Indian Audit and Accounts Department

Structured Training Module on Public Exchequer Control

Session 8 - Delegation of Financial Powers Rules, 1978

Delegation of Financial Powers Rules, delegate financial powers to incur expenditure out
1978 of public funds to subordinate authorities of
various other Ministries/Departments of
Session Overview Government of India.

In the previous session we learnt that financial
control over public exchequer includes well defined
and well laid down procedures regarding collection
of revenue for public exchequer and incurring of
expenditure from public funds and in that context
discussed the General Financial Rules, 2005 and
their application in disciplining the financial and
budgetary control in government spending etc.
Another tool of public exchequer control is well
defined powers of different functionaries in the
Government for incurring expenditure from public
funds.
The General Financial Rules, 2005 are
supplemented by the Delegation of Financial
Powers Rules, 1978, which lay down the financial
powers of different functionaries for incurring
expenditure of public funds for better and effective
control and monitoring of Government spending
out of the allotted funds.
In this session we will discuss the main features of
delegation of financial powers as laid down in the
Delegation of Financial Powers Rules, 1978.
The Delegation of Financial Powers Rules, 1978
is the compendium containing all the orders
delegating powers to authorities other than the
Ministry of Finance. These Rules came in to force
with effect from the 1st August, 1978 repealing the
Delegation of Financial Powers Rules, 1958. The
Rules have been amended from time-to-time since
their publication in the Gazette of India, dated the
22nd July, 1978.
President has the powers under Rule 2 of these
rules:
> to relax all or any provisions of these
rules in relation to any authority;
> delegate to any authority powers in
addition to the powers delegated under
these rules;
> reduce the powers delegated to any
authority to the extent specified in the
order;
> impose conditions in addition to those
specified by these rules ;and
> for specified reasons withdraw from any
authority all/any of the powers delegated
under these rules.

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

All powers to incur expenditure out of public funds

(Consolidated Fund of India) vest with the
Government in the Ministry of Finance. The
structure of governance in India and the area of
governance is so vast that it is not possible for the
Ministry of Finance to authorize all the expenditure
of government of India. It was necessary to

Participant Note Session 8 - Delegation of Financial Powers Rules, 1978

 Indian Audit and Accounts Department
Structured Training Module on Public Exchequer Control
Session 8 - Delegation of Financial Powers Rules, 1978
Basic Concepts
The definitions of some of the frequently used
terms in the Rules are as under;
'Appropriation' means the assignment to meet
specified expenditure of funds included in a
primary unit of appropriation.
'Contingent Expenditure' means all incidental
and other expenditure including expenditure on
stores which is incurred for the management of an
office, for the working of technical establishment,
office expenses and the like but does not include
any expenditure which has been specifically
classified as falling under some other Head of
expenditure, such as 'Works', 'Tools and Plant'.
Expenditure other than recurring expenditure is '
Non-recurring expenditure'.
'Primary unit of Appropriation' means a
primary unit of Appropriation referred to in Rule
8.
' Re-appropriation' means the transfer of funds
from one primary unit of appropriation to another
such unit.
' Subordinate Authority' means a Department of
the Central Government or any authority
subordinate to the President.
The terms and expressions other than those
defined above have the same meaning as defined
in the General Financial Rules, 2005.

'Head of the Department' in relation to an office General limitations on power to sanction

or offices under his administrative control, means expenditure
an authority/person as the concerned department in
the Central Government may, by order, specify, as No expenditure shall be incurred from the public
a Head of the Department. Such person has to be revenue except on legitimate objects of public
the Head of an identifiable organization and the expenditure, and that a Subordinate Authority may
minimum of his revised scale of pay should not be exercise the power to sanction expenditure subject
lower than that of a Deputy Secretary to to any general/special order, direction/stipulation
Government of India. which the authority delegating or re- delegating
such power may issue/prescribe from time to time.
'Head of Office' means a Gazetted Officer Subordinate Authority
declared as such under Rule 14 of these rules (Rule
14 specifies that Department of the Central
Government, Administrators and Heads of
Departments shall have power to declare any
Gazetted Officer subordinate to them as Head of an
Office for the purpose of theses rules, and no more
than one Gazetted Officer shall be declared as Head
of Office in respect of the same
office/establishment, unless such
office/establishment is distinctly separated from
one another).
'Miscellaneous expenditure' means all
expenditure other than expenditure falling under the
category of pay and allowances of Government
servants, leave salary, pensions, contingencies,
grant-in-aid contributions, works, tools and plant
and the like.

' Recurring expenditure' means the expenditure

which is incurred at periodical intervals.

Participant Note Session 8 - Delegation of Financial Powers Rules, 1978

 Indian Audit and Accounts Department
Structured Training Module on Public Exchequer Control
Session 8 - Delegation of Financial Powers Rules, 1978
may sanction expenditure/advances of public
money in those cases only in which it is authorized
to do so by the provisions of any law in force, by
these rules/other rules issued by/with the approval
of the President, by any general/special order of the
President/ any other competent Authority. In the
case of the introduction of any new principle/
practice likely to lead to increased expenditure in
future the approval of the Ministry of Finance is
essential. The financial powers not specifically
delegated to any authority (known as Residuary
Financial Powers) vest in the Finance Ministry.
(Vide Rules 4 and 5).
Effect of sanction
Expenditure against a sanction shall be incurred
only when funds to meet the expenditure/liability
are made available by valid
Appropriation/Re-appropriation. In the case of a
recurring expenditure/liability, sanction becomes
operative when funds for the first year are made
available by valid Appropriation/re-appropriation
or by an advance from the Contingency Fund, as the
case may be, and it remains effective for each
subsequent year subject to appropriation in such
years and subject to the terms of the sanction.
service/New Instrument of Service', have been
discussed vide Government of India's
decisions(1) under Rule 10. Prior approval of
the Parliament for expenditure from the
Consolidated Fund is required, for setting up a
new undertaking/taking up a new activity by an
existing departmental undertaking and
involving Capital Expenditure or for setting up
a new public sector company/splitting up of an
existing company/amalgamation of two or more
companies, or taking up a new activity by an
existing company or in respect of investments to
be made for the first time in private sector
companies/private institutions except in units
coming under Government Management (with
the approval of Parliament). Approval of the
Parliament is also required in the cases of
additional investments above ` one crore in an
existing undertaking/private sector
companies/private institutions and in the case of
additional investments in loans above ` twenty
lakhs to an existing

It is not within the competence of a Department of

the Central Government to order/agree to
re-appropriation without the concurrence of the
Ministry of Finance from the funds provided for
new items in the budget. (Govt. of India
decision(1) under Rule 9)
General restrictions on Appropriation/
Re-appropriation (Rule 10)]

No funds will be appropriated/ re- appropriated to

meet expenditure which has not been sanctioned
by an authority competent to sanction it. Funds
provided for charged expenditure shall not be
appropriated/re-appropriated to meet votable
expenditure and vice versa. Re- appropriation from
one Grant/Appropriation for Charged Expenditure
to another Grant/Appropriation for Charged
Expenditure is also not permissible. Funds shall
not be appropriated /re-appropriated to meet
expenditure on a new service/new instrument of
service not contemplated in the budget as approved
by Parliament. The limits for deciding 'New
 Indian Audit and Accounts Department
Structured Training Module on Public Exchequer Control
Session 8 - Delegation of Financial Powers Rules, 1978
public sector company, where there is no Budget
Provision. In the cases where there is budget
provision and paid up capital of the company is
between ` lcrore to ` 100 crore, the limit for
seeking approval of the Parliament ranges
between above twenty lakh to ` 15 crores. The
expenditure below the limits (shown for
reference to the Parliament for approval) can be
met from the re-appropriation of savings in a
grant subject to report to the Parliament.
Expenditure above `10 lakhs and upto `50 lakhs,
on new Works (Land, Buildings and/or
Machinery) can be met from savings in a grant by
re-appropriation subject to report to Parliament
and with the prior approval of the Parliament if it
exceeds `50 lakhs.
In the case of Grant-in aid to statutory and other
public/private institutions under Revenue
Expenditure, the prior approval of the Parliament
for meeting the expenditure out of the
Consolidated Fund of India is required above the
following limits:
Institutions in receipt of `10 lakh, (limits apply
grant-in- aid up to `1 with reference to money
crore disbursed by an
individual Ministry/
Department and not by
the Government as a
whole.
Write off of Government loans above `1 lakh
(individual case) has to be referred to the
Parliament.
Ministries/Departments have full powers for
re-appropriation of funds from one plan head to
another plan head in a Grant, except in cases
involving foreign exchange provided that no
re-appropriation from Capital to Revenue and vice
versa is made, and commitments are not made
beyond the allocations for the schemes during the
plan period. Similarly savings in Revenue Section
are not available for re- appropriation in Capital
Section and vice versa in the same Demand for
Grants. The Financial Advisors have not to allow
diversion of funds /re-appropriation of funds to
augment provisions for travel expenses. The
Administrative Ministries/Departments may
enhance provision under travel Expenses up to
10%. Funds from 'salary' cannot be
re-appropriated to any other head.
Rule 11to 13 deals with powers of subordinate
authorities relating to creation of posts and
abolition of posts.

Institutions in receipt of 10% of the Budget

grant-in- aid above `1 provision or ` 2 crores,
crore whichever is less.

Grants-in-aid to private Above `5 lakhs

institutions other than
for Export Promotions
Schemes, Recurring

Above `10 lakhs

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

Participant Note Session 8 - Delegation of Financial Powers Rules, 1978

Structured Training Module on Public Exchequer Control
Session 8 - Delegation of Financial Powers Rules, 1978
Rule 11 provides that no post shall be created in the
Secretariat office/department of the Central
Government unless the scale/rate of pay on which
the post is created has been approved by the
President. No post on permanent basis can be
created without the previous consent of the Finance
Ministry. The subordinate authority authorized to
create a permanent post, may create similar
supernumerary post (a shadow post i.e. no duties
are attached to such post) for the purpose of
accommodating the lien of a Government servant
who, though entitled to hold a lien against regular
permanent post cannot be so accommodated
because of non-availability of such a post. The
supernumerary post has to be created only if
another vacant permanent post is not available to
provide lien. The creation of supernumerary posts
is guided by the principles given in Rule11 (5).
Abolition of posts is covered under Rule 12, which
states that a subordinate authority may sanction the
abolition of post which it is competent to create.
Powers of subordinate authorities
The powers vested in the departments of the Central
Government/Administrators and Heads of
Departments in relation to creation of permanent
posts, temporary posts, Appropriation and
re-appropriation, incurring of contingent or
miscellaneous expenditure, write off of losses are
specified in Schedules II to VII of these Rules. A
Department of Central Government may by general
or special order confer powers not exceeding those
vested in that department upon an
administrator/Head of Department/or any other
subordinate authority.
However, no powers can be delegated to any
subordinate authority in respect of:
(a) Creation of posts;
(b) Write off of losses; and
(c) Re-appropriation of funds
exceeding 10 percent of the
original budget provision for either
of the primary units of
appropriation/sub head.
Similarly Rule 16 provides that a Head of Office
Participant Note Session 8 - Delegation of Financial Powers Rules, 1978
may have power to authorize a Gazetted Officers
serving under him to incur
contingent/miscellaneous expenditure on his
behalf subject to restrictions as may be laid down
by him. The Administrator/Head of the
Department shall, however, continue to be
responsible for the correctness, regularity and
propriety of the decisions taken by the Gazetted
Officer to whom powers have been delegated. The
rules provide that the powers cannot be delegated
to a Non-Gazetted Officer.(Rule-13)
Insurance of the Government Property
Government property both movable and
immovable is not to be insured and no
expenditure has to be incurred/liability undertaken
in connection with the insurance of such property
without the previous consent of the Finance
Ministry. Motor vehicles owned by the Central
Government used for purposes not connected with
any commercial enterprise, are exempt from
compulsory insurance against thirds party risk by
virtue of sub-section (2) of Section 94 of the
Motor Vehicle Act, 1939. Such vehicles shall not
therefore be insured. (Vide Rule 15). Exception,
however, are:
> Insurance of materials and equipments
received on loan/as aid from Foreign
Governments/ International/Other
Organizations; if terms of contract
/agreements entered into with them
demand so.
> Where for booking of goods by rail/road,
an enhanced risk rate is provided,
additional charges above
5
 Indian Audit and Accounts Department
Structured Training Module on Public Exchequer Control
Session 8 - Delegation of Financial Powers Rules, 1978
those prescribed for booking of goods at
owner's risk rate, being in the nature of
insurance charges.
> The Departments may incur an expenditure
on insurance not exceeding `20000 in each
case (i.e. the term each case means
purchases made by the department from
one or more than one suppliers abroad on a
particular occasion) of all costly/ extremely
delicate, highly sensitive/sophisticated
equipments of fragile nature, which are not
easily replaceable and for which insurance
is considered absolutely necessary.(GID(1)
below Rule 15)
In cases where it has been decided to insure
properties/goods under the direct/indirect
control of the Central Government, the
departments shall affect the insurance only
with a Nationalized Insurance Organization
and follow the procedure that may be laid
down by the Ministry of Finance from time
to time. .(Note 2 below Rule 15)
Remission of disallowances by Audit and
writing off of overpayments to Government
servants
where the provision for such work is made in a
demand under the control of another Department,
if the scheme has been approved by the Finance
Ministry. Further approval of the Finance
Ministry shall not be required to sanction excess
expenditure over the original estimates of a
sanctioned scheme up to ten per cent or ` five
crores whichever is less (in the case of plan
scheme),and ten percent or ` three crores
whichever is less (in the case of non-plan
scheme). In relation to public works this is subject
to the provisions of the Central Public Works
Department Code/ Central Public Works Account
Code, etc The powers to sanction expenditure on
schemes in respect of the Departments of Central
Government having Integrated Finance Advice
System under plan schemes have been enhanced
to schemes costing less than `50 crores (provided
the scheme has been accepted by the Ministry
of Finance at the pre-budget stage). The
enhanced powers are, however, to be exercised
subject to the approval of the schemes of specified
costs by the prescribed authorities. (Rule 18)
Government of India's decision 4(A)3 below
Rule 18 specifies that the increase in the cost will
be approved by the Administrative
Ministry/Department in consultation with the
Budget Division of Ministry of Finance( Planning
Commission dissolved w.e.f 01.01.2015), where
such increases are due to:

A Department of the Central Government/an

Administrator/or any other subordinate authority, to
whom powers may be delegated by or under special
order of the President, may waive the recovery of
an amount disallowed by an Audit Officer/
Accounts Officer, or otherwise found to have been
overpaid to a Government servant subject to
specified conditions. Rule 17 specifies the
principles for remission of disallowances by audit
and writing off of overpayments made to
government servants.
Expenditure on Schemes or Projects

A Department of the Central Government may

sanction expenditure on any scheme/ project, the
total outlay on which does not exceed ` one crore
fifty lakhs, (the limit includes the entire cost of the
scheme upto the date of completion, both
Participant Note Session 8 - Delegation of Financial Powers Rules, 1978
recurring/ non-recurring), cost of the works, even
Increase in statutory levies;
(a) Exchange rate variations and price
escalation within the originally
approved project time scale.
Where the Revised Cost Estimates exceed 5% of
the latest approved cost (excluding changes in
statutory levies and exchange rate variation) due to
scope change, addition deletion etc., the same shall
be submitted to the Public Investment Board
(PIB)/Cabinet Committee on Economic Affairs
(CCEA) for approval.
Criterion for appraisal forum and level of authority
for an approval of revised cost estimate will be cost
overrun and not time overrun.
Sanction of Non-Plan Expenditure
A Department with Integrated Finance Scheme can
sanction Non-plan expenditure on schemes costing
less than to ` 300 crores, with specified financial
limit by the prescribed authority but no Non-plan
post would be created under this power.(GID 4(B)
below Rule 18)
Major works costing up to `5 lakhs
Ministries/Departments of the Central Government
may issue expenditure sanction in respect of Major
Works costing up to `5 lakhs without consulting
the Ministry of Finance.
Power to Release Funds
The Departments of the Central Government have
powers to release funds for investment as equity
capital of statutory corporations/ companies wholly
owned by the Central
Government, within the allotment in the
Budget/Appropriation/Re-appropriation of funds or
advance sanctioned for the purpose from the
Contingency Fund. (Rule 19)
Grants and Loans
Rule 20 prescribes the principles as regards powers
to sanction grants-in-aid including scholarships and
loans.
Indents, Contracts and Purchases
A department of the Central Government shall have
full powers to sanction expenditure for purchase
and execution of contracts including agreements
or contracts for technical collaboration or
consultancy services subject to the:
(i) Power of GFR-2005
(ii) Delegation of financial powers in the
DFP Rules, 1978;
(iii) Purchasing powers delegated from
time-to-time to the indenting
departments for making purchases.
Delegation to Secretary of Department
concerned is as under vide GIMOF
Notification no. 1(11)/E.II (A)/03 dated
16.09.2003-(Rule-21(b)
a. open / Limited tender contracts upto
rupees twenty crores.
b. Negotiated /Single Tender or
Proprietary contracts upto rupees five
crores.
c. Agreements or contracts for technical
collaboration and consultancy
services upto rupees two crores.
Contracts or purchases exceeding these values in
categories above require approval of the Minister
in charge of the Department.
Power of Administrator.
As per GIMF OM No.F.1 (4)-E II (A)/93, dated
23/02/1995, (GI decision below Rule 21) consent
of the GOI shall be required in the following cases:
 Any purchase or contract the value of
which exceeds `. 5 crore in the case of
Administrators of Delhi and Pondicherry
and rupees twenty lakhs in case of other
Administrators of UTs , if a contract
extends over a period of time, the total
value over the entire period of its currency
shall be taken as the value for the purpose
of applying the limit;
 Any negotiated or single tender contract
exceeding `. 1 crore in value in the case of
Administrators of Delhi and Pondicherry
and rupees two lakhs in case of other
Administrators of UTs, a limited or open
tender which results in only one effective
offer shall be treated as a single tender
contact for this purpose;
 Any indent for stores of a propriety nature
, the value of which exceeds `. 60 lakh;
in the case of Administrators of Delhi and
Pondicherry and rupees two lakhs in case
of other Administrators of UTs
7
 Indian Audit and Accounts Department
Structured
2 Training Module
Re-appropriation fromon thePublic Exchequer
G.O.I's
Control Session 8 - Delegation of Financial decisionPowers
funds provided for
Rules, 1978
new items. under
 Any agreement or contract for technical
collaboration or consultancy services Rule 9with
3 firms
Excess of expenditure
or foreign governments; and Rule
 Anybeyondpurchase
15 perwhich the 10(5)
has normally
cent over to be
affected
approved/ through the Central Purchasing
sanctioned
Organization,
amount for a but which
work where is proposed to be
made
savings are available underof emergency, if
direct on the grounds
the words`.head.
value exceeds
appropriate 50 lakh. in the case of
Administrators of Delhi and Pondicherry
and rupees two lakhs in case of other
4 Re-appropriation for a new Rule 10
Administrators of UTs.
In the casepublic work costing
of Department ` 10
of Commerce, Secretary
of the Department has the power than
lakhs or above but less `
to approve rate
50DGS&D
contract of lakhs of value upto Rupees 100
crores in each case.
5 Re-appropriation from and to Rule 10(6)
Sale, etc.the of publicfor
provisions buildings
the Secret
Service Expenditure
Rule 24 gives full powers to the Departments of
the6Central Government/ Administrators
Re-appropriation of funds to G.O.I'sto
sanctionaugment
sale dismantle
the of public buildings
decision
(subject secretariat
to specifiedexpenditure.
conditions) provided underthese
powers are exercised with the concurrence Ruleof10their
Financial
7 Advisers
Re-appropriation of funds G.O.I's
between direct decision
Cases where the consent of the Finance Ministry is
expenditure in the Revenue under
essential
Section to Rule 10
Sl. Grants-in-Aid
Details to Referen
No. States/Union territories in ce (DFP
the same Section and Rules,
vice versa 1978)
18 Re-appropriation
Lumpsum provisions of funds
in G.O.I's
Govt. of
between Capital
budget for certain urgent decision
India's
Outlay and loans
schemes not ready inor vice under
Decision
versa.
sufficient detail at the pre Rule
under10
9 All cases
budget of re-
stage. GOIs
Rule 7
appropriation involving decision
savings of more than `10 below
lakhs under Schedul
individual plan schemes eV
and more than `100
lakh for the plan heads
Participant Note Session 8 - Delegation of Financial Powers Rules, 1978
 relating to the
Ministry/Department as a
whole
10 Any purchase/contract the Rule 21
value of which exceeds ` five
crores, any
negotiated/single tender
contract exceeding ` one
crore, etc.

Delegation of Financial Powers in IA&AD

Under Article 148(5) of the Constitution of India, the conditions of service of persons serving in the Indian
Audit and Accounts Department and the administrative powers of the Comptroller and Auditor General
shall be such as may be prescribed by rules made by the President after consultation with the Comptroller
and Auditor General.

The financial and administrative powers of the Comptroller and Auditor General of India under the
provisions of the 'Delegation of Financial powers Rules, 1978', and the 'General Financial Rules, 2005 and
the powers delegated to the subordinate authorities in the Indian Audit and Accounts Department are
compiled in the 'Comptroller and Auditor General's Manual of Standing Orders (Administrative) Volume
II'. This manual also includes powers of the Comptroller and Auditor General of India and other authorities
in Indian Audit and Accounts Department relating to 'Civil Pension (Commutation) Rules', 'Classification,
Control and Appeal Rules', 'Conduct Rules', 'General Provident Fund (Central Service) Rules', etc.
Application of many of these rules have financial bearing.

Participant Note Session 8 - Delegation of Financial Powers Rules, 1978 _______________________________ 9