Lok Sabha Question No. 1663 (UNSTARRED), answered on 2020-03-02
Subject: Monitoring of Expenditure
Ministry: FINANCE
Asked by: Raksha Nikhil Khadse

## Government of India Ministry of Finance Department of Expenditure *****

## LOK SABHA UNSTARRED QUESTION NO.1663

## ANSWERED ON MONDAY, 2 nd  MARCH, 2020 12 th  PHALGUNA, 1941 (SAKA)

## MONITORING OF EXPENDITURE

## 1663. SHRIMATI RAKSHA NIKHIL KHADSE

Will the Minister of Finance be pleased to state:

- (a) Whether  the  Government  proposed  and  asked  all  the  Ministries  to develop  a  robust  mechanism  in  coordination  and  consultation  with  the Comptroller  and  Audit  General  and  Controller  General  of  Accounts through which the expenditure can be monitored; and;
- (b) if so, the details thereof?

## MINISTER OF STATE IN THE MINISTRY OF FINANCE

## ANSWER (SHRI ANURAG SINGH THAKUR)

- (a)  &  (b):  There  is  no  such  proposal.  There  is  already  a  well-established mechanism existing for monitoring of expenditure.

Rule 57 to 70 of the General Financial Rules (GFRs), 2017 in Chapter 3 under the head, 'Control of Expenditure against Budget' ( Annexure Refers) lays out clear roles and responsibility centres for effective control and monitoring overexpenditure by Departments/Ministries.

Further, the Civil Ministries in the Government of India are using the platform of  Public  Financial  Management  System  (PFMS)  for  expenditure  monitoring and releasing of Grant in Aid.

Public Financial Management System (PFMS) is a web-based online software application  of  the  Controller  General  of  Accounts  to  provide  a  sound  Public Financial  Management  System  for  Government  of  India  by  establishing  a comprehensive  payment,  receipt  and  accounting  network  and  also  serving  as Management  Information  System  for  expenditure  monitoring  through  various modules.

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estimates. The  estimates  of  receipts  and expenditure  of  each  Ministry/Department shall be scrutinized in the Budget Division of the Ministry of Finance. Secretary (Expenditure) may hold meetings with Secretaries or Financial Advisers of Administrative Ministries or Departments to discuss  the  totality  of  the  requirements  of funds for various programmes and schemes, along  with  receipts of the Ministries or Departments.

Rule 53 (2) The  estimates  initially  submitted  by  the Departments may undergo some changes as a  result  of  scrutiny  in  the  Budget  Division, Ministry of Finance and deliberations in the pre-budget meetings between the 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  shall  be incorporated in the Budget documents.

Rule 54 Outcome Budget. After  finalization  of  the estimates for budgetary allocations, the Department  of  Expenditure  in  consultation with NITI Aayog and the concerned Ministries shall prepare an Outcome Budget statement linking outlays against each scheme/project with  the  outputs/deliverables  and  medium term outcomes. The outputs/deliverables s h a l l be mandatorily  given  in measurable/quantitative terms on the basis of  parameters and deliverables decided in advance, on the basis of projections made in the  Medium  Term  Expenditure  Framework (MTEF) Statement. Allocations for each scheme/project shall be against a firm set of deliverables which shall be adhered to. The performance against specified  outcomes would  form  the  basis  of  deciding  on  the continuation of the scheme and the quantum of budget allocation.

Rule 55 Vote on Account. If  the  Appropriation Bill seeking  authorization  of  the  Parliament  to make  expenditure  in  consonance  with  the Budget proposal is likely to be passed after the  start  of  the  financial  year  to  which  it corresponds then pending the completion of the procedure prescribed in Article 113 of the Constitution for the passing of the Budget, the Finance Ministry may need to obtain a 'Vote on Account' to cover expenditure for abrief period in accordance with the provisions of Article 116 of the Constitution. Funds made available under Vote on Account are not to be utilized for expenditure on a 'New Service'.

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Rule 56 Communication and distribution of grants and appropriations. After the Appropriation Bill relating to Budget is passed, the Ministry of Finance shall communicate  the  same  to  the  Ministries  / Departments which, in turn, shall distribute the same to their subordinate formations. The distribution so made  shall also be communicated  to  the  respective  Pay  and Accounts Officers  who  shall  exercise  check against  the  allocation  to  each  subordinate authority.

## II. CONTROL OF EXPENDITURE AGAINST BUDGET

Rule 57 (1) Responsibility for control of Expenditure. The Departments of the Central Government shall be responsible for the control of expenditure against the sanctioned grants and appropriations placed at their disposal. The control shall be exercised through the Heads of Departments and other Controlling  Officers,  if  any,  and Disbursing Officers subordinate to them.

Rule 57

(2) A Grant or Appropriation can be utilised only to cover the charges (including liabilities, if any, of the past year) which are to be paid during  the  financial  year  of  the  Grant  or Appropriation and adjusted in the account of the  year.  No  charges  against  a  Grant  or Appropriation  can  be  authorized  after  the expiry of the financial year.

Rule 57

Rule 57

(3) No expenditure shall be incurred which may have the effect  of  exceeding  the  total grant or appropriation authorized by Parliament by law for a financial year, except after  obtaining  a  supplementary  grant  or appropriation or an advance from the Contingency Fund. Since voted and charged portions  as  also  the  revenue  and  capital sections of a Grant/Appropriation are distinct and re-appropriation inter se is not permissible, an excess in any one portion or section is treated as an excess in the Grant/Appropriation.

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

(i) For drawal of money the Drawing and Disbursing Officer shall ( a ) Prepare and present bills for 'charged'  and  'voted'  expenditure

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separately. (b) Enter on each bill the complete accounts classifications from major head down to the object head of account. When a single bill includes charges falling under two or more object heads, the charges shall be  distributed accurately over  the respective heads. (c) Enter on each bill the  progressive  total  of  expenditure up-to-date under the primary unit of appropriation to which the bill relates, including  the  amount  of  the  bill  on which the entry is made.

- (ii) All  drawing  and  disbursing  officers shall  maintain  separate  registers  in Form  GFR  5, physically or electronically for allocation under each minor or sub-head of account with which they are concerned.
- (iii) On the  third  day  of  each  month,  a copy  of  the  entries  made  in  this register during the preceding month shall be sent by the officer maintaining  it,  to  the  Head  of  the Department or other designated Controlling  Officer.  This  statement shall  also  include  adjustment  of  an inward claim, etc., communicated by Pay  and  Accounts  Officer  directly  to the  DDO  (and  not  to  his  Grant Controlling  Officer).  If  there  are  no entries in the register in any month, a 'nil'  statement shall be sent.
- (iv) The Controlling Officer will  maintain a  broadsheet  in  Form  GFR  6  to monitor the receipt of the return prescribed in the foregoing subclause
- (v). On receipt of the returns from Disbursing  Officers,  the  Controlling Officer shall examine them and satisfy himself :-
- (a) that the accounts  classification has been properly given;
- (b) that progressive expenditure has been  properly noted and  the available  balances  worked  out correctly;
- (c) that expenditure up-to-date is within the grant or appropriation; and
- (d) that the returns have been signed by Disbursing Officers. Where the

Controlling Officer finds defects in any of these respects, he shall take steps to rectify the defect.

- (vi) When all the returns from the Disbursing  Officers  for  a  particular month have been received and found to be in order, the Controlling Officer shall  compile  a  statement  in  Form GFR 7, in which he shall incorporate -
- (a) the totals of the figures supplied by Disbursing Officers;
- (b) the  totals  taken  from  his  own registers in Form GFR 5;
- (c) the totals  of  such  adjustments under the various detailed heads as  communicated  to  him  by  the Accounts  Officer  on  account  of transfer  entries  and  expenditure debited to the grant as a result of settlement of inward account claims  and  not  reckoned  by  his DDOs.
- (vii). If  any  adjustment  communicated  by the Accounts Officer affects the appropriation  at  the  disposal  of  a subordinate  Disbursing  Officer,  the fact  that  the  adjustment  has  been made shall be communicated by the Controlling Officer to the Disbursing Officer concerned.
- (viii). On receipt of all the necessary returns, the  Head  of  the  Department  shall prepare  a  consolidated  account  in Form  GFR  8,  showing  the  complete expenditure from the grant or appropriation at his disposal upto the end of the preceding month.
- Rule 57 (5) The  Head  of  the  Department  and  the Accounts Officer shall be jointly responsible for the monthly reconciliation of the figures given in the accounts maintained by the Head of the Department with those appearing in the Accounts Officer's books. The procedure for reconciliation shall be as follows :-
- (I). DDOs shall maintain a Bill Register in Form  TR  28-A,  and  note  all  bills presented for payment to the PAO in the register. As soon as cheques for the bills presented for payment are received, and/or status of e-payments are verified from the reports available with DDO on PFMS portal these shall be noted in the appropriate column of the Bill Register and the DDOs shall

ensure that the amounts of cheques tally with the net amount of the bills presented. In case any retrenchment is made by the PAO, a note of such retrenchments  shall  be  kept  against the bill in the remarks column in TR 28-A.

- (ii) The PAOs shall furnish to each of the DDOs  including  Cheque  -drawing DDOs,  an  extract f r o m t h e expenditure  control  register  or  from the  Compilation  Sheet  every  month indicating the expenditure relating to grants  controlled  by  him  classified under the various major-minor detailed head of accounts. The statements for May to March shall also contain Progressive Figures.
- (iii). On receipt of these extracts from the PAOs, the DDOs shall tally the figures r e c e i v e d , e x c l u d i n g b o o k adjustments, with the expenditure worked out for the month in the GFR 5 register. Discrepancies, if any, between the two sets of figures shall be promptly investigated by the DDO in consultation with the PAO. He shall also note in the GFR  5  register particulars of book adjustments advised  by  the  PAO  through  the monthly  statement.  Thereafter,  the DDO  shall  furnish  to  the  PAO  a certificate of agreement of the figures as per his books with those indicated by  the  PAOs  by  the  last  day  of  the month following the month of accounts.
- (iv). The Principal Accounts Officer (or PAO wherever  payments,  relating  to a grant are handled wholly by a PAO) of each  Ministry,  shall  send  a  monthly statement  showing  the  expenditure vis-à-vis  the  Budget provision under the various heads of accounts, in the prescribed pro forma, to the Heads of Departments  responsible  for  overall control of expenditure against grant of the Ministry as a whole. The figures so  communicated  by  the  Principal Accounts Officer (or the  PAO concerned) shall be compared by the Heads  of  Departments  with  those consolidated  in  Form  GFR  8  and differences, if any, shall be taken up by the Heads of Departments with the

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Principal  Accounts  Officers  (or  the PAO  concerned)  for  reconciliation. The  Head  of  the  Department  shall furnish  a  quarterly  certificate  to  the Principal  Accounts  Officer  certifying the correctness of the figures for the quarter  by  the  15th  of  the  second following  month  after  the  end  of quarters  April-June,  July-September, October-December and JanuaryMarch.

- Rule 57 (6) The Departments of the Central Government shall obtain from their Heads of Departments and other offices under them the  departmental  figures  of  expenditure  in Form  GFR  8  by  the  15th  of  the  month following  the  month  to  which  the  returns relate. The figures relating to Revenue and Capital expenditure shall be separately shown in these returns. The information so obtained shall be posted in register(s) kept for watching the flow of expenditure against the sanctioned grant or appropriation. Progressive  totals  of  expenditure  shall  be worked out for the purpose. If the departmental figures obtained in Form GFR 8 and posted in the register(s), require correction in a subsequent month, Heads of Departments or other offices shall make such corrections by making plus or minus entries in the progressive totals. In case the Accounts Office  figures  which  subsequently  become available are found to be higher than departmental  figures,  the  former  shall  be assumed to be the correct figures, as appropriation accounts are prepared on the basis of the figures booked in the accounts.

Rule 57

(7) The Departments of Central Government shall also obtain from the Heads of Departments  and  other  authorities  under them, statements showing the details of the physical progress of the schemes for which they  are  responsible.  This  statement  shall show the name of the scheme, the Budget provision for each scheme, the progressive expenditure on each scheme, the progress of the scheme in physical terms and the detailed reasons  for  any  shortfalls  or  excess,  both against physical and financial targets.

Rule 57 (8 )  A  Broadsheet  in  Form  GFR  9  shall  be maintained  by  the  Departments  of  Central Government  or  each  Head  of  Department and other authorities directly under them, to watch  the  prompt  receipt  of  the  various returns  mentioned  above  from  month  to

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month and to take necessary measures for rectifying any defaults noticed.

Rule 58 Maintenance  of  Liability Register for effecting proper  control over expenditure. In  order  to  maintain  proper control over expenditure, a Controlling Officer shall obtain from the spending authorities liability statements in Form GFR 3A every month, starting from the month of October in each financial year. The Controlling  Officer  shall  also  maintain  a Liability  Register in  Form GFR 3.

Rule 59 Personal attention of the Head of Department  /Controlling Officer required to estimate savings or excesses. A Head of Department or Controlling Officer shall be in a position to estimate the likelihood of savings or excesses every month and to regularize them in accordance with the instructions laid down in Rule 62.

Rule 60 Control of expenditure against grant/appropriation and ultimate responsibility of t h e authority administering  it. The  Accounts  Officer shall report to the Head of the Department concerned immediately on the first appearance of any disproportionate expenditure, particularly in respect of recurring  items  of  expenditure  under  any grant or appropriation or a primary unit of appropriation thereof. However, the authority administering a grant/ appropriation  is  ultimately  responsible  for the control of expenditure against the grant/appropriation  and  not  the  Accounts Officer.

## Rule 61 Excess Expenditure.

1. The Accounts Officer shall not allow any  payment  against  sanctions  in excess of the Budget provisions unless there is specific approval of the Chief Accounting Authority.
2. The Financial Advisers and  Chief Accounting Authority, before according concurrence for excess under any Head, shall ensure availability of funds t hrough Reappropriation/ Supplementary D e m a n d s f o r G r a n t s . (Refer Appendix 10)
3. Rule 62 (1) Surrender of savings. Departments of the Central Government shall surrender to the Finance Ministry, by the dates prescribed by  that  Ministry  before  the  close  of  the

financial  year,  all  the  anticipated  savings noticed  in  the  Grants  or  Appropriations controlled by them. The Finance Ministry shall communicate the acceptance of such surrenders  as  are  accepted  by  it  to  the Accounts Officer, before the close of the year. The funds provided during the financial year and  not  utilized  before  the  close  of  that financial year shall stand lapsed at the close of the financial year.

Rule 62 (2) The  savings  as  well  as  provisions  that cannot be profitably utilised shall be surrendered to Government  immediately they are foreseen without waiting till the end of  the  year.  No  savings  shall  be  held  in reserve for possible future excesses.

Rule 62 (3) Rush  of  expenditure,  particularly  in  the closing months of the Financial year, shall be regarded as a breach of financial propriety and shall be avoided. The Financial Advisers of  the  Ministries/Departments  shall  ensure adherence to the stipulated Monthly Expenditure Plan and the guidelines issued in this regard by the Budget Division, Department of Economic Affairs, from time to time.

Rule 62 (4) The Financial Advisers of the Ministries/ Departments shall ensure adherence to the stipulated Quarterly Expenditure Plan and the guidelines issued in this regard by Ministry of Finance from time to time.

Rule 63 Expenditure on New  Service. No expenditure shall be incurred during a financial year on a 'New  Service' not contemplated in the Annual Budget for the year except after obtaining a supplementary grant or appropriation or an advance from the Contingency Fund during that year. The guidelines to determine cases of  'New Service'/'New  Instrument  of  Service'  are contained in Annexure-1 to Appendix -3.

Rule 64 (1) Additional Allotment for excess expenditure . A subordinate authority incurring the expenditure shall be responsible for  seeing  that  the  allotment  placed  at  its disposal is not exceeded. Where any excess over the allotment is  apprehended,  the subordinate authority shall obtain additional allotment before incurring the excess expenditure. For this purpose, the authorities incurring expenditure shall maintain a 'Liability  Register'  in  Form  GFR  3.

Rule 64  (2) A Disbursing Officer may not, on his own authority, authorize any payment in excess of

the  funds  placed  at  his  disposal.  If  the Disbursing Officer is called upon to honour a claim, which is certain to produce an excess over  the  allotment  or  appropriation  at  his disposal,  he  shall  take  the  orders  of  the administrative authority to which he is subordinate before authorizing payment of the  claim  in  question.  The  administrative authority shall then arrange to provide funds either by reappropriation or by obtaining a Supplementary Grant or Appropriation or an advance from the Contingency Fund. Instructions contained in Note below Appendix 10 may also be kept in view.

Rule 65 (1) Re-appropriation of Funds. Subject to the provisions of Rule 10 of the Delegation of Financial Powers Rules,  and also subject to such other general or specific restrictions as may be imposed by the Finance Ministry in this  behalf,  re-appropriation of funds from one primary unit of appropriation to another such  unit  within  a  grant  or  appropriation, may be sanctioned by a competent authority at any time before the close of the financial year  to  which  such  grant  or  appropriation relates. The Primary unit in this regard shall be  the  final  unit  of  appropriation  i.e.  the Object head of account.

Rule 65  (2) Re-appropriation of funds shall be made only when it is known or anticipated that the appropriation for the unit from which funds are to be transferred shall not be utilized in full  or  that  savings  can  be  effected  in  the appropriation for the said unit.

Rule 65 (3) Funds shall not be re-appropriated from a  unit  with  the  intention  of  restoring  the diverted  appropriation  to  that  unit  when savings become available under other units later in  the  year.

Rule 65 (4) An  application  for  re-appropriation  of funds  shall  ordinarily  be  supported  by  a statement in Form GFR 1 or any other special form authorized by departmental regulations showing how the excess is proposed to be met. I n all orders, s a n c t i o n i n g reappropriation, the reasons for saving and excess  of  Rupees  1  lakh  or  over  and  the primary  units  (secondary  units,  wherever necessary), affected shall be invariably stated. The authority sanctioning the reappropriation shall endorse a copy of the order to the Accounts Officer.

Rule 66 Supplementary Grants. If savings are not available  within  the  Grant  to  which  the payment is required to be debited, or if the expenditure  is  on  'New  Service'  or  'New

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Instrument  of  Service'  not  provided  in  the budget, necessary Supplementary Grant or Appropriation in accordance with Article 115 (1)  of  the  Constitution  shall  be  obtained before payment is authorized (Refer to Appendix 5).

Rule 67 (1)  Advance  from  Contingency  Fund. When  a  need  arises  to  incur  unforeseen expenditure in excess of the sanctioned grant or  appropriation  or  on  a  new  service  not provided in Budget and there is not sufficient time  for  the  voting  of  the  Supplementary Demand and the passing of the connected appropriation bill before close of the financial year, an advance from the Contingency Fund set up under Article 267 (1)  of  the  Constitution  shall  be  obtained before incurring the expenditure.

Rule 67 (2) An advance from the Contingency Fund shall also be obtained to meet expenditure in excess of the provisions for the service included in an Appropriation (Vote on Account) Act.

Rule 67 (3) The application for an advance from the Contingency Fund shall indicate inter alia the particulars of the additional expenditure involved and the sanction to the advance has also to indicate the sub-head and the primary unit  of  the  Grant  to  which  the  expenditure appropriately relates. In case, however, any difficulty is felt, the matter shall be referred to the Finance Ministry for clarification.

Rule 67 (4) The procedure for obtaining an advance from the Contingency Fund and recoupment of  the  Fund  shall  be  as  laid  down  in  the Contingency Fund of India Rules, 1952, as amended  from  time  to  time.  For  ready reference, rules have been placed at Appendix - 6 to this volume.

## Rule 68 Inevitable Payments.

- (i) Subject to the provisions of Article 114 (3) of the Constitution, money indisputably payable by Government shall not ordinarily be left unpaid.
- (ii) Suitable provision for anticipated liabilities shall invariably be made in Demands  for  Grants  to  be  placed before Parliament.

Rule 69 For  easy  reference  an  extract  relating  to procedures followed in the Accounts Office for check against provision of funds as a part of  pre-check  of  bills  has  been  placed  at Appendix 10.

Rule 70 Duties and Responsibilities of the Chief

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Accounting Authority. The  Secretary  of  a Ministry/Department who is the Chief Accounting Authority of the Ministry/ Department shall: -

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