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«Government of India Ministry of Finance Department of Expenditure General Financial Rules, 2005* (* Amendments issued upto March 2010 have been added as ...»

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5.(5) In reporting estimates of receipts by way of foreign grant assistance in cash or in kind, care should be taken to classify foreign grant receipts in cash under the Major Head '1605 External Grant Assistance' and those in the form of commodities under the Major Head '1606 Aid Materials and Equipment'. In the case of commodities grants, identical provision will be made in expenditure estimates under the Major head '3606 Aid Materials and Equipments' (both as debits to represent the notional payment therefor and as credits - recoveries in reductions of expenditure - to reflect the counter-balancing entries), as well as under the final functional Head of Account showing the final destination and use of the aid materials and equipment.

NOTE. - For utilization of cash grants, provision in expenditure estimates under the final functional Heads of Account will be necessary.

5.(6) In reporting the estimates, the estimating authorities should confine their estimates to those items of receipts which are to be accounted for finally in their own accounts and ultimately in the accounts of the Ministry/ Department to which they are subordinate. All other receipts/recoveries entering the accounts of another Ministry/ Department should be communicated to the concerned Ministry/Department for consolidation in their estimates (e.g., receipts of CGHS contributions and rent recoveries in respect of Government accommodation).

APPENDIX - 3 [ See Note below Rule 48 ]



1. For purpose of Budget Estimates, expenditure from the Consolidated Fund falls in two categories - Non-Plan expenditure and Plan expenditure -each comprising expenditure on revenue account and on capital account including loans and advances.


2. To facilitate appropriate scrutiny and consolidation of Expenditure Estimates for reporting to the Finance Ministry, the Financial Adviser in each Ministry / Department will obtain detailed estimates and other supporting data from each of the estimating authorities under the control of the Ministry / Department, in appropriate forms, sufficiently in advance.

3. The framing of the Revised Estimates for the current year should always precede estimation for the ensuing year. The Revised Estimates should be framed with great care to include only those items which are likely to materialize for payment during the current year, in the light of (i) actuals so far recorded during the current year, compared with the actuals for corresponding period of the last and previous years, (ii) seasonal character or otherwise of the nature of expenditure, (iii) sanctions for expenditure and orders of appropriation of re-appropriation already issued or contemplated and (iv) any other relevant factor, decision or development.

The Budget Estimate for the ensuing year should likewise be prepared on the basis of what is expected to be paid, under proper sanction, during the ensuring year, including arrears of previous years, if any. Due attention to considerations of economy must be paid and while all inescapable and foreseeable expenditures should be provided for, care should be taken that the estimate is not influenced by undue optimism.

4. No lump sum provision will be made in the Budget except where urgent measures are to be provided for meeting emergent situations or for meeting preliminary expenses on a project/scheme which has been accepted in principle for being taken up in the financial year. In latter cases Budget provision will be limited to the requirements of preliminary expenses and for such initial outlay, as, for example, on collection of material, recruitment of skeleton staff, etc.

Provision for a 'token' demand should not be made in the Budget Estimates for the purpose of seeking approval in principle for big schemes without the full financial implications being worked out and got approved by the appropriate authorities. In accordance with instructions contained in Paragraph (vii) of Appendix (6), a 'token' demand can be made during the course of a year for a project / scheme when the details thereof are ready and funds are also available for undertaking it but it cannot be started without Parliament's approval, it being in the nature of a 'New Service/New Instrument of Services'.

5. All estimates should be prepared on gross basis and 'voted' and 'charged' portions must be shown separately;

even expenditure met partly or fully from receipts taken in reduction of such expenditure or those counterbalanced by receipts credited as revenue to the Consolidated Fund, must be reported in such estimates on gross basis. Care should also be taken to ensure that all notional receipts reported in 'Receipt Estimates' (such as interest receipts fully or partly subsidized, loan repayment receipts partly or fully refinanced through further loans or conversions into equity, receipts of foreign grant assistance in the form of commodities or material, etc.) are properly matched by adequate provisions in expenditure estimates.

6. The estimates of Non-Plan expenditure should include all items which are fully accounted for in the accounts of the Ministry/Departments to which the estimating authority is subordinate; they shall also cover expenditure, if any, in Union Territories without Legislature, whether provided for in the demands of the said Ministry / Department or in the 'Area' demand of the concerned Union Territory. Estimates of 'Works Expenditure', if any, against the provisions in the demands of the Ministry of Urban Development, as well as expenditure on pensions (including commutation payments, gratuity payments, pension contributions, etc.) interest payments, loans and advances to Government servants, etc., which are provided for in the centralized Grants/Appropriations controlled by the Finance Ministry should be furnished to the Ministry of Urban Development and the Finance Ministry.

7. The estimate of establishment charges should be framed taking into account the trends over preceding three years and other relevant factors like changes in rates of pay, allowances, number of posts and their filling and the economy instructions issued by the Ministry of Finance from time to time.

8. Expenditure estimates will be prepared with full accounts classification, i.e., by Major/Sub-Major Head, Minor Head, Sub-Head and Detailed Head and Object Head of Account. The correctness of accounts classification must be ensured in each case an in case of any doubt, cleared beforehand with the Ministry of Finance, Budget Division/CGA.

The relevant Grant number and title of Appropriation should also be mentioned to facilitate identification of the provision in Budget Estimates for the current year.

9. Unless otherwise indicated by the Finance Ministry, estimates of Non-Plan expenditure (both Revised Estimates for the current year and Budget Estimates for the ensuing year) should reach the Finance Ministry, Department of Economic Affairs, Budget Division, by the date prescribed by the Ministry of Finance, each year, in triplicate in Form GFR 7, a separate form being used for each Major Head of Account.

10. To facilitate appreciation and scrutiny of the estimates, any major variations between the Budget and Revised Estimates for the current year and also between the Revised Estimates for the current year and Budget Estimates for the ensuing year should be explained cogently. In particular, all Non-Plan provisions for subsidy, capital investment or loan to a Public Sector Undertaking, must be explained by indicating their purpose and the extent to which they are intended to cover losses, working capital needs, debt or interest liabilities of the undertaking.

11. Wherever the proposed estimates attract the limitations of 'New Service/New Instrument of Service', the fact must be specifically highlighted. The guidelines to be followed in this regard are indicated in Annexure - I to this Appendix. For all 'new' schemes, other than purely 'works' projects, the estimates proposed should be supported by details set out in Annexure - II to this Appendix. In the case of provisions of 'Grants-in-aid' to non-Government entities, the full purpose thereof and the nature of the grants, whether recurring or non-recurring, should also be indicated.

12. All provisions for transfer of Government assets to Public Sector Undertaking and other non-Government entities must also be highlighted, indicating whether the transfer is by way of grants or by way of equity investment or loan. Similarly, in the case of nationalization or take-over of any private sector assets, the related provisions in estimates must be supported by full details, such as the effective date of take-over, the agreed compensation amount and the manner of its payment, etc. In cases of takeover, where the assets are simultaneously transferred to a Public Sector Undertaking, it must be ensured that the estimates provide for (i) payment of compensation for the take-over, (ii) for transfer of assets to the Public Sector Undertaking, by means of recovery of compensation payment to be taken in reduction of expenditure, and (iii) provisions for equity or loan to the Public Sector Undertaking.


13. The Planning Commission prescribe each year the form and the manner in which proposals are required to be submitted to them for determining the Plan allocations for the ensuing year. The Financial Adviser in each Ministry / Department of the Central Government will accordingly call for requisite data from the estimating authorities, public sector and other enterprises under the control of the Ministry / Department, etc. The approved Plan allocations will be communicated by the Planning Commission to the Central Ministries / Departments, indicating the total Plan outlay approved for each scheme / organization and the extent to which it is to be met from extra-budget resources and from provisions in the Demands for Grants.

14. Subject to such directions as may be issued by the Finance Ministry from time to time, the Revised Estimates for the current year and Budget Estimates of the ensuing year, in respect of Plan provisions, are to be sent to the Finance Ministry in Form GFR 7. For furnishing these estimates, instructions for preparation and submission of Non-Plan Expenditure Estimates will apply to the extent relevant; in addition, the following points should also be borne in mind :i) Such part of the approved budgetary support for Plan outlay as relates to 'works expenditure' and has been accepted by the Ministry of Urban Development for inclusion in their Demands for Grants should be excluded by the other Ministries / Departments in reporting the estimates to the Finance Ministry in Form GFR 7.

(ii) In the case of Plan, provisions for equity investments and loans to public sector and other enterprises, as well as those for grants-in-aid, specific schemes, for which the outlay is provided and the extent for each of them is also to be indicated clearly.

(iii) Provisions for Plan expenditure on Central and Centrally Sponsored Plan Schemes, including such expenditures in Union Territories, are to be included in the relevant demand of the Administrative Ministry/ Department and not in 'Area' Demand of the concerned Union Territory.

ANNEXURE - 1 TO APPENDIX - 3 (Refer: Ministry of Finance, Budget Division's OM No. F(15)-B(RA)/82 dated 13.4.1982) [ See Paragraph 11 of Appendix - 3 ]

–  –  –

1. Statement of proposal :

(a) Title of the proposal / scheme.

(b) Description of the proposal / scheme and its objects.

(c) Justification for the proposal / scheme and what alternatives have been considered.

(d) Description of the manner in which the proposal / scheme is proposed to be implemented including mention of agency through which the scheme will be executed.

(e) Schedule of programme and target date of completion.

2. Financial implications of the proposal :

(a) Nature of the scheme (Plan-Central or Centrally sponsored - or Non-Plan.) (b) Total outlay (recurring and non-recurring separately), its broad details and its year-wise phasing.

(c) (i) Plan allocation, in a Plan scheme; and (ii) Budget provision in the current financial year;

if no Budget provision exists, how is the expenditure proposed to be met?

(d) Foreign exchange component of the outlay and how it is proposed to be met.

(e) Component of grant, loan and subsidy, if any, in the total outlay involved and their proposed terms.

(f) Number of posts, their pay scales and the basis adopted for staffing (Statement attached).

(g) Broad details of construction works, their justification and basis of estimates (Statement attached).

(h) Requirement of stores and equipment together with justification and cost (Statement attached).

(i) Achievement / return expected and other economic implications, if any.

3. (a) Comments, if any, of the Planning Commission (for Plan Schemes only).

(b) Comments, if any, of other Ministries / Departments which may have been consulted.

4. Supplementary information, if any.

5. Points on which decision / sanctions are required.

Secretary to the Government of India.

–  –  –

1. The Demand for Grants are presented to Parliament at two levels. The Main Demands for Grants are presented to Parliament by the Ministry of Finance along with the Annual Financial Statement while the Detailed Demands for Grants are laid on the Table of the Lok Sabha by the concerned Ministries a few days in advance of the discussion of the respective Ministries Demands in that House.

Both the Main Demands for Grants as also the Detailed Demands for Grants comprise three parts each, viz.Part - I shows the Service for which the Demand (or Appropriation) is intended and the estimates of the gross amount, separately for Voted and Charged Expenditure, under Revenue and Capital (including Loan) sections required in the ensuing year in respect of that Service.

Part - II shows break up of the estimates separately for Plan and Non-Plan expenditure. In the Main Demands for Grants, the break up is exhibited up to the level of Major Heads of Account which correspond to functions of the Government.

In the Detailed Demands for Grants the break up in respect of activities/schemes/organization up to the object head level is given.

The Detailed Demands for Grants also exhibit actuals of the previous year in Part - II.

Both in the Main Demands for Grants as well as in the Detailed Demands for Grants, the details of recoveries taken in reduction of expenditure provided for in the Demand or Appropriation are also depicted.

2. All Detailed Demands for Grants of a Ministry / Department are consolidated in a single volume and presented to Lok Sabha by the concerned Ministry / Department. The Detailed Demands show ‘actual expenditure’ as per accounts in the previous year, Budget and Revised Estimates for the current years and Budget Estimates for the ensuing year, each showing ‘Plan’ and ‘Non-Plan’ items separately.

(i) The process of compilation should start in July / August with the preparation of a manuscript skeleton.

Manuscript skeletons of Detailed Demands for the ensuing year should be prepared by using the printed Detailed Demands for the current year by making necessary alterations therein. New sub-heads sanctioned by the Finance Ministry, if any, and those expected to be required should also be added in the manuscript at appropriate places. The manuscript should then be sent to the designated press for a proof. Where necessary, a second proof may be obtained. The printed skeletons should be available with the Ministries/ th Departments preferably by the 15 October each year.

(ii) Two copies of the Demand skeleton may then be sent to the Principal Accounts Officer, as the case may be, for filling the ‘Actuals’ column for the previous year and to return one copy duly filled in.

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