
will
als
oD
efe
nce
sub
ject
to
co
nsi
de
ratio
ns
of
secu
rity
in
th
ea
pp
ly t
o t
he
se D
ep
art
me
nts
su
bje
ct t
oca
se o
f D
efe
nce
.co
nsi
de
ratio
ns
of
secu
rity
in
th
e c
ase
of
De
fen
ce S
erv
ice
s E
stim
ate
s.
20
Note 1: For investment in Ordnance Factories, the limit ofRs. 1 crore mentioned in Item A (ii) will be applicable with referenceto investment in all the factories as a whole.
Note 2: Civil Works, which do not form part of any project of thedepartmental undertakings (Ordnance Factories) should be treatedas ordinary Defence works. As such, prior approval of Parliamentwill be necessary if the cost of individual works exceeds Rs. 50lakhs and in cases where the individual works cost Rs. 10 lakhs ormore but not exceeding Rs. 50 lakhs, a report to Parliament will berequired. A list of such works should, however, be supplied toDirector of Audit, Defence Services.
(Existing) Limits proposed after taking into account views of C&AG
Note 1: For investment in Ordnance Factories, the limit of Rs. 5crore mentioned in Item A (ii) will be applicable with reference toinvestment in all the factories as a whole.
Note 2: Civil Works, which do not form part of any project of thedepartmental undertakings (Ordnance Factories) should be treatedas ordinary Defence works. As such, prior approval of Parliamentwill be necessary if the cost of individual works exceeds Rs. 2.5crore and in cases where the individual works cost Rs. 50 lakhs ormore but not exceeding Rs. 2.5 crore, a report to Parliament will berequired. A list of such works should, however, be supplied toDirector of Audit, Defence Services.
APPENDIX II
F.No. 1(4) E.II(A)/05Ministry of Finance
Department of ExpenditureE.II (A) Branch
******
New Delhi, dated 9th November, 2005
OFFICE MEMORANDUM
SUBJECT: Revision of norms of re-appropriation pursuant to the Fiscal Policy StrategyStatement presented to the Parliament under the FRBM Act, 2003 and theFiscal Responsibility and Budget Management Rules of 2004.
**********
The undersigned is directed to refer to Lok Sabha Secretariat's O.M. No. 24/1/1/2005/PAC dated 28.9.2005 on the above subject, and to furnish the following information.
2. With regard to the justification for review of norms of re-appropriation, it isstated that the proposed norms are intended to give greater delegation of authorityand flexibility to the administrative Ministries in managing their departmental budgetsand their financial affairs.
Presently, though the administrative Ministries have been given full powers forre-appropriation under Schedule IV of Delegation of Financial Power Rules (DFPRs),1978, exercise of these powers by the administrative departments is subject to thevarious restrictions imposed under Rule 10 of these Rules and the Government ofIndia decisions (GIDs) issued thereunder. Some of these limits/restrictions imposedunder the above rule—like the existing limit of 'Rs 1 crore or more' for proposalsrequiring approval of Secretary (Exp.) [mentioned in para 2(i) of our OM ibid], and thenorms for "New Service (NS)/New Instrument of Service (NIS)" [mentioned in para 2(iii) of our letter] were delegated/framed way back in 1990 and in 1982 respectively.These limits merit upward revision in the light of normal increase in price index andinflation since then.
While, the upward revision of limits of NS/NIS, as recommended, would ensurethat administrative Ministries have greater flexibility/accountability in the delegationof powers for re-appropriation, discipline of meaningful and realistic budgeting wouldbe maintained, and the original objective of the budgeted scheme would not besubstantially altered by the exercise of delegated powers without prior approval of theParliament. In the revised limits, powers of administrative Ministries have beenrationalized and recast as per contemporary requirements.
Furthermore, it has been observed that with the imposition of various restrictionsunder Rule 10 ibid and GIDs issued thereunder, Ministries are required to seek approvalof this Department even for re-appropriation of funds for their ‘committed’ liabilitiesviz. expenditure towards Salary, wages, Pensionary Charges, Medical Expenses and
21
SERVER5\5162LS\5162LS 21
22
Rent Rate and Rent Rate and Taxes. As the expenditure on these heads is of‘committed’ nature , it has been proposed to give full powers of re-appropriation toadministrative departments for expenditure towards these heads, within the budgetedamount placed at their disposal.
3. It may also be clarified here that the delegation through the proposed revisednorms is not in view of any irregularities noticed under the existing norms, but is in factaimed at enabling administrative departments in having efficient management of theirdepartmental budgets with a view to improving the quality of implementation, andenhancing the 'efficiency' and 'accountability' of delivery mechanism through quickerdecision making. It is also intended to reduce references to the Ministry of Finance onmatters affecting day to day routine affairs so that expenditure control is enforcedthrough scales of expenses and budgetary ceilings rather than getting involved inmicro-management of the departmental affairs. Greater delegation would also implygreater responsibility to manage the affairs within the budget with consequent greateraccountability.
4. As regards the issue of financial control (point iii), it is stated that as per theScheme of 'Integrated' Financial Adviser of the Department of Expenditure, the FinancialAdviser is responsible both to the administrative Ministry and to the Ministry ofFinance, and functions under the general guidance of the Finance Ministry. Therefore,the procedure, guidelines and rules etc., issued from time to time by the Ministry ofFinance are required to be observed by him/her, while examining the re-appropriationproposals/other proposals of the administrative Ministry/Department concerned. Theproposal to be considered under the revised norms also, as recommended by us,would require the concurrence of the Financial Advisers of the administrativeDepartment concerned.
5. It may also be stated that the proposed revised norms, have been finalizedafter consulting various Ministries, and after obtaining the concurrence of O/o C&AG.
6. This issue with the approval of Secretary (Expenditure)
sd/-
(RUBINA ALI)
Under Secretary to the Govt. of India.
Lok Sabha Secretariat,[Kind attention: Ms. Anita B. Panda, Under Secretary]Parliament House Annexe, New Delhi.
APPENDIX III
OBSERVATIONS AND RECOMMENDATIONS
SI. Para Ministry/ Observations/RecommendationsNo. No. (Department)
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1. 13 Finance The Committee have been given to understand(Department that a Fiscal Policy Strategy Statement was laidof Expenditure) before the Parliament by the Finance Ministry on
26th February, 2005 under Fiscal Policy StrategyStatement Responsibility and BudgetManagement Act, 2003. Pursuant to this, theMinistry of Finance (Department of expenditure)have sought approval of the PAC for revision ofnorms for re-appropriation of funds. Theproposals inter-alia include that the limit ofRs. 1 crore or those for re-appropriations of fundsunder various sub-heads of the Grant, whichrequire approval of Secretary (Expenditure), maybe enhanced to Rs. 5 crore of more. Also, fullpowers are sought to be delegated to theMinistries/Department to re-appropriate fundsfrom the head ‘Salary’ for augmentation of head‘Salary’ across the schemes (sub-heads) within agrant. It is further proposed that financial limitsfor obtaining approval of Parliament under NewService/New Instrument of Service may beenhanced/revised.
2. 14 Finance The Ministry have explained that there is an(Department imperative need for such a review in view ofof Expenditure) inflation and price rise since 1990s. According to
the Ministry, the proposed norms are intended togive greater delegation of authority and flexibilityto the Administrative Ministries in managing theirdepartmental budgets and their financial affairs.The revised norms are stated to be aime at enablingAdministrative Departments in having efficientmanagement of their departmental budgets with aview to improving the quality of implementation,
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and enhancing the 'efficiency' and 'accountability'of delivery mechanism through quicker decisionmaking. It is also intended to reduce references tothe Ministry of Finance on matters affecting dayto day reoutine affairs so that expenditure controlis enforced through scales of expenses andbudgetary ceilings rather than getting involvedin micro-management of the departmental affairs.Greater delegation would also imply greaterresponsibility to manage the affairs within thebudget with consequent greater accountability.
3. 15 Finance As these proposals have been finalized after(Department consulting various Ministries and obtaining theof Expenditure) concurrence of the Office of the Comptroller &
Auditor General of India, and there is adequatejustification and need therefor, the Committee arein agreement with the proposed revision in thenorms for re-appropriation of funds. At the sametime, the Committee would like to impress uponthe Ministry of Finance (Department ofExpenditure) to divise an effective mechanism forproper and continuous monitoring of the revisednorms in order to ensure strict adherence to thesame by each and every Minisitry/Department.The Committee also expect the Financial Advisorsof all the Ministries/Departments to ensure thatthere is no violation in implementation of the saidrevised norms for re-appropriation of funds andany slackness in complying with the said normsis strictly dealt with.
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MINUTES OF THE FIFTEENTH SITTING OF THE PUBLIC ACCOUNTSCOMMITTEE (2005-2006) HELD ON 12TH DECEMBER, 2005
The Committee sat from 1630 hrs. to 1735 hrs. on 12th December, 2005 in RoomNo."139", Parliament House Annexe, New Delhi.
PRESENT
Dr. K. Malaisamy — in the Chair
MEMBERS
Lok Sabha
2. Shri Ramesh Bais
3. Shri Madan Lal Sharma
4. Shri Brijbhushan Sharan Singh
5. Dr. Ramlakhan Singh
6. Kunwar Rewati Raman Singh
7. Shri Tarit Baran Topdar
Rajya Sabha
8. Shri Prasanta Chatterjee
SECRETARIAT
1. Shri S.K. Sharma — Additional Secretary
2. Shri A. Mukhopadhyay — Joint Secretary
3. Shri Ashok Sarin — Director
4. Smt. Anita B. Panda — Under Secretary
5. Shri M.K. Madhusudhan — Under Secretary
OFFICER OF THE OFFICE OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA
1. Shri U. Bhattacharya — ADAI (RC)
2. Shri A.K. Thakur — DG of Audit
3. Shri Roy S. Mathrani — Pr. Director (AB)
4. Shri R.K. Ghose — AG(Audit), Delhi
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REPRESENTATIVES OF THE MINISTRY OF URBAN DEVELOPMENT
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REPRESENTATIVES OF DELHI DEVELOPMENT AUTHORITY
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REPRESENTATIVES OF DEPARTMENT OF EDUCATION, GOVERNMENT OF NCT OF DELHI
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2. As the Chairman (PAC) was unwell and could not attend the sitting, theCommittee chose Dr. K. Malaisamy to act Chairman for the sitting.
3. At the outset, the acting Chairman, welcomed the Members and the AuditOfficers to the sitting of the Committee. The Chairman informed the Members thatpursuant to Fiscal Policy strategy statement laid by FM before Parliament under FiscalResponsibility and Budget Management Act, 2003 the Ministry of Finance (Departmentof Expenditure ) has submitted a note seeking approval of the PAC which includedproposals for review of norms for re-appropriation of funds. The Chairman furtherinformed that these proposals were finalised by the Ministry in consulation with theOffice of C&AG of India. ADAI (RC) informed that Office of C&AG had alreadyexamined aforesaid proposals for review of norms for re-appropriation of funds andtheir comments/views had been incorporated in the Ministry's proposal.
The Committee then took up for consideration the Memorandum prepared bythe Secretariat explaining inter-alia the proposals submitted by the Ministry as alsoneed and justification therefor. After some deliberations the Committee approved theproposals submitted by Ministry of Finance (Department of Expenditure).
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(The Committee then adjourned.)
MGIPMRND—5162LS—27-2-2006.