GENERAL FINANCIAL RULES

GFR 2017
 CHAPTER – I
(INTRODUCTORY)
 WHAT IT CONTAINS?
 General Financial Rules (GFRs) are a compilation of
rules and orders of Government of India to be
followed by all while dealing with matters involving
public finances.
 Executive Instructions of the Government

 1947, 1963, 2005 and now 2017

 Published by Department of Expenditure, Ministry

of Finance.
 Applicable to: All Central Government Ministries/
Departments, attached and subordinate bodies.
 Interpretation: Refer to MoF for decision.
 SOME IMPORTANT TERMS

 Consolidated Fund of India

 Article 266(1) of the Constitution

 Contingency Fund of India

 Article 267(1) of the Constitution
 Contingency Fund of India Act, 1950

 Public Account of India

Article 266(2) of the Constitution
 SOME IMPORTANT TERMS

 CAPEX Model of Expenditure

 Meant for Capital Expenditure
 Used by the buyer to straightway purchase goods followed by
procurement of consumables, arranging comprehensive
maintenance contact after warranty period and finally
disposing the product after useful life.
 OPEX Model of Expenditure
 The seller provides the goods, maintains it and also provides
the consumables as required and finally takes back the goods
after useful / contracted life.
 The expenditure made by the Buyer in a staggered manner as
per the terms and conditions of the contract.
 CHAPTER 2
GENERAL SYATEM OF FNANCIAL
MANAGEMENT
 FUNDAMENTALS
 Amounts due to Govt. shall not be left outstanding
without sufficient reasons:
 Recovery OR Regularised

 The Credit must follow and not precede actual

realisation:
 No sums shall be credited as revenue by debit to a
Suspense Head.

 Standards of Financial Propriety

 Regulation 6 of FR I and Para 32 of Defence Audit Code
 FUNDAMENTALS
 Responsibilityof Controlling officer in respect of
Budget allocation:
 That the expenditure does not exceed the budget allocation.
 That the expenditure is incurred for the purpose for which
funds have been provided.
 That the expenditure is incurred in Public Interest.
 That adequate Control Mechanism is functioning in his
Department for prevention, detection of errors and
irregularities in the financial proceedings and to guard against
waste and loss of Public Money.
 FUNDAMENTALS
 Sanction: Date of effect, Validity & Lapse of sanction etc
 Losses that need not be reported to Higher Authority:
 Cases involving losses of revenue due to mistakes in
assessments which are discovered too late to permit a
supplementary claim being made, refunds allowed on the
ground that the claims were time barred, Petty losses of
value not exceeding Rs 10000/-.
 Loss of Govt. Property due to fire, theft & fraud:
 If loss value is above Rs 50000/- : Reported to the Police for
investigation as early as possible.
 All loss of Immovable property exceeding Rs 50000/- shall be
reported to the next higher authority.
 CHAPTER 3
BUDGET FORMULATION & IMPLEMENTATION
 FUNDAMENTALS
 Financial Year:
 1st April to 31st March.
 Presentation of Budget to Parliament:
 By Finance Minister
 Annual Financial Statement
 Article 112 (1) of the Constitution.
 Estimates of all revenues expected to be raised during
the financial year;
 Estimates of all expenditure for each programme,
scheme, project in that financial year.
 Estimates of all interest and debt serving charges and
any repayments on loans in that financial year.
 RECEIPTS
 Revenue Receipt:
 Central Taxes, duties and cess
 Local Taxes and Duties
 Interest Receipts of Loans & Advances by the Central Govt.
 Dividends on Equity investments

 Capital Receipt:
 Internal debt (Market Loan, Treasury Bills etc)
 External Debts
 Repayment of Loans and advances made by the Central
Govt.
 Disinvestment Receipts
 DEMANDS FOR GRANTS
 Presented to Parliament at two levels – Main
Demand for Grants & Detailed Demands for Grants
 Main Demands for Grants:
 Presented by the Ministry of Finance, Budget Division
 Detailed Demands for Grants:
 Laid on the table of Lok Sabha by the concerned
Ministries / Departments
 Will be scrutinized by Departmentally Related Standing
Committee (DRSC)
 For Ministry of Defence, there are four Demand
for Grants – Ministry of Defence (Civil), Defence
Services (Revenue), Capital Outlay and Defence
Services & Defence Pensions.
 OUTCOME BUDGET
 Outcome Budget Statement is prepared by
Department of Expenditure in consultation with the
NITI Aayog and concerned Ministries.
 Outcome Budget Statement links outlays against
each scheme/project with the outputs / deliverables
and medium term outcomes.
 Importance: The performance against specified
outcomes would form the basis of deciding on the
continuation of the scheme and the quantum of
budget allocation.
 VOTE ON ACCOUNT
 Article116 of the Constitution
 To cover expenditure for brief period (preferably first
two months of financial year – April & May) pending
approval of the Budget by the Parliament.
 To enable the Govt. to run the show

 Quantum – 1/6th of the Budget Estimate of Last year.

 Not to be utilized for expenditure on a ‘New Service’.

 RE-APPROPRIATION
 Not possible in the following cases:
 After the close of Financial Year
 Between Charged and Voted Expenditure

 Between two different grants of charged

expenditure
 To meet expenditure on a new service

 Between Capital & Revenue expenditure

 SUPPLEMENTARY GRANTS
 Constitutional Provision:
 Article 115 of the Constitution

 Conditions:
 If savings are not available within the Grant
 If the Expenditure is on ‘New Service’ or ‘New
Instrument of Service’.
 ADVANCE FROM CONTINGENCY FUND
 Toincur unforeseen Expenditure in excess of the
Sanctioned Grant or Appropriation

 To incur expenditure on a New Service not provided

in the Budget

 Thereis not sufficient time for the voting of the

Supplementary Demand

 Tomeet expenditure in excess of the provisions for

the service included in the Appropriation
THANK YOU!