1.

UTTAR PRADESH BUDGET MANUAL

CHAPTER I
INTRODUCTORY
This Manual contains rules framed by the Finance Department for the
guidance of estimating officers and departments of the Secretariat in
regard to the budget procedure in general and in particular to the
preparation and examination of the annual budget estimates and the
subsequent control over expenditure to ensure that it is kept within the
authorised grants or appropriations. These rules are statutory rules in so
far as they derive their authority from the rules framed by the Governor of
Uttar Pradesh in exercise of the powers conferred on him by Article 166
(2) and (3) of the Constitution of India. These rules inter alia regulate the
functions of the Finance Department.
2. Annual Financial Statement - Under Article 202 of the Constitution,
in respect of every financial year, a statement of the estimated receipts
and expenditure of the State for that year, called the "annual financial
statement" (or the "budget"), is to be laid before both the Houses of the
State Legislature. The estimates of expenditure show ‘charged’ and
‘voted’ items of expenditure separately and distinguish expenditure on
revenue account from other expenditure.
3. Structure of Government Accounts - All receipts and disbursements
of the State Government are shown in three separate parts, namely,
Part I - Consolidated Fund,
Part II - Contingency Fund and
Part III - Public Account.
Consolidated Fund - Under Article 266 ibid, all revenues received by a
State Government, all loans raised by that Government by the issue of
treasury bills, loans or ways and means advances and all moneys
received by that Government in repayment of loans form one
consolidated fund, called "the Consolidated Fund of the State." No
moneys out of this Fund shall be appropriated except in accordance with
law and for the purposes and in the manner provided in the Constitution.
Contingency Fund - Under Article 267 (2) ibid, the State Legislature has
established a Contingency Fund which is in the nature of an imprest and
enables the Executive Government to meet unforeseen expenditure
pending its authorisation by the Legislature by law.
(See the Uttar Pradesh Contingency Fund Act, 1950 and the rules
framed thereunder in Appendix IV).
Public Account - Besides the normal receipts and expenditure of the
Government which relate to the Consolidated Fund, certain other
transactions enter Government accounts, in respect of which, the
Government acts more as a banker, for example, transactions relating to
provident funds, other deposits such as security deposits made by
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contractors or court deposits or deposits by a local body for execution of

projects through a government agency, etc. The moneys thus received
are kept in the public account of the State, the connected disbursements
are also made therefrom. Generally speaking, public account funds do
not belong to the Government and have to be paid back some time or the
other to the persons and authorities who deposited them. Legislative
authorisation for payments from the public account is, therefore, not
required. In a few cases, a part of the revenue of the Government is set
apart in separate funds for expenditure on specific objects like sugar
development, maintenance of roads, industrial development,
replacement of depreciated assets of Irrigation Department, Public
Works Department. These amounts are withdrawn from the Consolidated
Fund with the approval of the State Legislature and are kept in the public
account for expenditure on the specific objects. The actual expenditure
on the specific objects is, however, again submitted for vote of the State
Legislature even though the moneys have already been earmarked by
the State Legislature for transfer to the funds.
4. Division of the Consolidated Fund - The main divisions of the
Consolidated Fund are:
(i) Revenue Account ;
(ii) Capital Account ;
(iii) Debt (comprising Public Debt and Loans and Advances).
Revenue Account – Revenue account is the account of (i) the current
income of the Government derived mainly from taxes and duties, fees for
services rendered, fines and penalties, etc., and (ii) the expenditure met
from that income. The difference between such income and expenditure
represents the revenue surplus, or deficit, as the case may be, for the
year.
Capital Account - Capital account consists of capital receipts and
payments. It includes receipts arising generally from sale of concrete
assets intended to be applied as a set-off to capital expenditure. Capital
payments consist of capital expenditure on acquisition of assets like land,
buildings, machinery, equipment, investments in shares, etc. Expenditure
on Capital account is usually met from borrowed funds or accumulated
cash balances.
Note 1 - The decision whether expenditure shall be met from current
revenues or from borrowed funds rests with the Executive-cum-the
Legislature.
Note 2 - Capital expenditure may be broadly defined as expenditure
incurred with the object of increasing concrete assets of material and
permanent character. It is, however, not essential that the concrete
assets should be productive in character or that they should even be
revenue producing.
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Note 3 - After it has been decided to incur expenditure for the creation of
a new or additional asset, the classification of expenditure between
"Capital" and "Revenue" is made as follows :
(a) Capital bears all charges for the first construction of a project as well
as charges for intermediate maintenance of the work while not opened
for service and also bears charges for such further additions and
improvements as may be sanctioned under the rules made by competent
authority.
(b) Revenue bears all subsequent charges for maintenance and all
working expenses. These embrace all expenditure on the working and
upkeep of the project and also on such renewals, replacements and such
additions, improvements or extensions as under rules made by
competent authority are debitable to the Revenue Account. In the case,
however, of works of renewals and improvements which partake both of
a Capital and Revenue nature, it is sometimes impracticable to draw a
hard and fast line between what is properly debitable to Capital or to
Revenue, but an equitable distribution of burdens between present and
future generations is aimed at.
(c) Expenditure on procurement of machinery and equipment for office
use is to be treated as revenue expenditure while expenditure on
procurement of machinery, equipment, vehicle etc to be used by
functional units of the Government is to be treated as capital expenditure.
Public Debt : This division comprises loans raised by Government such
as market loans, loans from the Life Insurance Corporation of India, etc.,
and the borrowings from the Central Government. The Sector "E. Public
Debt" will have two major heads, i.e., "6003. Internal Debt of the State
Government" and "6004. Loans and Advances from the Central
Government". Transactions connected with these are recorded both on
the receipt and the disbursement sides.
Loans and Advances - This division comprises loans and advances
made by Government and also recoveries thereof. The Sector "F. Loans
and Advances" will have pattern of classification as for capital
expenditure. Transactions connected with these are recorded both on the
receipt and the disbursement sides.
5. Divisions of Public Account - The major items in the public account
are grouped under the following sectors, namely :
(I) Small Savings, Provident Funds, etc.
(J) Reserve Funds
(K) Deposits and Advances
(L) Suspense and Miscellaneous
(M) Remittances
(N) Cash Balance
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The first three sectors comprise receipts and payments in

respect of which the Government act as a banker receiving amount
which they afterwards repay and paying out amounts which they
subsequently recover. The fourth and the fifth sectors comprise merely
adjusting heads under which appear remittances of cash between
Treasuries and transfers between different Accounting Circles. The initial
debits or credits to the heads in these sectors are cleared eventually by
either transfer to the final heads of account or by corresponding receipts
or payments.
6. Accounting Classification – The estimates of receipts and
expenditure in the Annual Financial Statement and of expenditure in the
demands for grants are shown according to the accounting classification
prescribed under Article 150 of the Constitution.
7(A). Sectors and Heads of Accounts -
Classification of transactions in Government Accounts on a
function-cum-programme basis was introduced from April 1, 1974. This
functional classification had been evolved with the twin objectives of
reflecting Government transaction in terms of functions, programmes and
schemes and securing correspondence between accounting
classification and Plan Heads of development. To bring about closer
correspondence between Plan Schemes and Account Heads, the
accounting classification was modified further with effect from April 1,
1987, under which a six tier classification structure incorporating the
following was adopted :
(I) Sectors, comprising sub-sectors, wherever necessary, to
indicate the grouping of the series of governmental functions
broadly :
A. General services (Administration of Justice, Land Revenue,
Interest Payments, Police, Public Works, Pensions and
Other Retirement benefit, Defence Services, etc.);
B. Social Services (General Education, Medical and Public-
Health, Housing, Information and Publicity, Welfare of
Scheduled Castes, Scheduled Tribes and Other Backward
Classes, Labour and Employment, Social Security and
Welfare, etc.);
C. Economic Services (Crop Husbandry, Forestry and Wild
Life, Agricultural Research and Education, Special
Programmes for Rural Development, Rural Employment,
Other Special Areas Programmes, Major and Medium
Irrigation, Flood Control and Drainage, Power, Industries,
Roads and Bridges, Telecommunication Services, Ecology
and Environment, Tourism, Civil Supplies, etc.).
(II) Major Heads (comprising Sub-Major Heads wherever
necessary) - The Major Heads of Account, falling within the sectors for
expenditure heads, generally correspond to functions of Government,
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such as Agriculture, Education, Medical and Public Health, Social

Security and Welfare, etc.
(III) Minor Heads - Minor Heads identify the programmes
undertaken to achieve the objectives of the functions represented by the
Major Head, where possible, so that expenditure on programmes can be
extracted from the accounts direct.
(IV) Sub-Heads of Classification denote and identify the
schemes undertaken in pursuance of programmes represented by Minor
Heads or components of a particular programme. If a programme does
not have any scheme, sub-heads may represent non-developmental
expenditure or expenditure of administrative nature. The Sub Heads
should not be multiplied unnecessarily and new ones opened only when
really necessary.
(V) Detailed Heads denote sub-schemes under various sub-
heads.
(VI) Standard Objects represent the primary units of
appropriation showing the economic nature of expenditure such as pay
and wages, office expenses, travel expenses, professional services,
grants-in-aid, etc.
The following is an example of six-tier classification in the budget
and accounts with reference to a plan scheme :
First Tier Sector B- Social Services
Sub-Sector (a) Education, Sports, Art &
Culture
Second Tier Major Head 2202-General Education
Sub-Major Head 01- Elementary Education
Third Tier Minor Head 111- Sarva Shiksha Abhiyan
Fourth Tier Sub-Head 01- Central Plan / Centrally
Sponsored Schemes
Fifth Tier Detailed Head 02- Appointment of Teachers /
Shiksha Mitra
Sixth Tier Primary Unit of 43- Grant-in-aid for pay,
Appropriation allowances, etc.

(B). Coding Pattern -

(a) Major Head-Major heads are the main units of accounts classification
under various Sectors. They give an idea of the distribution of
expenditure among functions which represent the major divisions of the
Governmental efforts.
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A four-digit code has been allotted to the Major Head whether

the Major Head is a Receipt Head or Revenue Expenditure Head or
Capital Expenditure Head or Loan Head. If the first digit is ‘0’ or ‘1’ the
Head of Account will represent Revenue Receipt, ‘2’ or ‘3’ will represent
Revenue Expenditure, ‘4’ or ‘5’ Capital Expenditure, ‘6’ or ‘7’ Loan Head,
and ‘8’ will represent Contingency Fund and public account.
Adding 2 to the first digit of the Revenue Receipt will give the
number allotted to corresponding Revenue Expenditure Head, adding
another 2 – the Capital Expenditure Head and another 2 – the Loan
Head of Account, for example:
0401 represents the Receipt Head of Crop Husbandry
2401 the Revenue Expenditure Head for Crop Husbandry
4401 Capital Outlay on Crop Husbandry
6401 Loans for Crop Husbandry
In a few cases where corresponding heads have not been
provided taking into account factors like the magnitude of the receipts or
expenditure, for example, the major head ‘2029-Land Revenue’ will not
have corresponding heads in capital and loan sections. However, the
transaction for the above will be recorded under major head ‘Other
Administrative Services’.
(b) Sub-Major Head - Sub-Major Head represents sub function of the
function, such as '01-Elementary Education', '02-Secondary Education'
under the Major Head '2202-General Education'
A two-digit code has been allotted, the codes starting from ‘01’
under each Major Head. Where no sub-Major Head exists, it is allotted a
code ‘00’. Nomenclature ‘General’ has been allotted code ‘80’
(c) Minor Head – Minor Head means a head subordinate to a Major or
Sub-Major Head and denotes various programmes under each function.
These have been allotted a three-digit code, the codes starting
from ‘001’ under each sub-Major/Major Head (where there is no Sub-
Major Head). Codes from ‘001’ to ‘100’ and few codes ‘750’ to ‘900’ have
been reserved for certain standard Minor Heads. For example, Code
‘001’ always represents Direction and Administration. Non Standard
Minor Heads have been allotted codes from ‘101’ in the Revenue
Expenditure series and ‘201’ in the Capital and Loan series, where the
description under Capital/Loan is the same as in the Revenue
Expenditure Section, the code number for the Minor Head is the same as
the one allotted in the Revenue Expenditure Section. Code numbers
from ‘900’ are always reserved for Deduct Receipt or Deduct Expenditure
Heads.
The code for 'Other Expenditure' is ‘800’ while the codes for
other grants / other schemes, etc. where minor head ‘Other Expenditure’
also exists is kept as ‘600’. This has been done to ensure that the order
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in which the Minor Heads are codified is not disturbed when new Minor
Heads are introduced.
The coding pattern for Minor Heads has been designed in such a
way that in respect of certain Minor Heads having a common
nomenclature under various Major/sub-Major Heads, as far as possible,
the same three digit code is adopted, a few illustrative cases are given
below.
Standard Common Nomenclature
3-digit Code
001 Direction & Administration
003 Training
004 Research / Research Development
005 Investigation
050 Land
051 Construction
052 Machinery & Equipment
190 Assistance to public sector and other undertakings
501 Services and Service Fees
792 Irrecoverable Loans written off
794 Special central assistance for Tribal sub plan
796 Tribal area sub plan
797 Transfer to / from reserve funds and Deposit Accounts
799 Suspense
800 Other Receipts / Other Deposits / Other Loans / Other
Expenditure
(d) Sub-Head – Sub-Head represents schemes under a programme
subordinate to a Minor Head. These are denoted by a two-digit code.
(e) Detailed Head – Detailed head represents sub-schemes under
schemes and is subordinate to the sub- head. It is denoted by a two-digit
code. Where no detailed head exists it is allotted a code ‘00’.
(f) Standard Object – Standard object represents nature and form of
expenditure. These are the primary units of appropriation. These are
denoted by two-digit code.
8. Preparation of the budget estimates and their transmission to the
Finance Department - Under the rules made by the Governor for the
convenient transaction of the business of the State Government and the
instructions issued thereunder, the Finance Department is responsible
for the preparation of the annual budget. The budget is prepared on the
basis of the material furnished by the departmental officers and the
administrative departments of the Secretariat. The Heads of
Departments and other estimating officers prepare the estimates for each
head of account with which they are concerned and forward these to the
Finance Department through the Accountant General in the case of
estimates under revenue heads and also to the concerned departments
of the Secretariat by the prescribed date. The estimates in respect of
capital heads and loans and advances by the state government are
 1.8

furnished direct to the departments of the Secretariat concerned. The

administrative departments scrutinise the estimates and send them along
with comments thereon to the Finance Department which then examines
the estimates after taking into account the comments of the Accountant
General also, who renders such assistance as may be reasonably asked
for by the Finance Department. Estimates under certain heads are
furnished direct by the administrative departments of the Secretariat and
the Accountant General. The budget estimates must be submitted to the
Finance Department by the prescribed date. (See Appendix - VI)
9. Proposal relating to 'new expenditure' - The estimates referred to
above take cognisance only of what are called 'standing sanctions,' i.e.,
all revenues based on existing laws, rules and orders and all expenditure
incurred by virtue of existing rules and orders. Proposals which involve a
reduction or an increase in revenue otherwise than in pursuance of
authorised Codes, Manuals and Rules and proposals for 'new
expenditure' (See Chapter VIII) are submitted to the Government
separately in proper time. The provision of funds for 'new expenditure'
depends on the position of the resources available and the necessity and
urgency of each proposal.
10. After the finalisation of the Budget with the inclusion of provision
therein for new expenditure, it is presented, under Article 202 of the
Constitution, to both the Houses of the State Legislature on the
recommendation of the Governor. After the grants have been voted by
the Legislative Assembly, a Bill to provide for the appropriation out of the
Consolidated Fund of the State of all moneys required to meet the voted
as well as the charged expenditure is introduced in the Legislative
Assembly. When the Appropriation Bill is passed by both the Houses of
the Legislature and it has also received the assent of the Governor, the
amounts shown therein can be expended during the financial year
concerned.
11. Other Estimates - Occasions may arise for approaching the
Legislature with proposals for Votes on Account, Votes of Credit and
excess grants, besides supplementary estimates. These are dealt with in
Chapters II and XIV.
12. Authorisation of expenditure - Except where the expenditure is
covered by standing sanctions or necessary powers have been
delegated to the administrative departments and subordinate authorities
in this behalf with the concurrence of Finance Department, provision of
funds in the budget by itself conveys no sanction to the subordinate
authorities to incur expenditure. The following conditions must be
satisfied before the public money is spent:
(i) The expenditure should be sanctioned by the authority competent to
sanction such expenditure (in the case of works expenditure to be
incurred by the Engineering Departments this sanction means both
administrative approval as well as technical sanction),
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(ii) Sufficient funds should have been provided for the expenditure in the
Appropriation Act or by re-appropriation by the authority competent to
sanction re-appropriation (See Chapter XIV); and
(iii) No breach of the standards of financial propriety, which are
mentioned below, is involved :
I - The expenditure should not be prima facie more than the occasion
demands. Every government servant should exercise the same
vigilance and care in respect of expenditure from public moneys
under his control as a person of ordinary prudence would exercise in
respect of expenditure of his own money.
II - Public money should not be utilised for the benefit of a particular
person or section of the community unless -
(a) the amount of expenditure involved is insignificant, or
(b) a claim for the amount can be enforced in a court of law, or
(c) the expenditure is in pursuance of a recognised policy or custom.
III - No authority should exercise its power of sanctioning expenditure
to pass an order directly or indirectly to its own advantage.
IV - The amount of allowances, such as travelling allowances, granted
to meet expenditure of a particular type, should be so regulated that
the allowances are not on the whole sources of profit to the recipients.
13. Committee on Estimates - There is a Committee on Estimates
constituted by the Legislative Assembly to examine such of the estimates
as the Committee deems fit or are specifically referred to it by the House.
(For rules relating to the constitution and the functions of the Committee,
see Appendix – II)
14. Committee on Public Accounts - The Appropriation Act has the
effect of determining the objects on which money may be spent from the
Consolidated Fund of the State and the amount which can be spent on
each object. The amount of expenditure which can be incurred is thus
strictly controlled by the Legislature. The extent to which the wishes of
the Legislature, as expressed by the demands voted by the Legislative
Assembly, are actually complied with is investigated and brought to the
notice of the Legislative Assembly by the Committee on Public Accounts.
(For the constitution and functions of this Committee, see Appendix - II).
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CHAPTER II
DEFINITIONS AND GENERAL EXPLANATIONS
15. Unless there is something repugnant in the subject or context, the
terms defined in this Chapter are used in this Manual in the sense here
explained :
(1) 'Accounts' or 'actuals' of a year - are the amounts of receipts and
disbursements for the financial year beginning on April 1 and ending on
March 31 following, as finally recorded in the Accountant General's
books.
(2) 'Administrative approval' of a scheme, proposal or work - is the
formal acceptance thereof by the competent authority for the purpose of
incurring expenditure thereon as and when funds permit. (see paragraph
316 of Financial Handbook, Volume VI)
(3) 'Annual financial statement' or Budget - See para 2 of Chapter I.
(4) 'Appropriation' - means the amount authorised for expenditure
under a major or minor head or sub - head or other unit of appropriation
or part of that amount placed at the disposal of a disbursing officer. (The
word is also technically used in connection with the provision made in
respect of 'charged' expenditure).
(5) 'Appropriation Accounts' - are the accounts prepared by the
Comptroller and Auditor-General for each grant or appropriation in which
is indicated the amount of the grant sanctioned and the amount spent
under each level of head of account given in budget literature and under
the grant as a whole. Important variations in the expenditure and
allotments, whether voted or charged, are briefly explained therein.
(6) 'Assembly' - means the Legislative Assembly, Uttar Pradesh.
(7) 'Budget' - See para 2 of Chapter I.
(8) 'Budget estimates' - are the detailed estimates of receipts and
expenditure of a financial year.
(9) 'Charged Appropriation' - means sums required to meet charged
expenditure as specified in the schedule to an Appropriation Act passed
under Article 204 of the Constitution, during the financial year concerned,
on the services and purposes covered by the 'Charged Appropriation.' It
does not include provisions for voted expenditure.
(10) 'Charged expenditure' or 'Charged on the Consolidated Fund of
the State' - means such expenditure as is not to be submitted to the vote
of the Legislative Assembly under the provisions of the Constitution.
A list of items the expenditure on which is charged on the
Consolidated Fund of the State is given below. Sums relating to
'Charged' expenditure are usually printed in Italics in the Detailed
Estimates and Grants :
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(i) The emoluments and allowances of the Governor and other

expenditure relating to his office.
(ii) The salaries and allowances of the Speaker and the Deputy
Speaker of the Legislative Assembly and also the Chairman and
the Deputy Chairman of the Legislative Council.
(iii) Debt charges for which the State is liable including interest,
sinking fund charges and redemption charges, and other
expenditure relating to the raising of loans and the service and
redemption of debt.
(iv) Expenditure in respect of the salaries and allowances of the
Judges of the High Court.
(v) The administrative expenses of the High Court, including all
salaries, allowances and pensions payable to or in respect of the
officers and servants of the Court.
(vi) Any sums required to satisfy any judgement, decree or
*
award of any court or arbitral tribunal.
(vii) Adjustments in respect of certain expenses and pensions
under Article 290 of the Constitution.
(viii) The expenses of the State Public Service Commission
including any salaries, allowances and pensions payable to or in
respect of the members and the staff of the Commission.
(ix) Any other expenditure declared by the Constitution or by the
Legislature of the State by law, to be so charged.
[See Articles 202(3), 229(3), 290 and 322 of the Constitution.]
(11) 'Constitution' - means the Constitution of India.
(12) 'Controlling Officer’ - means the authority made responsible for the
control of expenditure and receipt for any head of account.
Note :- List of controlling officers is given in volume - V of budget
literature with each grant .
(13) ‘Controller Finance’ - means officer of the Finance and Accounts
Service posted under controlling officer or in absence of Finance &
Accounts Service officer, any other officer entrusted to supervise the
work of Budget & Account; to release the budget, maintain the register of
budget allotment, advise the controlling officer / Head of Department in
financial matters, pre-audit of time-barred claims, internal audit, etc.
(See Chapter XVIII A of Financial Hand Book Volume V Part I)
(14) 'Council' - means the Legislative Council, Uttar Pradesh.
(15) 'Corporation' - means a body corporate legally authorised to act as
a single person.
(16) ‘Demand for Grant’ – is a proposal made to the Legislative
Assembly on the recommendations of the Governor, for appropriation of
 1.12

sums out of the Consolidated Fund of the State for expenditure on

particular service other than that charged.
(17) 'Departmental Estimate' - is an estimate of income and ordinary
expenditure of a department in respect of any year submitted by the
Head of Department or other estimating officer to the Finance
Department as the material on which to base its estimates.
(18) 'Disbursing Officer' - Every Government servant who draws money
for disbursement on bills from the treasury is a disbursing officer, except
that a gazetted Government servant who is not the head of an office and
who draws only his own pay and allowances from the treasury is not
included in this term.
(19) 'Estimating Officer' - means a departmental officer responsible for
preparing the departmental estimate.
(20) 'Excess Grant' - See Section IV of Chapter XIV.
(21) 'Finance Department' - means the Finance Department of the
Government of Uttar Pradesh.
(22) 'Fiscal Deficit' - the excess of total disbursements from the
Consolidated Fund of the State (excluding repayment of debt) over total
receipts into the Fund excluding the debt receipts during a financial year.
(23) 'Government' - means the Government of Uttar Pradesh.
(24) 'Governor' - means the Governor of Uttar Pradesh.
(25) 'Head of Department' - means an officer declared as such by
Government. (A list of Heads of Departments is given in Financial
Handbook, Volume I and in the Annexure to Chapter II of Financial
Handbook, Volume V, Part I).
(26) 'Legislature' - means the Legislature of Uttar Pradesh.
(27) 'Modified Appropriation' - means the sum allotted to any unit of
appropriation as it stands on any particular date after it has been
modified by re-appropriation or by supplementary or additional grant or
grants sanctioned by competent authority.
(28) ‘Primary deficit’ - The Primary deficit is the fiscal deficit excluding
interest payments the government makes on its borrowings. It is the
basic deficit figure.
(29) 'Re-appropriation' - means the transfer, by a competent authority,
of savings from one unit of appropriation to meet additional expenditure
under another unit within the same grant or charged appropriation. (See
Section II of Chapter XIV).
(30) 'Recurring charge' - is a charge, which involves a liability beyond
the financial year in which it is originally sanctioned.
(31) 'Revenue Deficit' - means the difference between revenue
expenditure and revenue receipts.
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(32) 'Revised estimate' - is an estimate of the probable receipts or

expenditure for a financial year, framed in the course of that year, with
reference to the transactions already recorded and anticipation for the
remainder of the year in the light of the orders already issued or
contemplated to be issued or any other relevant facts.
(33) ‘Sinking Fund’ - A fund created for the redemption of a liability or
with the object of replacing an asset by setting aside a sum periodically
so as to produce the required amount at the appropriate time.
Provision for amortisation of open market loans is governed by
the terms of notification of each loan. It is generally obligatory for the
government, under the terms of the prospectus, to provide for a Sinking
Fund (Depreciation) from current revenues to be utilised for purchasing
the securities of the loan for cancellation. The annual contribution to the
Sinking Fund (Depreciation) is calculated at a certain percentage of the
nominal value of the loan concerned. A Sinking Fund may also be
created for the amortisation of the Government of India loans repayable
in one instalment.
(34) 'Standing sanctions' - relate to revenues based on existing laws,
rules and orders and expenditure incurred by virtue of existing laws, rules
and orders.
(35) 'Standard Object' – Standard object represents nature and form of
expenditure. These are the primary units of appropriation. These are
denoted by a two digit code.
(36) 'State' - means the State of Uttar Pradesh.
(37) 'Supplementary statement of expenditure' - means the statement
to be laid before the Legislature under Article 205(1)(a) of the
Constitution showing the estimated amount of further expenditure
necessary in respect of a financial year over and above the expenditure
authorised in the annual financial statement for that year. The demand
for a supplementary grant may be token or substantive. (See Section III
of Chapter XIV).
(38) 'Technical sanction' - is the approval to the detailed designs,
plans, specifications and quantities by the competent Engineering
authority, which is required to be given to any work (other than petty
works, petty repairs, and other repairs for which a lump sum provision
has been sanctioned by the Competent Authority) before its
commencement. (see paragraph 318 of Financial Handbook, Volume VI)
(39) ‘Token Demand’ – Token Demand is a demand made to the
Legislative Assembly for a nominal sum either to secure advance
approval to the incurring of expenditure on a scheme, details of which
are yet to be finalized or to bring new expenditure to the notice of
Legislative Assembly when funds to meet it are available by re-
appropriation within the grant.
(40) Vote on Account' - means a grant made in advance by the
Legislative Assembly, in pursuance of Article 206(I)(a) the Constitution,
 1.14

in respect of the estimated expenditure for a part of any financial year,

pending the completion of the procedure relating to the voting of the
demand for grants and the passing of the Appropriation Act. The annual
financial statement is generally presented to the Legislature in the month
of February and normally the general discussion thereon in both the
Houses, the voting of the demands for grants by the Legislative
Assembly and the passing of the Appropriation Act are expected to be
completed before the end of March, so as to make available the grants
and appropriations for the ensuing year right from the commencement of
the year. But circumstances may sometimes arise in which this may not
be possible. On such occasions demands for advance grants in respect
of the estimated expenditure for a part of the year may be presented.
(41) 'Vote of Credit' - See Article 206 of the Constitution reproduced in
Appendix I.
(42) 'Votable' / 'Voted' expenditure - means expenditure which is
subject to the vote of the Legislative Assembly. It is to be distinguished
from 'charged' expenditure.
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CHAPTER III
PREPARATION AND SUBMISSION OF DEPARTMENTAL ESTIMATES :
GENERAL RULES AND DIRECTIONS
16. Accuracy of estimates and responsibility therefor - Under the
rules made by the Governor for the convenient transaction of the
business of the State Government and the instructions issued
thereunder, the Finance Department is responsible for the preparation of
the annual budget for which it obtains material from the various
departmental officers, etc., and the departments of the secretariat. But
the Finance Department is not and cannot be, responsible for the
correctness of the material supplied to it. If the material supplied by the
departmental officers is defective, the estimates will also be defective
and the responsibility then reverts to the officers who supplied the
material. It is, therefore, essential that preparation of the departmental
estimates should receive the closest personal attention of the estimating
officers. The estimates should be framed after a careful and thorough
consideration of all items of expenditure and of all sources of income and
of every factor likely to affect the actual results. Every care should be
taken to ensure that the estimates are as accurate as possible. As
Government accounts are maintained in general on a cash basis, the
estimates should take into account only such receipts and payments
(including those in respect of the arrears of past years) as the estimating
officer expects to be actually realised or made during the budget year.
17. Estimates to be prepared on gross basis - The budget estimates
should, as a rule, be prepared on a gross and not on a net basis. The
gross transactions in the case of both receipts and charges in each
department should be entered separately. Receipts should be estimated
on the receipt side and the expenditure on the expenditure side. In other
words, it is not permissible to deduct receipts from the charges or the
charges from the receipts. There are, however, certain exceptions to this
general rule of gross budgeting. Refunds of revenue, for instance, are
deducted from the gross collections and the budget is prepared only for
the net receipts, the reason being that the refunds do not really represent
the expenditure of the Government but are merely repayments made out
of the receipts. The receipts on capital account are also taken in
reduction of expenditure and not shown on the receipt side. For example,
in the case of capital outlay incurred on Government Trading Schemes,
such as food grains, the amounts received from sale are taken in
reduction of expenditure. There are certain cases in which a service is
undertaken by one Government on behalf of another Government or an
outside body subject to the recovery of the cost of the service. In such
cases the cost of the service is provided in the budget of the Government
Department undertaking the service as expenditure under the
appropriate head and the relative recovery is taken in reduction of the
gross expenditure provided under the relevant head.
Note - All credits and recoveries are, however, excluded from the
demands for grants. For the purpose of obtaining the vote of the
 1.16

Legislature on the supply and of authorising the withdrawals of money

from the Consolidated Fund, the gross expenditure is invariably taken
into account.
18. Rounding - The estimates under each lowest unit should be rounded
off to the nearest Rs. 1000. Ordinarily, provisions amounting to Rs. 500
and above will be rounded to Rs. 1000 and those below Rs. 500 omitted
except where this has the effect of leaving no provision at all in which
case a sum of Rs. 1000 should be provided. This is, however, intended
only to simplify budgeting by avoiding meticulous calculations. The
sanctions to be accorded after the passing of the budget will be for the
actual amounts and not in accordance with rounded figures.
19. Channels and dates for transmission of estimates to Finance
Department - The Heads of Departments and other estimating officers
should prepare the estimates for each head of account with which they
are concerned on the basis of the material obtained by them from
subordinate officers and forward these to the Finance Department
through the Accountant General by the prescribed dates. Simultaneously
they should submit copies to the appropriate administrative departments
and also to the Finance Department of the Secretariat. The
administrative departments will scrutinise these estimates and make
available their comments to the Finance Department which examines
them on receipt of the estimates from the Accountant General. The
Accountant General furnishes the past actual, offers his comments, if
any, and renders such assistance as may be reasonably asked for by the
Finance Department. He also frames the estimates in respect of certain
heads of account and furnishes these to the Finance Department. The
administrative departments of the Secretariat also frame and furnish to
the Finance Department estimates relating to certain heads. It is of the
utmost importance that the duly scrutinised estimates are submitted
without fail by the prescribed dates ; in fact the endeavour should be to
submit them a few days earlier so as to enable a proper scrutiny by all
the concerned authorities. Delay in this respect may upset the entire
budget programme of the Finance Department and may involve a
possibility of any item not being adequately provided for or being omitted
altogether. (see Appendix VI)
20. Proposals involving 'new expenditure' and their timely
submission - The departmental estimates referred to above should take
cognisance only of what are called 'standing sanctions,' i.e. all revenue
based on existing laws, rules or orders and all expenditure incurred by
virtue of existing laws, rules or orders. Proposals which involve a
reduction or an increase in revenue otherwise than in pursuance of
authorised codes, Manuals, Rules or orders and proposals involving 'new
expenditure' (See Chapter VIII) should be submitted to the Government
separately by prescribed date. If a departmental officer feels any doubt
whether a particular proposal should be treated as constituting 'new
expenditure', he should make a reference to the Government in the
administrative department concerned well in advance of the prescribed
date. (see Appendix VI)
 1.17

Proposals relating to 'new expenditure' should be submitted to

the Government as and when ready and must not be held up for being
submitted towards the last date prescribed, so that the administrative
departments of the Secretariat and the Finance Department may have
sufficient time to examine each proposal as closely as possible and to
call for such further information as may be deemed necessary. It must be
clearly understood that any proposal reaching the Finance Department
after the prescribed date will not ordinarily be entertained and the
responsibility for the inconvenience which may be caused to the public
service on that account will attach to the officer or the administrative
department concerned who or which failed to take action in time.
21. Classification of receipts and expenditure in the departmental
estimates to conform to the prescribed heads of account - The list of
major and minor heads of account of State receipts and disbursements,
as prescribed by the Controller General of Accounts, Department of
Expenditure, Ministry of Finance, Government of India on the advice of
the Comptroller and Auditor General of India in terms of Article 150 of the
Constitution of India should be used for the classification of heads of
account. The introduction of any new major and / or minor head, as well
as the abolition or a change in the nomenclature of any of the existing
heads, require the approval of that authority and cannot be carried out
until such approval has been obtained. The sub heads, detailed heads
and primary units of appropriation are, however, variable according to
convenience and as such the exact units will appear every year in the
State Budget under “Detailed Estimates of Expenditure”. The detailed
classification of the receipt heads is also shown therein. In the matter of
accounting and for control of expenditure the nomenclature of the budget
heads must be followed. Even if the budget provision has originally been
made under an incorrect head, the corresponding expenditure should be
brought to account against that unless there be strong reasons for a
contrary course, e.g. when such accounting would be contrary to law. All
such cases of budget provision having been made under incorrect heads
should, however, be brought to the notice of the Finance Department as
early as possible so that in future the charge may be budgeted for under
the correct head.
Note 1 - While submitting his annual budget estimate, the estimating
officer may, where absolutely necessary, add a sub head/detailed head
not provided for in the previous year's budget. But while doing so he
must prominently bring it to the notice of the Finance Department to
enable them to decide whether the proposed new sub head /detailed
head should be introduced or the provision made within any of the
existing sub head/detailed head. No new primary unit of appropriation
can be opened without the prior sanction of the Finance Department.
Note 2 - The opening of a sub–head or a detailed head will be
sanctioned by the Finance Department under intimation to the
Accountant General.
22. Estimates to be accompanied by explanatory notes – The
estimates of the current year must not be accepted blindly as a basis for
 1.18

framing those of the forthcoming year. It is tempting to take for granted

the figures of the current year but the process, however, leads to waste
and extravagance. It may result in the reappearance year after year of
expenditure that has long become irrelevant. The need for every item,
therefore, must be first fully scrutinized before it is accepted and entered.
The preparation of the estimates for the forthcoming year affords a
convenient opportunity for reviewing the schemes. The mere fact, that
these are sanctioned, is not in itself adequate justification for presuming
that the current year’s provision should be repeated, as a matter of
course.
Each departmental estimate must be accompanied by a note by
the estimating officer, containing his proposals and the reasons in
support of them, arranged by major heads, sub-major heads, minor
heads, sub heads etc, in the same order in which the estimate has been
prepared. The note should be clear and precise and should explain the
variations between the proposed estimates for the forthcoming year and
the figures of the budget estimates of the current year. It should also give
reasons for the repetition or the omission of any item. One copy of the
estimate and the budget note should be sent direct to the administrative
department concerned and the Finance Department at the same time as
the original is sent to the Accountant General.
23. Corrections to estimates and time limits for their submission -
Corrections, if any, to the estimates should be sent direct to the Finance
Department by demi-official letter to the Budget Officer with a copy to the
administrative department within one month from the date of submission
of the estimates and in any case not later than the 5th December.
24. Action to be taken by the Accountant General - On receipt of the
departmental estimates, the Accountant General will scrutinize and
compile them into a self contained budget for each major head of
account in Form B.M.-1. He will also fill in the following figures in the
budget form :
(a) Final grant for the current year.
(b) Actuals for the first six months of the previous year.
(c) Actuals for the last six months of the previous year.
(d) Actuals for the first six months of the current year.
In the same form he will give his own comments, criticism and
suggestions, if any, in regard to the proposed estimates and will then
send that form in original to the Finance Department.
In reviewing or checking the estimates he is expected to take
into account all circumstances which are likely to affect the receipts and
expenditure of the department concerned, such as transfer adjustments
with other Governments and Departments as well as transfer entries
between different heads of account which it is usual to make in the
accounts of the year to which the estimates relate, e.g. (1) Commuted
value of pensions, leave salaries, etc., payable to or recoverable from
 1.19

other Governments or departments, (2) Contributions recoverable for

Railway Police, (3) Overpayments and advances of the previous years
recoverable during the budget year, (4) Transactions relating to
expenditure and receipts from other Government, (5) Distribution of the
cost of the Public Works Establishment and Tools and Plant and (6)
Annual transfer entries.
 1.20

CHAPTER IV
INSTRUCTIONS FOR PREPARING DEPARTMENTAL ESTIMATES OF
REVENUE AND RECEIPTS
25. In the preparation of the budget the aim is to achieve as close an
approximation to the actuals as possible. It is, therefore, essential that
not merely should all items of revenue and receipts that can be foreseen
be provided but also only so much, and no more, should be provided as
is expected to be realised, including past arrears, in the budget year. The
following instructions should be carefully observed in preparing the
estimates :
(1) The estimates should be based on the existing rules and
rates of taxes, duties, fees, etc. and no increases or
reductions in such rates which have not been sanctioned by
the Government should be proposed.
(2) An estimate should show the amounts actually expected to
be received during the budget year and those only. The
arrears, if any, standing over from past years for collection
should be included if there is a reasonable certainty that they
would be realised within that year. On the other hand, the
estimates should exclude any receipts which, although
falling due during the budget year, are not expected to be
actually realised within that year.
(3) In preparing the estimates of the receipts of a fluctuating
nature careful attention should be given to all abnormal
factors as well as to normal conditions and tendencies as
explained below :
(a) Circumstances may have arisen in the current year
which make it evident that the estimate for that year will
be substantially departed from. If this should be the
case, any such expected departure from the original
estimate for the current year should be taken into
account in estimating the probable realisations of the
budget year on the basis of the figures of the past three
years and the revised estimate for the current year.
(b) Events may have occurred in the current year which
make it obvious that unusually large arrears will be
outstanding for collection in the budget year. Any such
addition to the total amount of receipts due for realisation
during the coming year should be taken into account in
framing the estimates of receipts for that year, but the
amount to be included should be that which is expected
to be actually realised and the balance should be shown
in the 'Remarks' column with reasons in brief.
(c) Conditions may have arisen that enable the estimating
authorities to forecast some particular effect on the
 1.21

revenue receipts in the coming year, e.g. an irrigation

work may have been opened or improved or extended,
resulting in an additional income from extra water supply
to cultivators. Estimates for increased or additional
revenue on these accounts should, however, be
proposed only if the estimating authorities are certain
about this and full reasons must be given in the budget
note.
Some calamity may have supervened which will have a
definite effect in reducing revenue during the coming year, e.g.
the breaching of an embankment which cannot be repaired
before the cultivating season in the coming year, which will lead
to reduction in revenue receipts. Account must be taken of this.
It is, thus, particularly necessary to guard against
accepting the estimates of the current year blindly as a basis for
framing the estimates of the following year.
(4) The gross transactions should be exhibited in full, unless in
any particular case there are definite instructions to the contrary
when net receipts may be entered and a brief explanation given
in the remarks column.
(5) Refunds - Refunds of revenues are not regarded as
expenditure for purposes of grants or appropriation. Provision
should be made in the revenue estimates, where necessary.
'Refunds of Revenue' shall, as a general rule, be taken
in reduction of the revenue receipts. "Deduct-Refunds" (code
'900') may be opened as a minor head under the major / sub-
major heads falling in the Sector "B. Non-Tax Revenue", unless
it is not practicable to account for such refunds as sub-heads
below the concerned programme minor heads under the relevant
major / sub-major heads. This minor head may also be opened
under the major / sub-major heads of the sector "C. Grants-in-
Aid and Contributions". In respect of major / sub-major heads
falling under the sector "A. Tax Revenue", the head "Deduct-
Refunds" should however be opened as a distinct sub-head
below the appropriate minor heads so that the net collection of
each tax / duty is readily ascertainable from the accounts.
26. The reasons which have led to the proposing of estimates for the
ensuing year should be fully and clearly explained, item by item, in the
budget note of the estimating officer, specially when the estimate
proposed for the ensuing year is in any way abnormal, due regard being
paid to the following variations :
(a) actuals of the past year compared with the original and the
revised estimates of that year ;
(b) revised estimates for the current year as compared with the
original estimates; and
 1.22

(c) budget estimates proposed for the following year as

compared with the original and revised estimates for the
current year.
27. Where several items of a miscellaneous nature are grouped under a
single head of account, details of the more important items should be
given along with the estimates proposed for each in the budget note.
 1.23

CHAPTER V
INSTRUCTIONS FOR PREPARING ESTIMATES OF
ORDINARY EXPENDITURE
28. Estimates to be complete and accurate - The estimates of ordinary
expenditure are those for the expenditure expected to be incurred in the
coming year for the normal working of the departments with reference to
existing sanctions. No item constituting 'new expenditure' (See Chapter
VIII) should, therefore, be included in these estimates. The estimating
should be as close and accurate as possible and the provision to be
included in respect of each item should be based on what is expected to
be actually paid or spent (under proper sanction) during the year,
including arrears of past years, and not merely confined to the liabilities
pertaining to the year. The need for every item must be fully scrutinised
before provision for it is included and the amount should be restricted to
the absolute minimum necessary. Even in framing estimates in respect of
what are called 'fixed charges' it must be borne in mind that nothing is
irrevocably fixed for all times and the position should be brought under
review periodically. The various general or specific orders issued by the
Government or by the Heads of Departments for economy in expenditure
must be carefully borne in mind and complied with. All estimating officers
must know that an avoidable extra provision in an estimate is as much a
financial irregularity as an excess in the sanctioned expenditure and it
can sometimes lead to serious consequences for which the officers
found to be at fault may be held personally responsible.
29. Obsolete items to be omitted - The estimates of the current year
must never be adopted blindly as a basis for framing those of the
following year. There is always a temptation to save trouble by taking the
current year's estimates for granted and adding something to certain
items on which increased expenditure is foreseen. This tendency is to be
strongly deprecated. The estimating officer must give his closest
personal attention to each and every item and see that the items of
expenditure, which have become obsolete, are omitted. At the same time
it is his duty to see that provision for all expenditure that can be
reasonably foreseen and does not constitute 'new expenditure' is made
in the estimates. Care must, however, be taken that no provision for
increased expenditure requiring specific sanction of the competent
authority is included unless that sanction has already been obtained and
that even in the case of a sanctioned scheme provision is made for only
so much of it as can actually be brought into effect in the budget year.
30. Past actuals to be consulted - In preparing the estimates, the
average of the actuals of the past three years, as also the revised
estimates for the current year, should invariably be kept in sight; not as
something that could conveniently be repeated but as a basis for an
intelligent anticipation which takes into account any noticeable tendency
for the expenditure to rise or decline, any abnormal features during the
past years, any recognisable regularity in the pitch of the expenditure
and any special features known to be certain or likely to arise during the
 1.24

budget year. When any item of expenditure, although covered by

standing sanction, is to be held in abeyance under the orders of the
competent authority, provision for it should be omitted. If it is proposed
that it should be revived, specific reference to the competent authority
should be made well in time and in that case the estimating officer can
include the provision in the estimates but he must draw pointed attention
to this in his budget note at the appropriate place.
31. Lump provision to be avoided - Lump provisions should not, as a
rule, be made in the estimates. In some cases, however, lump provisions
become unavoidable. Except when the expenditure out of lump
allotments is regulated by standing sanctions, instructions or rules, full
explanation in justification of the provisions proposed, with indication of
the principal items, should be given in the budget note and the working
out of details should be started immediately after the amounts have been
finally included in the budget so that there may be no delay in their
examination and the issue of sanctions.
32.Estimates for pay and leave salaries - The estimates should be
framed on the basis of expenditure required to be incurred in the coming
year on account of the pay (including special pay and personal pay but
excluding compensatory allowances) of the officers and the staff likely to
be on duty and the actual pay to be drawn by each, irrespective of the
sanctioned strength. In the case of holders of posts carrying time scales
of pay provision should also be made for increments falling due during
the year. In the case of a cadre which includes leave or training reserves,
the estimate should provide not only for such of its members as are likely
to be on duty but also those who are likely to take leave or be under
training, but no separate provision should be made on account of leave
salaries. In small cadres of gazetted officers provisions for leave salaries
need not be made unless it is definite that certain officers will go on
leave. Provision for leave salaries in respect of large cadres of gazetted
officers and of non-gazetted establishments should not be made on any
percentage basis but on the average of the past actuals plus such
increase for new posts as may be considered necessary. It will be
advantageous if information is obtained beforehand as to the number of
persons intending to take leave in the budget year, the period for which
each intends to take leave and the likely leave salary payable in each
case.
No provision should be made for posts held in abeyance. If it is
considered necessary to revive any of them in the ensuing year,
proposals therefor should be submitted in good time and necessary
orders of the competent authority obtained.
33. Numerical strength and pay scales to be indicated - The number
of posts budgeted for in the current year and those for which provision
has been proposed for next year in the estimates should be clearly
indicated. The scales of pay should also be indicated, but it will be
sufficient if only the minimum and the maximum pay is shown instead of
the full scale. In the case of temporary posts, provisions should be made
only for the continuance of such posts as are definitely required to be
 1.25

retained and for the period for which they will actually be required. The
number and date of the orders by which each post was created or last
retained should invariably be quoted for reference.
34. Provision for pay and fixed allowances for March to be made in
the budget of the following year - The pay, leave salary and fixed
allowances of a government servant for a month become due only at the
end of the month. Provision for them for the month of March should,
therefore, be made in the budget estimates of the following financial
year.
35. Compensatory Allowances and Honoraria - In the case of fixed
allowances the estimates should be based on the sanctioned rates and
after making actual calculations of amounts to be drawn by the
incumbents of the various posts in the budget year and after taking into
account changes, if any, in the rates due to increase in pay on accrual of
annual increments. The estimates for fluctuating items should generally
be based on the current year’s allotment viewed in the light of the
average of the past three years’ actuals, allowance being made for any
causes likely to modify that figure. Particular care should be taken to see
that the estimate for traveling allowance (other than fixed traveling
allowance) is restricted to the absolute minimum amount necessary.
Unless full and convincing reasons have been given in the budget note,
all increases proposed by the estimating officers are liable to be cut
down by the Finance Department.
36. Establishment Expenditure – The estimates in the relevant
standard object of expenditure should invariably be prepared keeping in
view the changed requirement and should not be a mere extrapolation of
the historical expenditure. The justification should be worked out with a
view to reducing cost without adversely affecting work efficiency.
Sufficient care is to be taken that the expenditure is classified under
proper standard object, and is not camouflaged under the omnibus
‘Other Expenditure’ .
37. Estimates for the categories other than salary, allowances and
establishment expenditure – The estimates should be prepared with
reasonable accuracy. The scrutiny related to prescribed formalities like;
technical specification, costing, cost and benefit analysis, purchase
procedure, financing pattern, clearance of project/fund from the
concerned agency, survey of location or individuals (say, category of
institution/student), availability of land, work schedule as also the time
schedule for recurring and non-recurring expenditure, justification of
continuity of project/function, etc should be ensured. No increase can be
proposed by the estimating officers in the fixed annual allotments, save
in exceptional circumstances. The estimates should generally be framed
on the basis of the average of the actuals of the past three years and the
revised estimates of the current year, but care must be taken to see that
all non-recurring and extraordinary items of the past years and the
current year are ignored while provision for all foreseeable items not
constituting 'new expenditure' and likely to be required in the budget year
is included in the estimates. There is always need for utmost economy in
 1.26

non-committed expenditure and the estimates proposed by the

departmental officers are likely to be cut down considerably by the
Finance Department if the budget notes are wanting in details or do not
give full and convincing reasons in justification of the estimates
proposed. Vague statements, such as 'normal growth of expenditure' or
'normal expansion of the scheme' will not be accepted. The reasons
must be precise and the estimates supported by details and past actuals.
38. Provision for payment of decretal amounts or awards by arbitral
tribunals, etc. - As stated in para 15 (10) (vi) of Chapter II, expenditure
on payments made in satisfaction of any judgement, decree or award of
any court or arbitral tribunal is to be treated as charged on the
Consolidated Fund of the State. Provision for such expenditure should,
therefore, be made under a separate sub head, "Payments in satisfaction
of decrees of courts, awards of arbitral tribunals, etc. (Charged)" under
specific head of accounts. However, the expenditure should be charged
to the project / scheme / service concerned. As re-appropriation between
charged and voted provisions is not permissible, it is necessary that the
charged provision should be restricted to the absolute minimum,
additional funds being arranged later, if required, through the
supplementary estimates. In emergent cases advances can be obtained
from the Uttar Pradesh Contingency Fund to be recouped by
presentation of supplementary demands at the earliest opportunity.
38-A. Grant-in-Aid - The payment of various classes of grants to local
bodies and institutions, etc., will be regulated, subject to the instructions
given in Financial Hand-Book Volume V (Part I), by the general or special
orders of government sanctioning each class of payment.
Note - As a general principle, grants-in-aid can be given to a person or a
public body or an institution having a distinct legal entity. One
department of the Government cannot make a grant-in-aid to
another Department of the same Government. Similarly, a grant-
in-aid should not be given to an organization set-up by the
Government by a resolution or an executive order since such an
organization does not have a separate legal status of its own and
functions only as a limb of the Government. Either the
expenditure of such bodies should be treated as normal
Government expenditure and provided for in the budget as such
or steps should be taken to secure a separate corporate status for
the organization.
 1.27

CHAPTER VI
ESTIMATES FOR EXPENDITURE IN ENGLAND

39. - Deleted
40. - Deleted
41. - Deleted
42. - Deleted
43. - Deleted
44. - Deleted
45. - Deleted
46. - Deleted
47. - Deleted
48. - Deleted
49. - Deleted
50. - Deleted
 1.28

CHAPTER VII
REVISED ESTIMATES
51. General observations - The revised estimate is an estimate of the
probable receipts or expenditure for a financial year, framed in the
course of that year, with reference to the transactions already recorded
and anticipation for the remainder of the year in the light of the orders
already issued or contemplated to be issued or any other relevant facts.
It does not authorise any expenditure, nor does it supersede the budget
estimate as the basis for regulation of the expenditure. If an excess is
anticipated in the revised estimate under any particular head, it is
necessary for controlling authority to apply separately in proper time for
additional funds required, unless the excess can be met by
re-appropriation of savings from other heads or has already been
sanctioned by the competent authority. On the other hand, if the figure
taken for the revised estimate is less, it is the duty of the controlling
officer to see that as far as possible the expenditure during the remaining
part of the year is so restricted that the total expenditure for the year
does not exceed that figure. The savings may be due to one or more of
the following causes :
(i) actual postponement of expenditure ;
(ii) real savings due to economy measures ;
(iii) normal savings due to either over-estimation or
administrative causes, e.g. casualties, etc. and
(iv) compulsory savings notified by the Government
It is essential that the revised estimates should be prepared with
great care, so that they may approximate as closely as possible to the
actuals which will not be available for some months after the close of the
financial year. These estimates, besides enabling the Government to
arrive at the approximate closing balance of the current year (which will
be the opening balance of the next year) are prima facie the best guide
to the next year's estimates.
52. A revised estimate is based on :
(i) ascertained actuals of the past months of a financial year, and
(ii) an estimate of the probable figure for the remaining months of
that year.
The figure for (i) above being definitely known, it is only that for
(ii) which has to be estimated and in doing so the actuals for the same
period during previous years, chiefly those of the preceding year, should
be the main guide, due allowance being made for any exceptional factors
or unusual characteristics which may have affected the actuals of the last
preceding year or which may affect those of the current year. If the
revised figure differs appreciably from the previous year's figure, the
reason or reasons for the variation should be clearly explained. Also, if
 1.29

any special factors have affected the figure for (i) above, this should be
mentioned and it should be explained whether or not they are likely to
continue throughout the year. The usual adjustments with other
Governments and departments, etc. which take place during and after
the close of the year should be duly taken into account when framing the
revised estimates.
53. Methods for framing the revised estimates - The revised
estimates are generally based on the actuals of the first six months of the
year. Assuming that at the time of the preparation of the revised
estimates the actuals for the first six months of the current year are
available, the estimates will generally be framed in one of the following
ways :
(i) by adding the actuals of the first six months of the current
year to those of the last six months of the previous year, or
(ii) by taking a proportionate figure so that the revised estimates
will be twice the actuals for the first six months, or
(iii) by assuming that the revised estimates for the current year
will bear the same proportion to the actuals of the first six
months as the actual in the previous year bore to those of
the first six months of that year.
The Heads of Departments and other estimating officers should
use their discretion and adopt one or other of the above methods or any
other suitable method for each particular case in the light of the actual
trend of revenue or expenditure during the previous years, due allowance
being made for any abnormal features in those years and for factors
which may modify the realisation of original expectations. It would always
be of advantage to base the forecast on a careful study of the figures of
three years immediately preceding rather than those of a single year.
54. Preliminary statements of excesses and savings - A statement of
anticipated excesses and savings in expenditure in Form B.M. 2 (Part I)
shall be submitted by each controlling officer to administrative
department, so as to reach Government in the Finance Department not
th
later than 30 November every year. Only those items should be shown
in the statement in which any excess or saving is anticipated. The
reasons for the variations should be explained fully and clearly against
each such item. If no excesses or savings are anticipated a blank
statement should be submitted. It is essential that the statement is
prepared with the utmost care, as inaccurate statements may at times
have serious repercussions.
Note : Explanations of all important variations in the Revised Estimates
as compared to Budget Estimates should invariably be given. The
explanation should be precise and informative, and vaguely worded
phrases such as “decrease in receipts was due to smaller receipts
obtained” or “increase in expenditure was due to larger expenditure on
certain items” should be avoided. The reasons for decrease in revenue
and increase in expenditure should be clearly stated.
 1.30

55. Revised estimates to be framed by the Finance Department –

The revised estimates to be included in the annual budget will be
prepared by the Finance Department with the help of –
(a) registers of actuals of revenue and expenditure maintained
by it for the purpose :
(b) rough preliminary estimates furnished by the Accountant
General in appropriate column of the budget form showing
estimates of various departmental budgets for the next year;
(c) the preliminary statements of anticipated excesses and
savings in expenditure submitted by officers (vide para. 54
above); and
(d) the revised estimates in respect of different heads furnished
by the administrative departments concerned .
56. Revised estimates for particular receipt heads - Revised
estimates of revenue receipts should also be submitted so as to reach
th
the Finance Department not later than 30 November every year by the
Controlling Officers and Departments .No particular form is prescribed,
but the forwarding memorandum should explain fully and clearly how the
revised figures have been arrived at.
The administrative departments of the Government and
controlling officers may obtain such information from subordinate
authorities as they may consider necessary.
57. Corrections to revised estimates - Any appreciable variations
discovered in the revised figures of expenditure and receipts subsequent
to their communication to the Finance Department should be
communicated through administrative department in any case not later
than December 5.
 1.31

CHAPTER VIII
NEW EXPENDITURE
58. Under the rules and instructions issued by the Governor under Article
166 (2) and (3) of the Constitution, the Finance Department is required to
examine and advise on all schemes of new expenditure for which it is
proposed to make provision in the Budget and is empowered to decline
to make provision for any scheme which has not been so examined.
∗
59. There is no authoritative definition of the term "new service"
occurring in the Constitution [cf. Article 205 (1) (a)]. However, a working
arrangement has been arrived at, under which the term "new service",
though undefined, has been taken as synonymous with term "new
expenditure". It is also not possible to define rigidly the term "new
expenditure" and in actual practice based on convention it bears a wide
interpretation. Broadly speaking, expenditure involved on a new scheme,
in the adoption of a new policy, provision of a new facility, or any
substantial alteration in character or extent of an existing facility, will
normally be treated as constituting "new expenditure". In some cases,
increase in expenditure, other than increase due to normal growth or rise
in the price of commodities, on the extension or development of an
existing scheme or facility, is also, where it is appreciable, treated as
"new expenditure".
For the purpose of general guidance, some examples of "new
expenditure" are given below:
(1) Starting of new schemes, establishments or undertakings.
Explanation - (1) Cases of "New Schemes" treated as "New Expenditure"
and acted upon in the previous years will, however, be treated as "New
Expenditure" if no budget provision has been made in the last five years.
Explanation - (2) Where provision for an existing service has been made
either in the Revenue, Capital or Loan section and it is proposed to
change the character of service by transferring it from the existing
section to any other section, it will require prior approval of the
Legislature.
Explanation - (3) Expenditure on existing service under one head but
involving provision of funds under a different head within the same
section due to change in classification of expenditure can be made by re-
appropriation without prior approval of or report to the Legislature.
(2) Increase in coverage and / or revision of rate of scholarships,
stipends, social security pensions etc. when the additional liability
exceeds the budget provision for the scheme by Rs. 50 lakh or ten
percent of the budget provision for the scheme whichever is higher.
(3) Grants-in-aid to new institutions or in excess of the approved scales.

(∗) Approved by the Legislative Assembly in their sitting of August 07, 2009.
 1.32

(4) Remission of loans not covered by existing rules and orders

regulating such remissions.
(5) Any loans to or investment in Public Undertakings or local bodies,
institutions and private bodies, etc., except where such loans or
investments are covered by the existing rules or standing orders.
(6) Purchase of tools and plant, except where the cost is met from the
provision for a sanctioned project or from a duly constituted Depreciation
Reserve Fund.
(7) Purchase of equipment, vehicle and furniture where the cost of
individual item exceeds Rs. One lakh.
Explanation - Replacement of equipment, vehicle and furniture will not be
treated as new expenditure irrespective of the amount of individual item.
(8) Alienation/ transfer of Government assets
Explanation - (1) Transfer of Government assets shall include leasing
them out for more than 36 months except leasing out of housing
accommodation to government employees or others under existing rules
or standing orders.
Explanation - (2) Relief in respect of leasing out of Government assets to
a private body or individual at concessional rates shall be given through
a grant-in-aid rather than by remission of dues.
Explanation - (3) The cases of alienation of Government assets to a
State owned company / statutory body / society shall be reported to the
Legislature along with the next batch of supplementary demands.
(9) Strengthening, reorganisation, modernisation or extension of an
already existing scheme, establishment or undertaking where its cost
exceeds Rs 25 lakh recurring or Rs 1.00 crore non-recurring
Explanation - (1) Where the additional expenditure does not exceed Rs
1.00 crore recurring and Rs 3.00 crore non-recurring, the expenditure
can be made by reappropriation of savings in a Grant but if the additional
expenditure exceeds Rs 25 lakh recurring or Rs 1.00 crore non-recurring,
it shall be subject to report to Legislature.
Explanation - (2) Employment of additional staff or provision of service
for normal increase of work involving no change in policy or the sanction
of new scheme, shall not be treated an item of new expenditure.
Explanation - (3) Expenditure on purchase of arms and ammunition
against the indent approved by the Home Department where the
expenditure is within the budget provision irrespective of the cost of
individual item shall not be treated an item of new expenditure.
(10) A committee / commission constituted, except under a statute by the
Government if the recurring expenditure exceeds Rs. 10 lakh per annum
or Rs. 20 lakh non-recurring.
 1.33

(11) Surveys and studies not provided for in a project or scheme, where
the expenditure is estimated to exceed Rs. 10 lakh per annum recurring
or Rs. 20 lakh non-recurring.
(12) Any new authorization or increase in the amount of existing
authorization or change in nature of 'Secret Service Expenditure'.
(13) Any new authorization or increase in the corpus of a Discretionary
Grant.
(14) In respect of schemes receiving assistance from the Central
Government, autonomous bodies etc, and in respect of expenditure
relating to natural calamities, the expenditure shall not be treated as
"New Expenditure" if the expenditure can be met from savings, however,
such cases should be brought to the notice of the Legislature by specific
inclusion in the next batch of supplementary demands.
60. To enable a proper and detailed examination by the Government, all
proposals and schemes for 'new expenditure' should be submitted by the
Heads of Departments or estimating officers to the administrative
departments concerned of the Secretariat, through the usual channels,
as soon as they are ready and should not be held up for being submitted
towards the last date. The administrative departments will examine them
thoroughly, both from the administrative and financial aspects, and
recommend to the Finance Department only such of them as are not only
administratively sound but also really essential and urgent. The
proposals should reach the Finance Department in sufficient time and, in
no case, later than the prescribed date, complete in all respects, to
enable it to carry out proper examination and obtain such further
information as may be considered necessary by it. The proposals or
schemes which the administrative departments may have themselves to
formulate must also be referred to the Finance Department very early.
After the prescribed date, the Finance Department will be at liberty to
decline to accept any proposals, whatever may be the reason for delay.
61. Every proposal or scheme involving new expenditure must be
explained as fully and concisely as possible and its financial implications,
both immediate and ultimate, as also the physical target clearly brought
out. It should also be explained and shown distinctly whether the
proposal forms a part of the development programme included in the
Five Year Plan, and, if so, yearly allocation and ceiling fixed under the
Plan should be specified. The estimates of cost should show the
recurring and the non-recurring expenditure separately, by the major and
minor heads, sub-heads, detailed heads and primary units of account. In
the case of recurring expenditure and of non-recurring expenditure
proposed to be spread over a series of years, the estimates for each
year should be given. If any assistance in the shape of loans, grants,
contributions or donations or any other receipts or recoveries are
expected, details thereof for each year should be given and the heads of
account to which they will be creditable or taken in reduction of
expenditure indicated. Necessary details should be given as in
Annexure-A to this chapter.
 1.34

62. In framing the estimates of cost, the date from which a new scheme
is likely to be introduced and whether it will be introduced in full from the
beginning or by stages must be carefully considered. Account should be
taken of any administrative or other difficulties likely to be encountered
and the time likely to be taken in the various sanctioning processes. In
brief, only so much should be provided in the estimates as will actually
be spent in a particular year. In the case of schemes to be taken up by
stages or under a phased programme, the different stages and the
expenditure expected to be incurred and the income anticipated, if any,
at each stage should be indicated.
63. Schemes relating to engineering projects or works must be
accompanied by preliminary plans and approximate estimates. In the
case of buildings, the number and dimensions of the various types of
rooms proposed to be constructed and the basis for providing
accommodation should be clearly explained. The Finance Department
may decline to make provision in the budget for any project or work for
which the administrative approval of the competent authority has not
been obtained. The total estimated cost of the project, the time likely to
be required for its completion and the expenditure to be incurred each
year should be stated in every case after consulting the agency to whom
the execution of the project is to be entrusted. It has to be borne in mind
that even after provision has been made in the budget on the basis of
preliminary plans and approximate estimates, time is required for
preparing detailed plans and estimates and according necessary
sanctions, inviting tenders and settling contracts. In many cases land has
to be acquired under the Land Acquisition Act which takes time.
Sometimes seasonal conditions and scarcity of labour or of building
materials in the market also delay the start or the progress of a work. All
relevant factors should be carefully taken into account. If as a result of
the construction of new buildings any of the existing buildings are likely to
be rendered surplus, it should be indicated how they are proposed to be
utilised.
64. Deleted
65. Proposals for starting of new undertakings, or of additional
undertakings similar to those already existing, should give full financial
and other details as well as the justification. In the case of the latter, the
pattern and average cost of existing undertakings should be mentioned
for comparison.
66. Proposals relating to sanction of loans or grants-in-aid to local bodies
and other non-Government institutions, corporations, private parties and
individuals, etc., should not be submitted to the Government until the
admissibility of the loan or the grant-in-aid applied for in each case has
been fully examined with reference to any existing rules or orders or
approved schemes. If the loan or the grant-in-aid applied for is for a new
scheme or for expansion of an existing scheme, it is necessary to satisfy
that full details have been worked out and have received the approval of
the competent authority. Proper assessment of the latest financial
position of the party concerned is absolutely necessary to determine
 1.35

whether (i) Government aid is really called for; (ii) the balance of the
expenditure, if any, can be met by the party concerned from its own
resources ; and (iii) there is likely to be any difficulty in effecting recovery
of the loan proposed to be granted and the interest thereon. The terms
and conditions to be attached to the proposed loan or grant-in-aid should
be clearly mentioned.
67. It is quite possible that some schemes (both Plan and Non-plan)
which are under implementation are not very useful to the public at large.
A quick review has to be made to ascertain whether economy could be
effected in those schemes so that cost thereon and staff could be utilized
for more useful schemes. Preference will, therefore, be given to schemes
of those Heads of Departments, who come forward with economy
measures elsewhere.
It is better that new schemes are proposed well within time so
that a thorough evaluation can be made. It is necessary that the practice
of sending all the proposals together only in October – November is
avoided.
68. In all cases in which purchase of articles from outside India is
involved, the name of the foreign country and the currency in which
payment will be made should be stated, it being also indicated whether
or not supplies have been assured when required in the event of firm
orders being placed.
69. After the Finance Department has examined the proposal and raised
no objection to it, the administrative department will prepare explanatory
note in such form or manner as may be prescribed by the Finance
Department and send it to the Finance Department for being taken over.
No reference should ordinarily be made in the explanatory note
to official correspondence. Each note should be signed by an officer of
the department concerned not below the rank of Secretary.
70. In order to enable the Finance Department to check up the schedule
of new expenditure and to avoid inadvertent omissions, each the
administrative department will maintain a list of the items which have
been examined and passed by the Finance Department, a separate list
being maintained, with the various items arranged in order of priority, for
each demand for grant/Charged Appropriation. A copy of each of these
lists must be furnished to the Finance Department within a week after the
last date prescribed, for accepting items of new expenditure has expired.
71. It must be carefully understood that the acceptance by the Finance
Department of a proposal, item, or scheme of new expenditure does not
constitute any authority for the incurring of any liability in connection
therewith until necessary provision has been included in the
Appropriation Act and the competent authority has sanctioned the
incurring of the expenditure in each case.
72. The instructions contained in the preceding paragraphs should be
borne in mind also while dealing with proposals for new expenditure
 1.36

arising in the course of the current year for which provision is required to
be made through supplementary estimates.
 1.37

Annexure-A
POINTS TO BE SPECIFICALLY LOOKED INTO BY THE
CONTROLLING OFFICERS WHILE PREPARING PROPOSALS
FOR ESTIMATES OF "NEW SERVICE / NEW EXPENDITURE"
1. Is it very necessary to implement the scheme/ programme by the
State Government given its limited resources?
2. Can the proposed scheme/ programme be not implemented by a
non-government organization? If the scheme can be
implemented by incurring less expenditure ( that is, by giving
grant-in-aid to a non-government organization ) by a private/
non-government organization, it will reduce the burden of
expenditure on the State Government.
3. The cost-benefit analysis of the proposed scheme/ programme
be carried out also keeping in view the extent to which the
proposed expenditure will result in economic/ social benefits.
4. Can the proposed scheme/ programme be taken up without
incurring any additional expenditure by terminating some
continuing scheme/ schemes?
5. What percent of the recurring expenditure on the proposed
scheme/ programme is on establishment? How much
expenditure on the capital side is estimated on the creation of
assets and the basis thereof? Has the cost of the scheme been
determined on the basis of some standards?
6. The departments should carry out "Zero-base review" of
continuing schemes to ensure that items that have become
irrelevant are not included. The departments should list savings
thus estimated.
7. Have the projects/ schemes been prioritized, and whether such
projects / schemes are proposed to be included in the budget as
are financially and economically viable and which entail better
returns? It is essential to avoid excessive multiplicity of schemes
with same or similar objectives in the budget so that the
resources are not thinly spread over such schemes. Such
schemes may be dovetailed. (See para-206)
8. The concept of "Value for Money" should be borne in mind while
assessing schemes.
 1.38

FORMAT FOR SUBMITTING BUDGET PROPOSALS

FOR "NEW SERVICE/ NEW EXPENDITURE"
Department .............................................. Financial Year ......................
Grant No. and Name ..................................................................................
Plan/ Non-Plan
(Amount in thousand rupees)
(A) Statement of Proposal
1. Name of the Scheme :
2. Description of the Scheme and its Objects :
3. Justification for the Scheme and the details :
of the alternatives considered
4. (i) Description of the manner in which the :
scheme is proposed to be implemented
including the mention of the agency
through which the Scheme will be
executed
(ii) Time schedule of the Programme and :
target date of completion
(B) Financial Implications of the Proposal :
5. Total expenditure involved (Recurring and :
non-recurring to be shown separately), its
broad item-wise details and year-wise
phasing : Share of establishment
expenditure in the total recurring
expenditure be indicated (in percentage).
6. If the creation of posts is required, the :
number of posts (Statement of pay-scales
and staffing norms be attached).
:
7. If the expenditure is on works; the broad
details thereof, their justification and basis
of estimates. Year-wise estimated
expenditure on maintenance subsequent to
the completion of work or/ and subsequent
to the expiry of warrantee period (if any) on
equipment / machines.
8. Sources of Funds for the Scheme -
(i) Central Plan/ Centrally Sponsored
Schemes -
Financing pattern be clearly mentioned.
Position of funds receivable/ received
from the Centre be clarified.
 1.39

(ii) Schemes funded by various Financial

Institutions - Details be given according
to (i) above
(iii) Others - Details of funds expected to be
received for the scheme through
dovetailing by convergence with a view to
optimum utilization of the resources.
(In case of the Scheme being a Central
Scheme/ Centrally Sponsored Scheme or
funded by a Financial Institution, the
Central share or the share of the
Financial Institution and the State share
be given clearly)
9. Details of year-wise liabilities against the
estimated cost of remaining works
(including land-building, furnishings,
machines, equipment, vehicle etc) of
different programmes / projects / schemes
be given in prescribed form. (Consolidated
year-wise details can be given in Form
B.M.-12A in respect of the works / schemes
costing upto Rs. five crore, but individual
works / schemes of more than Rs. five
crore should be shown separately in Form
B.M.-12B).
10. Other details required under the provisions
of the Chapters - VIII and XIX of the Uttar
Pradesh Budget Manual.
11. Classification of the proposed budget
estimate according to Heads of Account-
(It should be clearly mentioned whether the
proposed provision is for both, the Central
share the share of the financial institution
and the State share or for State share only)
Revenue Expenditure : .......................
: ........................
Total Revenue Expenditure : ........................
Capital Expenditure : ........................
: ........................
Total Capital Expenditure : ........................
12. Other Related Details
 1.40

(C) Supplementary information, if any

(D) Points on which decision/ sanction are sought

Name of Section ......................

File No. ................................... Signature .....................................
Date ......................................... Principal Secretary/ Secretary of the
Administrative Department
 1.41

CHAPTER IX
PREPARATION OF THE ESTIMATES AND THE BUDGET BY
THE FINANCE DEPARTMENT
73. Finance Department’s responsibility for preparing the Budget :
Under the rules made by the Governor under Article 166 (2) and (3) of
the Constitution and the instructions issued thereunder, the Finance
Department has been charged with the responsibility to prepare a
statement of estimated revenue and expenditure, to be laid before the
Legislature in each year. Although the material is supplied by the Heads
of Departments and other estimating officers, the actual preparation of
the estimates and the budget thus falls upon the Finance Department
and it is solely the business and responsibility of that department to settle
the estimates of receipts and disbursements.
74. Scrutiny of departmental estimates : On receipt of the
departmental estimates (Ref: Chapter III), the Finance Department will
scrutinise the estimates, item by item, with due regard to (a) the
explanations furnished by the estimating officers, (b) the comments of
the Accountant General and (c) the recommendations, if any, of the
administrative departments concerned on the estimates submitted
through them ( Ref: para. 19 of Chapter III ).
75. In respect of the estimates of receipts the Finance Department will
take into account any special information affecting the estimates for the
forthcoming year which it may possess and which has not already been
taken into account by the estimating officer, the Accountant General or
the administrative department.
76. In respect of the estimates of disbursements the Finance Department
will direct the closest scrutiny to the items relating to fluctuating and non-
recurring charges. It is only in rare instance that it should be necessary
for the Finance Department to make any modification in the estimates of
recurring charges proper; it will nevertheless particularly examine the
estimates under primary units related to salary , and if necessary, modify
them on the basis of actuals of previous year. The Finance Department
will scrutinise the estimates of fluctuating charges, item by item, and will
excise any increases which are not adequately or satisfactorily
explained. It will further scrutinise items in respect of which no increase is
proposed, with the object of effecting any legitimate reduction which can
be made. It will similarly scrutinise the estimates of non-recurring
charges, excising any amounts which are not covered by sanction and
eliminating or reducing the estimates for the forthcoming year where
there is no reasonable certainty that the amount estimated will be spent.
It will also scrutinise and make such corrections as are necessary in the
classification of receipts and disbursements (i) under the various major
heads, minor heads and primary units of appropriation and (ii) under –
(a) votable and charged,
(b) revenue and capital,
(c) plan and non-plan.
 1.42

77. Enquiries by the Finance Department to be attended to

promptly : In the course of the examination of the estimates, the
Finance Department may find that in respect of particular items further
explanations or clarifications, etc., are necessary before the estimates
can be settled. The necessity of such further information being supplied
to it with the least possible delay needs no emphasis. The Finance
Department will normally address their inquiries to the administrative
departments concerned of the Secretariat and the latter will furnish the
required information after consulting their Heads of Departments, etc.,
where necessary. In cases where it is clear that the details will have to
be obtained from the Heads of Departments and other estimating
officers, the Finance Department may address their inquiries direct to the
officers concerned and send a copy to the administrative departments
concerned. Final action will, however, ordinarily be taken by the Finance
Department only on the basis of the report received from the
administrative department which should be full and clear. The required
information must be furnished to the Finance Department within the time
allotted for the purpose, failing which the Finance Department will finalise
the estimates at its own discretion and the responsibility for any
incorrectness of the estimates will ultimately devolve on the officers of
the administrative departments concerned.
78. Compilation of Detailed Estimates by the Finance Department :
As a result of its scrutiny of each departmental estimate the Finance
Department will adopt figures for each item included in the estimate and
will cause the estimate as so adopted to be compiled in the form it
appears in the Detailed Estimates. The Finance Department may, if it
considers necessary, send either before or after its scrutiny, any
departmental estimate to the Secretary of the administrative department
concerned either for information or to enable him to clear up any doubtful
point. It must, however, be clearly understood that this is not obligatory
and it is for the Secretary concerned to go through each departmental
estimate received from the estimating officer before it is sent to the
Finance Department.
79. Further scrutiny and submission of the estimates to the Council
of Ministers : When all the departmental estimates have been settled
and detailed estimates are complete in all respects, the Finance
Department will re-examine the estimates as a whole and will make such
changes as may be found to be necessary due, for example, to overall
unsatisfactory financial position or modification of the contemplated loan
programme or any other financial factor affecting the estimates. A
preliminary note by the Finance Secretary, based on the figures in the
consolidated estimates, together with the schedule of new expenditure
and the connected explanatory notes, shall then be placed by the
Finance Department before the Council of Ministers ordinarily in the
second week of January. The Council may then consider questions of
policy arising from the budget, such as fresh taxation, floatation of loans
in the market and select, with reference to the funds available, the new
items which are to be included in the budget. The amounts for items thus
selected shall be added under the appropriate demands for grants in the
 1.43

detailed estimates to be presented to the Legislature. Other decisions

taken by the Government affecting those estimates will also be
incorporated therein. The Budget is then ripe for presentation to the
Legislature.
80. Last stage modification : The Finance Department may, at any
stage before the budget is presented to the Legislature, make such
modifications in the estimates as may be necessitated by the emergence
or the discovery of factors disturbing the estimates so far framed. Such
action is incumbent on the Finance Department in the fulfilment of its
responsibility to present the estimates as correctly as possible.
 1.44

CHAPTER X
PRESENTATION OF THE BUDGET TO AND ITS
DISPOSAL BY THE LEGISLATURE
81. Details of the Budget Literature - The Budget Literature, which is
supplied to the Legislature, at present consists of six Volumes, namely –
Volume I – The Finance Minister’s budget speech.
Volume II – This Volume is in two parts. The Part-I is the
Finance Secretary’s Memorandum on the Budget, containing a
brief review of the State’s finances as revealed by the actuals of
the previous year and the revised estimates for the current year,
and a brief review of the estimated receipts and detailed
explanations for the variations in the estimates of expenditure for
the budget year and also the undermentioned statements:
(1) Introduction to the Budget
(2) Review of Financial Position
(3) Statement of Receipts into the Consolidated Fund
(4) Expenditure to be made from the Consolidated Fund
(5) Contingency Fund and the Public Account
(6) Grant wise Statement of Gross and Net Expenditure
(7) Statements to be presented under the provisions of
the Uttar Pradesh Fiscal Responsibility and Budget
Management Act, 2004
The Memorandum also contains annexures showing the total
indebtedness of the State, the guarantees given by the State
Government involving contingent liability on the Consolidated
Fund of the State, the outstanding balances of loans and
advances granted by the State Government, the balances in the
various Reserve Funds including Depreciation Reserve Fund
and Sinking Funds, analysis of interest payments, analysis of
interest receipts, statement of grants-in-aid given to various
institutions, statement of subsidies given by the State
Government, statement of pension, gratuity and other retirement
benefits, financial results of commercial departments (Irrigation)
etc.
The Part-II of this Volume contains Standard Object-wise
details of expenditure under each Grant/ Appropriation
Volume III – This gives a list of the new items of expenditure
included in the estimates of the budget year with connected
explanatory notes (See Chapter VIII).
 1.45

Volume IV – This contains the estimates of receipts of revenue

and capital accounts. Estimates of refunds, if any, under any
head of receipts, are also shown.
Volume V – This contains grant-wise detailed estimates of
expenditure. This volume may have number of parts on the basis
of number of grants and the number of schemes.
Volume VI - This contains scale-wise description of posts of
Government employees in different departments.
82. Procedure for presentation to and Disposal of the Budget by the
Legislature - The procedure for the presentation of the Budget to the
Legislature and for its disposal is regulated by the Rules of Procedure
and Conduct of Business of the Legislative Assembly and the Legislative
Council.
83. According to the Rules referred to above, the budget has to go
through the following stages :
(1) presentation to the Legislature,
(2) general discussion,
(3) voting on the demands for grants in the Legislative Assembly,
(4) introduction, consideration and passing of the Appropriation Bill
in the Legislative Assembly and its consideration thereafter by
the Legislative Council, and
(5) obtaining the assent of the Governor to the Appropriation Bill.
84. The Budget is presented to the Legislature ordinarily in the second
half of February or early in March. In presenting the budget the Finance
Minister makes a speech in the Legislative Assembly explaining the
salient features of the budget and Government policies. In the Legislative
Council the budget is presented with the same speech read either by the
Finance Minister himself or by some other Minister or member of the
Government.
85. On days to be appointed by the Speaker / Chairman, but not earlier
than two days in the case of the Legislative Assembly and three days in
the case of the Legislative Council of the presentation of the budget,
begins the general discussion in both the Houses of the Legislature on
the budget as a whole or on any question of principle or policy involved
therein. The number of days for such discussion in the Legislative
Assembly allotted by the Speaker is ordinarily five days; while in the
Legislative Council the number of days is allotted by the Chairman in
consultation with the Leader of the House. No motion is to be moved, nor
are the details of the budget to be discussed, at this stage further than is
necessary to explain the general principles and policies of the budget.
The Finance Minister has a general right of reply at the end of the
discussion in both the Houses.
 1.46

86. After the general discussion is over, the voting on the demands for
grants is taken up in the Legislative Assembly in accordance with the
programme approved by the Speaker. The Legislative Council is not
required to vote on the demands for grants. A demand for grant is a
proposal made, on the recommendation of the Governor, for the
appropriation of funds for expenditure to be met from the Consolidated
Fund of the State, other than that charged. The amounts required for
charged expenditure are shown separately (generally in italics) and are
not subject to vote but can nevertheless be discussed. There is usually
one demand for grant in respect of each department, but the Finance
Minister may include in any one demand grants proposed for two or more
departments or make a demand for grant in respect of expenditure which
cannot readily be classified under particular departments. Each demand
for grant contains first a statement of the total amount required, followed
with details arranged by Major Head(s) and Sub-Major Heads, Minor
Heads, Sub-Heads, Detailed Heads and Primary Units of Appropriation.
The demand is moved by the Minister in-charge of the subject or
department or some one deputising for him. The Legislative Assembly
has power to assent, or to refuse to assent, to any demand, or to assent
to any demand subject to reduction of the amount specified therein.
Motions can be moved to reduce or omit any grant but not to increase or
alter the destination of a grant. Notice of such motions is to be given not
less than two days before the day appointed for the discussion of the
demand for the grant concerned, unless otherwise directed by the
Speaker. Every such motion must be accompanied by a brief note
explaining in precise terms the purpose of the intended motion.
87. Appropriation Bill - After the voting on all the demands for grants
has been completed, an Appropriation Bill is introduced to provide for the
appropriation out of the Consolidated Fund of the State of all moneys
required to meet (a) the grants made by the Assembly and (b) the
expenditure charged on the Consolidated Fund but not exceeding in any
case the amount shown in the statement previously laid before the
Legislative Assembly and the Legislative Council. The Bill has to go
before both the Houses, but being a Money Bill it originates in the
Legislative Assembly. Article 204(2) of the Constitution prohibits the
moving of any amendment to an Appropriation Bill which has the effect of
varying the amount or altering the destination of any grant made by the
Assembly or of varying the amount of any expenditure charged on the
Consolidated Fund. After the Appropriation Bill has been considered and
passed by the Legislative Assembly, it is transmitted to the Legislative
Council for its recommendations. The Legislative Council is empowered
to make recommendations and required to return the Bill, within fourteen
days of its receipt, to the Legislative Assembly with or without any
recommendations. The Legislative Assembly may either accept or reject
any of the recommendations of the Legislative Council. If it accepts any
of the recommendations, the Appropriation Bill is deemed to have been
passed by both the Houses with the amendments recommended by the
Legislative Council and accepted by the Assembly. If, on the other hand,
it does not accept any of the recommendations of the Legislative Council,
 1.47

the Bill is deemed to have been passed by both the Houses in the form in
which it was passed by the Assembly without any of the amendments
recommended by the Legislative Council. The Governor’s assent to the
Bill is thereafter obtained; and when that has been given, the amounts
shown in the Act assented to by the Governor and the Schedule thereto
become the sanctioned grants for expenditure under the various
demands.
 1.48

CHAPTER XI
SUBSEQUENT ACTION IN RESPECT OF THE BUDGET :
COMMUNICATION AND DISTRIBUTION OF GRANTS
88. Communication of grants - As soon as the demands for grants
included in the Annual Financial Statement have been voted by the
Legislative Assembly and the payment from and the appropriation out of
the Consolidated Fund of the State of the sums voted by the Assembly
and the sums charged on that Fund have also been authorised by
means of an Appropriation Act, the Finance Department will intimate the
same to all the administrative departments of the Secretariat indicating at
the same time whether the demands have been voted in toto, or whether
any amounts have been omitted or reduced by the Assembly, either
through substantive or token cuts and the purpose or object underlying
each such cut. The administrative departments will be responsible for
taking necessary action immediately for communication of budget
allotments to various Heads of Departments and other controlling officers
under them. The allotments placed at the disposal of each such officer
for expenditure, whether voted or charged, will be intimated by the
administrative departments to the Accountant General also. The
controlling officers or the Heads of Departments, as the case may be,
and the administrative departments concerned of the Secretariat shall be
responsible to ensure that the expenditure is kept strictly within the
authorised appropriation; and where cuts have been made by the
Assembly in the demands, to ensure that the purpose or object
underlying the cuts is duly fulfilled. They should carefully remember that
it is not permissible to increase or provide for expenditure on any item
the provision for which has been specifically reduced or disapproved by
the Assembly through a substantive or a token cut.
The administrative departments will also ensure that the new
items of expenditure for which provision has been included in the budget
as passed by the Legislature are sanctioned by them as soon as
possible. The orders will be issued with the concurrence of the Finance
Department, except where the Finance Department may have delegated
the necessary financial powers to the administrative departments. A copy
of each such order should be sent to the Accountant General and the
Finance Department.
89. Matter to be brought to the notice of the Accountant General -
The Finance Department will supply copies of the Budget Literature to
the Accountant General and while doing so will communicate to him
cases in which, on a demand being presented to it, the Assembly has
declined to provide funds for expenditure on a particular purpose. The
Finance Department will also bring to the notice of the Accountant
General any resolution or other motion which has been passed by the
Assembly expressing direct disapproval of an expenditure on a specified
purpose.
90. Deleted
 1.49

91. Distribution of grants by Controlling Officers - The Heads of

Departments and other controlling officers may distribute either the whole
or a portion of the grants placed at their disposal among the disbursing
officers concerned who are subordinate to them in such manner as they
may deem fit. In the case of supplies relating to the estimates which are
consolidated by certain departments of the Secretariat, the necessary
distribution of the grants amongst the various officers concerned will be
made by those departments.
In distributing allotments care must be taken to intimate the
allotments with complete accounts classification of each sum allotted,
i.e., the major head to the standard object of expenditure. The controlling
officer should compulsorily seek the advice of the Controller Finance
before the distribution of the budget to sub-ordinate disbursing officers.
The budget available at the disposal of controlling officer should not be
allotted in too many instalments. If the budget put at the disposal of
controlling officer needs to be allotted in a number of instalments, the
reasons shall be recorded by the controlling officer on the allotment
file/register. The Controller Finance shall maintain a budget control
register on the Form B.M.-10. Every budget allotment is to be entered in
the budget control register and duly signed by the Controller Finance.
The allotment order shall bear the page number of the budget control
register.
Note (1) - No distribution should generally be made of the appropriations
under the heads ‘Grant-in-aid’ and ‘Scholarships’ where expenditure is
watched by the Controlling Officer of the total grants against the State
allotments, but there is no bar to controlling officer distributing the
appropriations under these heads too among the various disbursing
officers if he considers it necessary to do so in the interest of exercising
efficient control over expenditure.
Note (2) - In respect of such items of expenditure as dietary charges in
Jails, annual contributions, purchase of arms and ammunitions for the
police force, purchase of uniforms, expenditure on special repairs and
petty works, etc., which do not occur every month, the Controlling Officer
has full discretion to decide whether he will distribute the grant or retain
the full appropriation under his own control, requiring disbursing officers
who wish to spend money against it to apply to him for special allotment
as and when the need arises.
92. Early action for communication of sanctions - It is necessary that
the communication of sanctions and distribution of grants is effected with
the least possible delay. Every effort should be made to complete this
work before the end of April. For this purpose the administrative
departments should prepare necessary draft G.Os, etc. immediately after
the connected demands for grants have been voted by the Legislative
Assembly without waiting for the final passing of the Appropriation Act
and the formal intimation of the budget allotment by the Finance
Department. The draft should be referred to the Finance Department for
concurrence, where this is necessary, and kept ready with fair copies for
issue early in April.
 1.50

93. Items provisionally approved by Finance Department -

Sometimes proposal for certain new schemes or items of new
expenditure are referred to the Finance Department so late in the year
that it is not possible for that Department to examine them completely in
detail. At the same time, such new schemes or items may be considered
to be so urgent and essential that the inclusion of necessary provision for
them in the Budget cannot be postponed. Pending the examination of all
relevant details, provision for these items may be allowed to be included
in the Budget as a special case. Such provisions are in a sense lump
provisions although they are not to be treated as such and all such items
must necessarily be examined thoroughly both in the administrative
departments and in the Finance Department before expenditure sanction
can be accorded. In fact such further examination should be started and
completed well in time after the presentation of the budget so as to
enable the administrative departments to issue the necessary orders as
early as possible after the passing of the budget. The administrative
departments should maintain a list of all such items and see that there is
no delay in the issue of orders on this account.
94. Lump Provision - It has already been stated in para 31 of Chapter V
that the working out of details for utilisation of lump provisions should be
started immediately after the amounts have been finally included in the
budget. After the details have been finally settled in consultation with the
Finance Department, the administrative department shall obtain the
approval of the Minister concerned and thereafter the approval of the
Finance Minister and the Chief Minister. Only then the expenditure can
be authorised by issue of necessary sanctioning orders copies of which
should be supplied to the Accountant General under the signature of an
officer of the Finance Department.
Provided that where the total amount of the project / scheme or
of the service does not exceed Rs. one crore or where the amount is
required for payment of a decretal amount, the approval of the Minister of
Finance and the Chief Minister shall not be necessary.
Provided further that where the amount exceeds Rs one crore
but does not exceed Rs. three crore, the approval of the Chief Minister
shall not be necessary.
Provided also that any individual case may be submitted by the
Finance Department to the Finance Minister and the Chief Minister if it
presents any unusual features in the opinion of the Finance Department.
The administrative departments should submit a report to the
th
Cabinet by 15 April of the ensuing year stating how the lump provisions
were utilised.
This procedure will, however, not be necessary in respect. of
lump provisions when the expenditure is regulated by standing sanctions,
instructions or rules.
95. - Deleted
 1.51

CHAPTER XII
WATCHING THE PROGRESS OF REVENUE AND RECEIPTS
96. Government dues to be assessed and realised regularly and
promptly - Subject to any special arrangement that may be authorised
by Government with respect to any particular class of receipts, it is the
duty of the departmental Controlling Officers to see that all sums due to
Government are regularly and promptly assessed, realised and duly
credited into the Government account. The Controlling Officers should
accordingly arrange to obtain from their subordinates monthly accounts
and returns in suitable form claiming credit for so much paid into the
treasury or otherwise accounted for and compare these with the
statements of treasury credits furnished by the Accountant General, to
see that the amounts reported as collected have been duly credited to
Government account. (List of controlling officers is given in Volume-V of
the Budget Literature)
If wrong credits come to the notice of the Controlling Officers,
they should at once inform the Accountant General with a view to
correction of the accounts. If any credits are claimed but not found in the
accounts, inquiry should be made first of the responsible departmental
officer concerned. Where departmental registers are not maintained
under the departmental rules, the heads of offices must make their own
arrangement within the office to ensure the correct and complete report
of receipts.
97. General instructions - The following instructions should be borne in
mind :
(i) It is essential that the departmental controlling officer’s
account should not be compiled from returns prepared by the
treasury. But the treasury officer is in some cases required to verify
returns for submission to departmental controlling officers.
(ii) The amounts collected should at once be deposited into the
treasury and in order to minimise chances of discrepancies between the
treasury figures and the departmental figures, the challans with which
money is remitted to or deposited into the treasury should bear full and
correct classification of account and duly reconciled.
(iii) The collections should on no account be utilised for meeting
any expenditure.
(iv) Mistakes in classification should be reported by means of
foot notes in the next return and action taken where necessary for
correction of accounts in accordance with the prescribed procedure.
Note - The relevant rules in Chapter IV of Financial Handbook, Volume V
part-1 should be consulted.
98. Irrecoverable dues - No amount due to Government should be left
outstanding without sufficient reason and without bringing the matter to
the notice of the competent authority within a reasonable time. Where
 1.52

any dues appear to be irrecoverable, a full report must be submitted to

the competent authority and orders sought. If it is found that any dues
have become irrecoverable due to failure on the part of any Government
servant to take timely action without sufficient reason, the official at fault
may, after following the prescribed procedure, be called upon to make
good the loss in such manner as the competent authority may deem fit.
99. Credit to revenue by debit to suspense head not permissible -
Unless specially authorised by any rule or order made by competent
authority, no sums may be credited as revenue by debit to a suspense
head, the credit must follow and not precede actual realisation.
100. Submission of progress reports to the Finance Department -
The responsibility for keeping a proper watch on revenue receipts
primarily rests with the Controlling Officers. The Accountant General,
however, also keeps a watch and immediately reports to the Finance
Department any large increase or falling off in those receipts. Any large
differences that are likely to arise in actuals as compared with the
estimates should also be reported by him as soon as reason arises for
expecting them. He is required to submit to the Finance Department the
th
preliminary actuals of receipts and outgoings of each month by the 15
of the following month. The Controlling Officer will maintain details in
form B.M.3 and send the same form to the Finance Department and the
th
Accountant General by the 10 of the following month.
101. Inter departmental adjustments - To ensure that all periodical
adjustments between the various departments of the Government are
properly and promptly made, the Accountant General should maintain
records showing (1) all periodical adjustments that are usually required to
be made,(2) the month’s accounts in which the adjustments should be
made, and (3) the actual date of adjustment, and should take steps to
ensure that as far as possible all adjustments are made before the close
of the final accounts of the year.
102. Recoveries from other Governments and the local bodies, etc. -
The Controlling Officers must see that claims in respect of dues from
other Governments and the local bodies, etc., are made and recoveries
effected as early as possible.
 1.53

CHAPTER XIII
WATCHING OF ACTUALS AND CONTROL OVER EXPENDITURE
103. General Responsibilities of the Finance Department and the
Accountant General - Under the rules made by the Governor under
Article 166 (2) and (3) of the Constitution, the Finance Department is
responsible for watching the Government’s balances and their ways and
means operations. The Accountant General is, therefore, required to
furnish to the Finance Department a monthly account of the Government
transactions in Form B.M. 14 by the 15th of the following month; and also
a monthly grant-wise account (in 15 digit code) of expenditure.
The Accountant General warns the Finance Department
immediately of the appearance of any appreciable excess in the
proportionate outlay under any grant (or under any sub-head or primary
unit of appropriation if so required by the Finance Department). He also
reports any large differences that are likely in the actuals as compared
with the estimates as soon as reason arises for expecting them.
104. Book adjustments and maintenance of liability register - It is
necessary that all book adjustments are properly and promptly carried
out. In regard to the adjustments which are to be made periodically or
annually, the Accountant General maintains a record showing (i) all such
adjustments, (ii) the month in the accounts of which they are to be made,
and (iii) the actual dates of adjustments, and see that all such
adjustments are so made. He also makes other adjustment in respect of
debits which are received by him supported by the acceptance on
invoices or which he has already been asked by the departmental
officers concerned to accept without any further reference to them. Other
adjustments should, however, be carried out by him only on receipt of
intimation of acceptance of debits by the controlling or disbursing officers
concerned. He should send timely intimation of the receipt of advices of
such debits to the officers concerned. It must be clearly understood that it
is not open to a controlling or a disbursing officer to incur expenditure or
authorise payments in excess of the amounts provided in the
Appropriation Acts. If inevitable payments for which no appropriation
exists have to be made, Government in the administrative department
concerned should be moved beforehand to provide for funds for these if
necessary, by sanctioning an advance from the Contingency Fund.
A separate Liability Register in Form B.M.12 should be
maintained by the disbursing officers in order to keep a proper watch
over any liabilities and their timely clearance. The disbursing officer shall
obtain statements in Form B.M.12 from all concerned offices for which he
is working as drawing and disbursing officer. Information in that
statement should be furnished to the Controlling Officer by 15th April of
the ensuing year. The controlling officer shall maintain register of
liabilities of works / schemes costing upto Rupees five crore in Form
B.M.12A and that of works / schemes costing more than Rupees five
crore in Form B.M.12B.
 1.54

The Controlling Officer shall send statements on the aforesaid

forms to the Administrative Department, the Finance Department and the
Accountant General by the 15th May of the ensuing year.
It must, however, be carefully understood that If the reasons are
not sufficient to create liability, the responsibility should be fixed on the
official at fault.
Note : The aforesaid limit of Rupees five crore may be enhanced by the
Finance Department whenever it is felt by that department to do so.
105. Responsibility of the Administrative Departments and the
Heads of Departments etc. - The authority administering a grant is
responsible for watching the progress of expenditure under its control
and for keeping it within the sanctioned grant or appropriation. In order
that the control of departments over the expenditure may be effective
and real and the controlling officers may be in a position from month to
month to estimate the likelihood of savings and excesses in grants and
appropriations, the procedure mentioned and the instructions contained
in the preceding and the following paragraphs of this Chapter should be
carefully observed by all departments and controlling and disbursing
officers, except where the Finance Department may have agreed in
writing to some other procedure. The Heads of Departments will be
responsible for controlling expenditure from the grant or grants or
charged appropriations placed at their disposal and will exercise control
through the controlling officers, if any, and the disbursing officers
subordinate to them. Such control must be exercised with reference to
the grants or charged appropriations as they stand from time to time.
While keeping himself posted with the progress of expenditure under
different units of appropriation, a controlling officer should also keep a
clear record of all commitments made and liabilities incurred, including
those of the previous years. Similar record should also be kept in respect
of works taken up on behalf of the Central Government, other State
Governments and local or other bodies, etc. He should keep himself
informed of any special circumstances which are likely to affect the
progress of expenditure during the remaining part of the year and should
take action in proper time for obtaining additional funds where necessary.
106. Re-examination of expenditure programme with reference to
the sanctioned grants - As soon as the grants have been
communicated by the administrative departments to the Heads of
Departments, etc., the first duty of these officers is to compare carefully
the amounts actually provided for expenditure in these grants with the
amounts which had been proposed in the departmental estimates. A note
must be taken at once of all reductions made under various units of
appropriation and ways and means devised, right at the beginning of the
year, to ensure that the expenditure is restricted to the amounts actually
provided. Reductions are mostly made to enforce economy in
expenditure. It would be improper on the part of the administrative
departments and their subordinate officers to start incurring expenditure
without first carefully re-examining the position with reference to the
amounts actually provided.
 1.55

107. Responsibilities of Controlling Officers - For every grant there is

usually one controlling officer, but in respect of certain grants there may
be more than one (See Vol. V of Budget literature). The duties and
responsibilities of a controlling officer briefly are:
(i) to ensure that the grant placed at his disposal is expended
only on the objects for which it has been provided, keeping in
view the standards of financial propriety [see para 12 (iii) of
Chapter I];
(ii) to keep the expenditure within the sanctioned grant;
(iii) to keep the expenditure under a particular unit of appropriation
within the sum allotted to him under that unit, and, where this is
not possible, to meet the excess by effecting saving in the
sums allotted to him under other units through re-
appropriations, in accordance with the rules contained in
Chapter XIV;
(iv) to move the competent authority, in proper time, to provide
additional funds, either by re-appropriation or through
supplementary estimates, whenever an excess over the total
grant placed at his disposal is expected by him as unavoidable
or when he desires to incur some new expenditure;
(v) to surrender appropriations or portions thereof which are not
likely to be required during the year as soon as lapses or
savings are foreseen;
(vi) to ensure the observance by himself and his subordinates of
all financial rules and regulations.
108. Responsibilities of disbursing officers - The responsibilities
mentioned above of a controlling officer attach equally to a disbursing
officer. In addition, a disbursing officer must ensure that the conditions
preliminary to the incurring of expenditure are satisfied, namely, that the
sanction of the competent authority exists and funds to cover the charge
fully have been placed at his disposal. The probability of any excess
expenditure over the amounts allotted must be foreseen by him and
intimation of the likely excess, along with reason for this, should be sent
to the controlling officer concerned in sufficient time to enable the latter to
arrange additional funds if these are to be allotted at all.
Every controlling officer, in respect of expenditure incurred by
himself, is in the same position as a disbursing officer.
109. Conditions for appropriation out of allotments - The Heads of
Departments and the subordinate authorities to whom they have
distributed allotments under particular units of appropriation, have,
subject to any general or special orders, full powers to appropriate sums
to meet sanctioned expenditure falling under these units, provided that -
(a) an allotment for ‘charged’ expenditure must not be
appropriated to votable expenditure and vice versa ;
 1.56

(b) an allotment must not be appropriated for any item of

expenditure which is not covered by sanction, either general or
special ;
(c) an allotment be appropriated only for the objects for which it is
sanctioned ;
(d) no expenditure must be incurred without the previous approval
of competent authority on an object the demand or the
provision for which has been specially reduced by
Government; and
(e) an allotment must not be appropriated to increase the amount
in any grant and specified standard object.
110. Appropriation, its meaning and operation - It will be noted that
an appropriation is intended to cover all charges, including any
outstanding liabilities of past years to be paid during the current year or
to be adjusted in the account of that year. When a provision is originally
proposed in the departmental estimate, or when an application is made
subsequently, in the course of the year, for additional appropriation, the
amount asked for should , therefore, be inclusive of all anticipated
liabilities. An appropriation is operative until the close of the financial year
when any unspent balance lapses and is thus not available for utilisation
in the following year. The accounts of each financial year are, however,
kept open till June of the following year so that, as far as possible, all the
transactions of the year may be entered in the accounts of the year. If it
is not possible for any expenditure to be booked in the accounts of the
year to which it relates owing to the fact that the actual incidence thereof
is under dispute, it ought to be charged to the accounts of the year in
which the final decision is taken.
111. General system of control - To facilitate control, departmental
accounts are maintained by controlling officers and the progressive
actuals are verified every month with those entered in the books of the
Accountant General, except in the case of the departments and the
account heads mentioned in paras 128-129 infra the control over
expenditure on which is based on the progress of actuals as reported by
the Accountant General.
Note - The controlling officers given in Vol. V of Budget Literature should
reconcile their accounts on month to month basis against the accounts
maintained by the Accountant General . The Accountant General will, in
fact, be acting not as an audit officer but merely as an agent of
Government for keeping the record of expenditure.
112. Maintenance of register of allotment and expenditure by
disbursing officers - Each disbursing officer will maintain a register of
expenditure under each detailed head of account with which he is
concerned in Form B.M. 4. Separate registers should be maintained for
the Plan and non-Plan expenditure. The allotments communicated by the
controlling officer at the beginning of the year will be noted in this register
in red ink under each detailed head. Should the allotment against any
 1.57

standard object be increased or reduced by the controlling officer

subsequently, the amount of the allotment will be corrected in the register
by plus or minus entry in red ink. Should a disbursing officer receive
information from his controlling officer that any particular items have
been misclassified, he will correct the accounts of expenditure and the
available balances of the allotments by means of plus or minus entries in
red ink. In the register will also be entered the details of each bill cashed
at the treasury under the appropriate standard object together with the
number and date of each voucher on which money has been drawn. The
number and date of each voucher will be known from the reconciliation
statement provided by the treasury officer in Form B.M.5. If the
reconciliation statement is not provided, the number and date of the
voucher can be filled in later when it is received. At the end of each
month the expenditure against each standard object will be totalled. The
total expenditure will, at the same time, be deducted from the allotment
shown in relevant column of the register in Form BM 4 and the balance
brought forward to the account of the next month.
The disbursing officer will also maintain budget control registers
in Form B.M.11 (Part I and Part II).
113. Procedure for presentation of bills at the treasury - Whenever a
disbursing officer presents a bill at the treasury he should enter in the bill
the complete account classification of the proposed expenditure, from the
major head down to the primary unit of appropriation, and also indicate
whether the expenditure is ‘charged.’ With a view to distinguishing
expenditure relating to Plan from the non-Plan expenditure, the words
‘Plan’ or ‘non-Plan’ should be clearly written on top of the face of the
treasury bill. The “Code” prescribed for different classification of heads of
account , source and sector of fund should be correctly entered in the
bill.
The Drawing and Disbursing officer must obtain reconciliation
statement in Form B.M.5 (in triplicate) duly signed by the Treasury
Officer by the 5th of the ensuing month and reconcile every drawal
(voucher) from the treasury. The reconciliation statement must contain
voucher number, date ,grant number and all levels of heads of accounts
including the standard object of expenditure.
114. Grants-in-aid and contributions : Unless in any case the
Government direct otherwise, all bills for grants-in-aid and contributions
are prepared and vouched for by the grantees and presented for
payment through some responsible Government Officer after they have
been countersigned by him. The Treasury officer shall refuse payment of
all bills which do not bear the signature or countersignature of the
sanctioning authority or such other Government officer as may be
nominated by government in this behalf provided that when the sanction
of Government is communicated in the form of an express order to the
Accountant General to make the payment, the Accountant General may
authorise the payment of the bill without requiring the signature or
countersignature of a government officer. This procedure will not,
however, apply to the cases wherein the grants are paid by cheque or by
 1.58

transfer to the account of the grantee or in cash through a responsible

government officer after the amount of the grant has been drawn on a bill
by the officer himself. The officer who is authorised to sign such bill must
reconcile the drawals from the treasury and send it to controlling officer
or administrative department like any other voucher being shown in the
register in Form B.M. 4.
115. Prompt availability of reconciliation statement - The submission
of monthly statements of expenditure by the disbursing officer to the
controlling officer and by the latter to the Accountant General, prescribed
in the subsequent paragraphs, should not, however, in any case be
delayed on account of any delay in receiving the reconciliation statement.
Should the reconciliation statement made available by the Treasury
Officer show missing any of the drawals made by the disbursing officer,
the latter should promptly inform the Treasury Officer and ask him to
furnish the voucher numbers and dates thereof.
The above instructions must carefully be noted and strictly
complied with, as the procedure is intended to facilitate prompt detection
of fraudulent drawals and interpolation in the bills and prevent the
inclusion in monthly cash totals of bills which were not presented by the
disbursing officer. The disbursing officer must return a signed copy of the
reconciliation statement received from the treasury indicating
discrepancies, if any. The object of reconciliation will be defeated if there
is no return of reconciliation statement.
The controlling officer will, for those parts of the budget allotment
which he retains himself, adopt the same procedure as prescribed for the
disbursing officer, i.e. he will keep registers of expenditure and liabilities
in the same manner and form as a disbursing officer.
116. Submission of monthly statement of expenditure by disbursing
officer to controlling officers - On the fifth day of each month, each
disbursing officer must submit to the controlling officer concerned
statement of expenditure in respect of the previous month in Form B.M. 4
being a copy of his register in this form. In statement in Form B.M.4, the
numbers and dates of the treasury vouchers against those entries in
respect of which reconciliation statement has been received by him from
the treasury should be filled and the reconciliation statement attached to
it. The wanting reconciliation statement, if any, should follow, as early as
possible with the voucher numbers and dates of passing, on their receipt
from the Treasury Officer. If there be nothing to report for any month, a
nil statement should be sent. Treasury should supply the reconciled
drawal statement to disbursing officer as early as possible .
If any error in classification is discovered before the monthly
statement of accounts is submitted to the controlling officer, the
statement should be corrected by the disbursing officer. If the statement
has already been submitted, the mistake should be set right by means of
a clear explanatory footnote in the next statement.
 1.59

117. Receipt and check of the monthly statements by the controlling

officers - In order to watch the receipt of the monthly returns referred to
above, the Controlling Officer / Head of Department shall maintain a
checklist in Form B.M.13 in which a serial number will be allotted to each
individual disbursing officer. This checklist shall be kept up-to-date and
reminders issued promptly if any statements are not received in time.
On receipt of the monthly statements of expenditure and
liabilities from the disbursing officers, the controlling officer should
carefully examine each statement and satisfy himself that-
(i) the accounts classification has been correctly given (this will
appear from the heads shown in reconciliation statement) ;
(ii) progressive expenditure has been properly noted and the
available balances correctly calculated;
(iii) the new liabilities shown, if any, have been incurred under
proper authority;
(iv) the expenditure plus the liabilities up-to-date are within the
appropriation;
(v) the statement has been signed by the disbursing officer
himself; and
(vi) reconciliation statement has been attached by the disbursing
officer or has been received direct by the controlling officer
himself from the treasury.
If the controlling officer finds any defects, he shall take
immediate steps to have them rectified.
118. Maintenance of registers of expenditure by the controlling
officer - The Controlling Officer shall maintain register of expenditure in
Form B.M.6. This register will contain the same details columns as given
in Form B.M.4, and will be complied in a similar manner, except that this
will contain only the monthly totals, as reported by the disbursing officers,
of expenditure under each primary unit of appropriation. In this register a
separate page will be allotted for each disbursing officer.
119. The controlling officer shall also maintain another register in Form
B.M.7 in which he will consolidate the statements of monthly expenditure
received from his disbursing officers with his own monthly expenditure.
This register will be filled in when all disbursing officers’ returns for a
particular month have been received and found to be in order. The
controlling officer will also incorporate the totals of adjustments under the
various detailed heads which will be communicated to him by the
Accountant General on account of transfer entries and expenditure
debited to the grant through ‘accounts current’, i.e., expenditure incurred
in another state or in a Union Territory and communicated to the
Accountant General by the authorities of that State or the Union Territory
for inclusion in the accounts of this State. If any adjustment
communicated by the Accountant General affects the appropriation at the
 1.60

disposal of a subordinate disbursing officer, the fact that it has been

made should be communicated immediately by the controlling officer to
the disbursing officer concerned.
120. Watch over important but occasional items of expenditure -
The controlling officer shall keep a separate and careful watch on
occasional but important items of expenditure (e.g., purchase of uniforms
and arms and ammunition for the police force, equipment and medicines
for hospitals and dispensaries and food grains, etc., for jails ). He will
decide for himself what suitable method he should adopt to watch such
expenditure and keep control over it. In some cases he may prefer to
keep the entire grant in his hands and direct the disbursing officers to
apply for allotment when they wish to incur expenditure. In other cases
he may distribute allotments and merely ask the disbursing officers to
report the expenditure, as soon as they incur it, separately from the
monthly accounts of other expenditure. Whatever method he adopts, it is
essential that he should keep himself fully informed from time to time not
only of the expenditure already incurred but also of the liabilities incurred
which have to be met out of the sanctioned grant.
121. Watch on the general progress of expenditure - If the controlling
officer finds at any stage that the expenditure is progressing too rapidly,
he should promptly take such steps as he considers necessary to restrict
further expenditure so that the sanctioned grant is not exceeded.
122. Review of the monthly progress of expenditure by the
Administrative Department and the Finance Department - In order
that the administrative departments of the Secretariat and the Finance
Department may be able to review the monthly progress of expenditure,
each controlling officer should prepare a statement in Form B.M.8 and
forward it to the Departmental Secretary and the Finance Secretary by
the end of the month following that to which the expenditure relates. As
regards the heads of account directly controlled by a Departmental
Secretary, the statement should be prepared in the Secretariat and sent
to the Finance Secretary. The figures of actual expenditure shown in this
statement should contain only the departmental figures. Reconciliation of
figures with the accounts maintained by the Accountant General, referred
to in the following paragraphs, takes a little time and it will serve the
purpose if the month up to which reconciliation with the Accountant
General’s figures has been completed is indicated in a note appended to
the statement .The Departmental Secretary shall satisfy himself that the
explanation for the variation in each case is adequate and proper and
take such steps as he may deem necessary to remove the causes for
shortfalls or excesses over allotments.
123. Submission of monthly statement of expenditure by the
controlling officer to the Accountant General - The controlling officer
shall send to the Accountant General each month a statement showing
the departmental totals of expenditure under each primary unit of
appropriation, that is, a copy of the entries in the register in Form B.M.7.
This statement shall be prepared and forwarded so as to reach the
th
Accountant General by the 20 of the month following that to which the
 1.61

accounts relate. It should be accompanied by the disbursing officers’

statements, in original, from which the monthly account has been
compiled.
124. Reconciliation of department figures of expenditure with the
booked figures in the office of Accountant General - The Accountant
General shall check the statement referred to above with the amounts
booked in his office which will be based on the vouchers received direct
from the treasuries and the accounts received from the accounting
officers of other states or Union Territories. The controlling officer and the
Accountant General shall be jointly responsible for the reconciliation of
the figures given in the accounts maintained by the controlling officer with
those which appear in the Accountant General’s books and for correcting
misclassifications. The responsibility of the Accountant General shall,
however, be subject to the limitations placed on him under provisions of
the Comptroller and Auditor - General's (Duties, Powers and Conditions
of Service) Act, 1971 and the rules and regulations made thereunder
(Appendix-III). The variations, if any, between the departmental and the
Accounts Office figures or in the classification, noticed by his office, will
be communicated by the Accountant General to the controlling officer
along with the numbers and dates of related vouchers. The controlling
officer will pass them on to the disbursing officers concerned with
necessary orders for correction which should be made by entries in the
remarks column against the item reclassified and a plus and minus entry
in the register , where it is open thus : "Adjustment on account of
misclassification in voucher no. ..... dated ........". The controlling officer
shall also intimate the Accountant General, as early as possible, and in
any case within a fortnight of the receipt of the statement of
discrepancies, that the corrections and adjustments have been made.
125. Objects of reconciliation - The reconciliation of departmental
figures with the booked figures in the office of the Accountant General
has two objects viz.
(i) to ensure that the departmental accounts are sufficiently
accurate to secure efficient departmental financial control, and
(ii) to secure the accuracy of the accounts maintained in the
Accounts office from which the final published accounts are
compiled .
126. Discrepancies up to certain limits to be ignored - In view of the
very considerable amount of labour which would be involved in a
complete reconciliation of the two sets of figures, which would not be
commensurate with the results obtained and also in pursuance of the
instructions issued by the Comptroller and Auditor-General to the effect
that the reconciliation of discrepancies should not be more minute than is
necessary to attain the two objects mentioned above, a difference in
progressive expenditure under a minor head to the extent of three per
cent of the progressive allotment for that head or Rs. 2,000, whichever is
less, may be ignored, provided that the allotment under no primary unit of
appropriation subordinate to that minor head is exceeded. If the
 1.62

expenditure under any primary unit of appropriation suggests the

possibility of an excess, the figures should be examined in detail and
discrepancies reconciled so as to bring them within the permissible limit.
The above relaxation shall not, however, apply to the reconciliation of
figures relating to disbursement of loans for which there should be a cent
percent reconciliation of the departmental figures with these booked in
the Accounts office.
127. Reconciliation of figures by personal contact - It is very
necessary that the reconciliation of the departmental figures of
expenditure with those booked in the office of the Accountant General is
carried out as early as possible. If on any occasion the controlling officer
finds that observance of the procedure prescribed in paragraphs 123 and
124 is leading to protracted correspondence and causing undue delay in
effecting a complete reconciliation, he may depute to the Accountant
General’s Office for a day or more in a month, as may be necessary, one
or more clerks or assistants, as the need may be, for the purpose of
reconciling discrepancies by personal discussion and verification. The
staff so deputed should have papers proving their identity and a letter of
authority signed by the controlling officer himself. They should take with
them requisite records and statements and, with the help of the
Accountant General’s staff, compare the departmental figures with those
recorded in the Accountant General’s books. A statement of
discrepancies will then be prepared in triplicate in two columns bearing
the stamp of the office of the Accountant General, one showing the
mistakes, misclassifications and omissions on the part of the
departmental officers and the other those on the part of the Accounts
Office. The original statement will be kept in the Accounts Office. One
copy will be made over to the departmental staff and the other sent by
post to the controlling officer concerned by name in a closed cover, with
an endorsement signed by a gazetted officer of the Accounts Office to
the effect that the mistakes, misclassifications and omissions on the part
of the departmental officers may be corrected and an intimation of
compliance sent to the Accounts Office within a fortnight. On the
authority of this statement, which should be seen by him personally, the
controlling officer will correct his statements and registers and also direct
the disbursing officers concerned to make such corrections as are
necessary in their accounts and registers. The procedure mentioned
above is intended to reduce the volume of correspondence and to
expedite reconciliation.
128. Separate procedure for certain departments - The general
procedure does not apply to the Remittance Departments, e.g. Forest,
Public Works, Irrigation, Rural Engineering Service, Minor Irrigation etc.
except in the case of drawals from treasuries to meet establishment
expenditure.
(Special rules and procedure applicable to the Forest Department are
detailed in Chapter XII of Financial Handbook, Volume VII while those
applicable to Engineering Departments are contained in Chapter XXV of
Financial Handbook, Volume VI).
 1.63

129. Expenditure controlled by Secretaries to the Government - The

secretariat level Drawing and Disbursing Officers are also supposed to
prepare the statements prescribed for Drawing and Disbursing Officer as
well as Controlling Officers. The cheque sections [Governor’s
Secretariat, Vidhan Parishad, Vidhan Sabha and IRLA (Individual
Running Ledger Account)] also render their accounts to the Accountant
General.
130. Functions of the Administrative Departments : The functions of
the administrative departments of the Government in respect of control of
expenditure (except in those cases in which ;the expenditure is controlled
by Secretaries to the Government) are generally supervisory, and it is
undesirable that they should assume any of the direct responsibilities
which devolve properly on the controlling and disbursing officers. They
will, however, either on the report of any Head of a Department
subordinate to them or at the instance of the Finance Department or the
Accountant General or on their own initiative, take any action which
maybe necessary in the general interest of economy or to check
extravagance or to obviate excesses over allotments. They will also take
action, when necessary, to restrict expenditure and to investigate the
causes of extravagance and excess and also to mete out suitable
punishment, after observing proper procedure, to the officials found to be
at fault, to prevent the recurrence of any irregularity or impropriety in
expenditure.
131. Deleted
132. Procedure for dealing with anticipated excesses - When on an
examination of the monthly statement of expenditure of a disbursing
officer, or on a separate report received from the disbursing officer
himself, it appears that the allotments placed at his disposal need
readjustment or supplementing, the controlling officer should proceed as
follows :
(i) He should, in the first place, examine the allotments made to
other disbursing officers under the same unit of appropriation
and transfer to the disbursing officer who requires additional
allotment such sums as can be spared, informing the
disbursing officers whose allotments are so reduced. The
disbursing officers concerned shall personally ensure that the
allotment is reduced accordingly by the Treasury Officer.
(ii) Should he find such re-distribution impossible he should
examine the allotments against other units of appropriation
with the object of discovering probable savings and effecting a
transfer. He should obtain the sanction of the competent
authority for re-appropriation.
(iii) If provision of funds from within the same unit of appropriation
proves to be impossible, an examination of the whole grant
placed at his disposal should be undertaken to see whether
there are likely to be savings under any of the other units of
 1.64

appropriation. If such savings are anticipated, he should

proceed as indicated in clause (ii) above.
(iv) If savings are not available, it should be examined whether
special economies can be effected or whether the excess
should be met by postponement of expenditure on unessential
or less urgent items.
(v) If none of the methods indicated above is feasible, an
application for additional funds should be made to the
Government in administrative department concerned which
will, if necessary, move the Finance Department for provision
of additional funds by re-appropriations or through the
supplementary estimates. Normally, an application for a
supplementary grant will not be entertained by the Government
unless the anticipated excess is due to causes beyond the
control of the authority concerned and funds cannot be found
by any legitimate postponement of expenditure for which
provision already exists in the budget or the expenditure in
question cannot be postponed.
 1.65

CHAPTER XIV
SAVINGS IN APPROPRIATIONS, EXPENDITURE NOT PROVIDED
FOR IN THE BUDGET - RE-APPROPRIATIONS, SUPPLEMENTARY
ESTIMATES AND EXCESS GRANTS

133. The payment from and the appropriation out of the Consolidated
Fund of the State and the sums voted by the Legislative Assembly and
the sums charged on that Fund are specified in the Schedule to the
Appropriation Act which authorises the appropriation of these sums for
the services and purposes expressed in that Schedule in relation to the
financial year concerned. Only the total sum for each grant or
appropriation is specified in the Schedule to the Appropriation Act and
this total is worked out on the basis of detailed estimates of gross
expenditure contained in the Volume ‘Detailed Estimates and Grants’ as
finally passed by the Legislature.
134. Emphasis has been laid in the earlier chapters that the detailed
estimates should be framed as accurately as possible. Unavoidable and
unforeseen circumstances may, however, sometimes arise in the course
of the year which make it necessary to incur expenditure under one or
other of the minor or sub-heads and units of appropriation in excess of
the amounts originally estimated. It may also be that the expenditure
under certain heads may not have to be incurred to the extent originally
estimated, or a new service, scheme or item for which provision has
been included in the budget may be started late or may not be taken up
at all due to any administrative reason, resulting in savings. Subject to
certain restrictions and limitations mentioned hereafter, the savings
available under certain heads can be re-appropriated to meet
requirements for additional funds under other heads within the same
Grant or the Appropriation concerned. The further savings if any, are to
be reported to the Finance Department for resumption. An appropriation
is operative only until the close of the financial year and therefore all re-
appropriations and resumption of savings must be completed before the
close of the year. The rules relating to these are contained in Sections I
and Section II of this Chapter.
135. Circumstances may sometimes arise on account of which the
amount authorised for expenditure in a year may be found to be
insufficient for the purposes of that year or a need may arise during the
year for supplementary or additional expenditure upon some new
service, scheme or item not contemplated in the original budget. In that
case a supplementary estimate has to be presented to the Legislature
under Article 205 (1) (a) of the Constitution. The rules and instructions
relating to supplementary estimates are contained in Section III of this
Chapter.
136. Sometimes a need may arise for incurring unforeseen expenditure
of an urgent nature before it can be approved by the Legislature. In such
a case, an advance may be sanctioned from the Contingency Fund,
 1.66

established under the Uttar Pradesh Contingency Fund Act 1950, for
meeting such expenditure pending its authorisation by the Legislature
through an Appropriation Act. The Uttar Pradesh Contingency Fund Act
and the rules framed thereunder are reproduced in Appendix IV.
137. If after the close of the year it is revealed, through the Appropriation
Accounts, that any expenditure was incurred under any Grant or
Charged Appropriation in excess of the total final appropriation for that
year under that Grant or Charged Appropriation, the excess expenditure
should be regularised, on the basis of the recommendation of the
Committee on Public Accounts, by presenting to the Legislative
Assembly demands for excess grants as required under Articles 205 (1)
(b) of the Constitution. Incurring of unauthorised excess expenditure is
most objectionable and must be avoided. The rules relating to
presentation of demands for excess grants to the Legislature are
contained in Section IV of this Chapter.
SECTION - I
SAVINGS IN APPROPRIATIONS
138. The progress of expenditure month by month and careful
assessment of the commitments and liabilities for the remaining part of
the year may indicate savings in the appropriations shown against the
several minor or sub-heads in the detailed budget estimates and grants.
The savings may be due to various reasons.
139. All savings anticipated by the controlling officers should be reported
by them with full details and reasons to the administrative departments
concerned of the Secretariat immediately they are foreseen, unless these
are required to meet anticipated requirements for additional funds under
some other heads within the total allotment under the same grant /
appropriation placed under their control. No amount out of the savings
should be held in reserve for meeting additional expenditure not definitely
foreseen or already approved by the competent authority. Except as
provided under paragraph 142, the administrative departments should
intimate such of the savings reported by the controlling officers as may
not be required by them to the Finance Department which will resume
the savings. Savings so resumed will be re-allotted by the Finance
Department, if necessary, when dealing with applications for re-
appropriations or supplementary grants or appropriations.
140. Every controlling officer must furnish the final statement of excesses
and savings in Form B.M. 2 (Part - II) which should reach the Finance
Department, through the Administrative Department concerned, not later
th
than 25 January. Where a Secretary to Government is the controlling
th
officer, the statement should reach the Finance Department by 15
January. The disbursing officers or district level officers should prepare
the aforesaid statements on the basis of expenditure up to December
and furnish to controlling officer latest by January 5. These statements
should be prepared with utmost care, as inaccurate statements may lead
to uncovered excess expenditure or unsurrendered savings both of
 1.67

which constitute a financial irregularity – the former a more serious

irregularity. The administrative departments will prepare their proposals
for re-appropriations or surrenders of savings on the basis of those
statements. The savings surrendered will be in addition to those
surrendered earlier in accordance with the provisions of the preceding
paragraph. The disbursing officer will intimate and send the copy of the
details of all surrenders to the concerned Treasury Officer. The Treasury
Officer shall reduce the allotment accordingly.
141. It must be carefully noted that no amount out of the savings
reported in the final statement shall subsequently be utilised by the
controlling officer without the prior approval of the Finance Department.
Savings coming to notice after the dispatch of the final statement should
be reported separately as soon as possible. All final savings must be
surrendered to the Finance Department by 25th March. Officers making
belated surrenders, when savings could reasonably have been foreseen
and surrendered earlier, will be held responsible for the resultant
financial irregularity if the Finance Department are not able to accept
such surrenders.
142. In the Public Works, Irrigation and other Remittance Departments,
anticipated savings in the budget grants should also be intimated to the
Finance Department. The above mentioned departments will keep a note
of the savings, distinguishing between lapses and savings, and ask the
disbursing officer concerned not to utilize these savings without prior
approval.
143. If the appropriation under a unit is reduced either due to resumption
of savings or by re-appropriation of funds made from it to some other
unit, it is the duty and responsibility of the controlling officer to see that
the expenditure debitable to that unit is kept within the reduced
appropriation.
144. Savings should be surrendered to the Finance Department in
multiples of Rs. 1000. Lesser amounts are not required to be
surrendered .
145. A copy of each order resuming savings will be furnished by the
Finance Department to the Accountant General.
146. Registers shall be maintained in form BM-2 (Part II) in the
administrative department and the Finance Department to keep a record
of the savings resumed by the Finance Department. The amounts re-
allotted for re-appropriation out of the savings resumed earlier will also
be noted in the register.
 1.68

SECTION - II
RE-APPROPRIATIONS
147. Every controlling officer is expected to see not only that the total
expenditure is kept within the total grant or appropriation placed at his
disposal but also that the expenditure under each unit of appropriation is
kept within the amount originally provided under that unit of
appropriation. Transfer of funds from one unit to another, however, some
times becomes unavoidable.
148. The appropriation audit is conducted by the Accountant General.
Transfer of funds from one primary unit to another will constitute the
smallest unit of re-appropriation.
149. Deleted
150. Re-appropriation is permissible only when it is known or anticipated
that the appropriation for the unit from which funds are diverted will not
be utilised in full or that savings can definitely be effected in it. It is both
objectionable and irregular to sanction a re-appropriation from a unit
under which no savings are anticipated at the time of sanction in the
expectation of restoring the original allotment under that unit later in the
year by transferring to it savings that may then become available under
other units.
151. Re-appropriations where not permissible: Re-appropriations are
not permissible -
(i) from one Grant/Appropriation to another
(ii) from the Charged to the voted section or vice versa ;
(iii) where provision for an existing service has been made either
in the Revenue, Capital or Loan section and it is proposed to
change the character of service by transferring it from the
existing section to any other section;
(iv) to provide for new expenditure, whether voted or charged (for
explanation of the expression "new expenditure" see Chapter
VIII);
(v) to increase or provide for the expenditure on an item the
provision for which was specifically reduced or disapproved by
the Assembly either through a substantive or a token cut; and
(vi) after the close of the financial year.
152. Recoveries not to be taken into account : As the demands for
grants, whether original or supplementary, placed before the Legislature
are for gross expenditure without taking into account deductions on
account of recoveries, credits on account of recoveries of expenditure
must be ignored for the purposes of sanctioning re-appropriation of funds
or obtaining supplementary grants.
 1.69

153. Re-appropriations should invariably be in multiples of Rs. 1000.

Petty additional requirement below these limits under any particular sub-
head should be collected by the controlling officer or other subordinate
officer concerned by inclusion in a consolidated re-appropriation
application in respect of that sub-head and the disbursing officers
concerned should be informed that the requirements would be included
in a consolidated re-appropriation order to be issued in due course
before the close of the year.
154. Powers to sanction re-appropriation : Subject to the restrictions
mentioned in para 151, Finance Department shall have the powers to
sanction any re-appropriation within a grant from one major, minor or
subordinate head to another. Provided that the Planning Department
shall be consulted before sanctioning any re-appropriation which has the
effect of increasing the ceiling for a Plan scheme allotted by that
department for a particular financial year.
155. Deleted.
156. While submitting proposal for re-appropriation to the Finance
Department, the administrative department concerned should also
explain if -
(a) re-appropriation involves undertaking a recurring liability, that is, a
liability which extends beyond the financial year in question;
(b) a certain part of the provision for a new service, scheme or item of
expenditure is to be utilized (this provision should ordinarily be utilized for
the purpose for which it was included in the budget);
(c) re-appropriation is sought to meet an item of expenditure which has
not been sanctioned by the competent authority;
(d) re-appropriation involves transfer of funds on original works which will
increase the maintenance charges in future.
157. Deleted
158. Instructions for preparing applications for re-appropriations :
All proposals for re-appropriations should be submitted to the Finance
Department in the prescribed form (Form B.M. 9 Part I). The reasons for
the original appropriation proving insufficient, as also those for the
anticipated savings which it is proposed to utilise, should invariably be
explained fully and clearly in each application item by item. Registers in
Form B.M. 9 (Part II) shall be maintained in the administrative
departments and Finance Department to keep a record of the re-
appropriations sanctioned.
159. Procedure for submitting applications : All applications for re-
appropriations should be numbered and dated. They should be signed
by the applicants and be submitted in quadruplicate to the administrative
department of the Government which administers or controls the grant or
the appropriation concerned. The administrative department concerned
shall refer the proposal to the Finance Department with its
 1.70

recommendations. While submitting the applications, the officers will

furnish a certificate similar to that mentioned in paragraph 160 below. As
far as possible, all such applications requiring action in the Finance
th
Department should reach that Department by 20 March.
160. Communication of sanction to Audit : Copies of all orders
sanctioning re-appropriations issued by the administrative department /
Finance Department should be supplied to the Finance Department and
the Accountant General and should invariably be accompanied by a
certificate that the re-appropriations sanctioned do not infringe any of the
restrictions or the limitations specified in paragraphs 150 and 151. The
certificate shall be recorded on the body of each re-appropriation order.
SECTION - III
SUPPLEMENTARY ESTIMATES
161. A supplementary grant or appropriation is in addition to the total
authorised grant or appropriation for a financial year and has to be
obtained in the manner prescribed in Article 205 (1) (a) of the
Constitution, passing through the same stages of legislative procedure
as the original grant or appropriation.
162. Supplementary grants or appropriations are required in the following
cases :
(i) when the amount included in a grant or appropriation
authorised by the Appropriation Act is found to be insufficient
for the year ; or
(ii) when need has arisen for incurring expenditure, whether voted
or charged, upon some new service, scheme or item not
contemplated in the Appropriation Act for the year, even
though it can be met wholly or in part by re-appropriations
within the amount authorised under the grant or the
appropriation ; or
(iii) when it is desired to obtain the prior approval of the Legislature
to a scheme involving large financial commitments, even
though little or no expenditure on that account is anticipated in
the current year.
In cases falling under clause (ii), a token sum of Rs. 1000 or the
amount actually required, as the case may be, should be included in the
supplementary statement of expenditure, while in cases falling under
clause (iii) only a token sum of Rs. 1000 need be included.
163. If a supplementary estimate is for increased provision in respect of a
sanctioned object, the authority concerned should show :
(a) that the need for the increased provision could not be foreseen
at the time when the original departmental estimate was
framed, and
 1.71

(b) that in the absence of such provision injustice would be caused

to some person not at fault, or serious inconvenience or
serious loss or damage would be caused to the public service.
A supplementary estimate for increased provision will not be
presented unless condition (b) is fulfilled. Failure to fulfil condition (a)
[whether condition (b) is fulfilled or not] is a financial irregularity and may
involve a report to the Committee on Public Accounts.
164. If a supplementary estimate is required for some new expenditure
not contemplated in the budget, the authority concerned must show
either —
(a) that the expenditure has been newly imposed by statute, or by
order of a court of law, or other competent authority ; or
(b) that urgent necessity has arisen for the proposed expenditure
the postponement of which would (i) involve extra expenditure
ultimately, or (ii) be administratively impossible or would be
against any accepted policy.
The Finance Department must necessarily agree to the
presentation of supplementary estimate in case (a), while in case (b) its
presentation will depend on the urgency of the proposed expenditure.
165. The principles enunciated in paragraphs 163 and 164 apply also to
an application for a supplementary estimate in respect of any demand to
which the Assembly has previously refused its assent or the amount of
which the Assembly has reduced either by a reduction of the whole grant
or by the omission or reduction of any of the items of expenditure of
which the grant is composed.
166. The primary responsibility in regard to proposals for supplementary
grants or appropriations rests on the controlling officer who should
explain clearly in each case not only why a supplementary grant or
appropriation is required but also why the need could not be foreseen at
the time when the original budget estimates were framed. In explaining
the proposals, it should be clearly explained in detail whether specific
conditions as prescribed under para 163 or 164, as may be relevant, are
strictly fulfilled. If it is under clause (b) of para 164, the authority
concerned should explain the necessity and the urgency of the proposed
expenditure and also why it is not administratively possible to postpone
it. Greatest care should, therefore, be taken in submitting such
proposals. It must be carefully understood that if after the close of the
financial year it is revealed that any supplementary grants or
appropriations obtained were unnecessary or excessive, the officers at
fault will be held responsible for the financial irregularity to which the
Accountant General is bound to draw attention in the Audit Report on the
Appropriation Accounts which will come up before the Legislature and
the Committee on Public Accounts in due course.
167. Proposals for supplementary grants or appropriations should be
submitted by the controlling officers to the Government in the
 1.72

administrative departments concerned, and not to the Finance

Department direct as soon as their necessity has been clearly
established. The administrative departments should examine the
proposals very carefully and recommend to the Finance Department only
such of them as are considered to be fully justified. The savings
available, if any, within the grant or the appropriation concerned should
be duly taken into account and supplementary grant or appropriation
should be asked only for such amount as cannot be met by sanctioning
re-appropriations of funds. If the supplementary grant or appropriation is
required under para 163 and if savings resumed by the Finance
Department under the Grant or the Appropriation concerned are
available for re-allotment, that department will, if convinced of the
necessity for the supplementary grant or appropriation, sanction it by re-
appropriation from these savings. If there are no such savings, or those
available are not sufficient to meet the entire additional demand, the
Finance Department will take steps to present supplementary estimates
to the Legislature for the amounts needed. Similarly, any savings under
any grant or appropriation reported to the Finance Department for
resumption should be utilised by that Department in reducing the
supplementary estimate under that grant or appropriation required under
para 164 and only token or partly substantive provision should be made
where the estimated expenditure on any new item or scheme can be met
either wholly or in part by re-appropriation of savings.
168. All proposals relating to supplementary estimates submitted by the
administrative departments to the Finance Department should be
accompanied by self-contained memoranda and indicate clearly the
major and minor or sub-heads, etc. of account under which additional
grants and appropriations are required. If any proposal involves incurring
of additional expenditure in the future years also, that should also be
clearly mentioned and estimates given. All applications for
supplementary grants or appropriations must be submitted to the
Finance Department by the prescribed date after which that department
may not be in a position to entertain any application.
169. On the passing of the Appropriation Act pertaining to the
supplementary statement of expenditure, the Finance Department will
communicate to the administrative departments concerned and also to
the Accountant General the amounts included in the Act under the
several grants or appropriations. The administrative departments should
take immediate steps to communicate the additional grants and
appropriations to the subordinate authorities concerned and also to
issue, where necessary specific orders sanctioning the incurring of
additional expenditure not exceeding those limits. The administrative
departments should also issue orders for sanctioning any scheme or item
constituting new expenditure for which provision has been made through
the supplementary estimates. Copies of all such orders should be
furnished to the Accountant General through the Finance Department
(except where the administrative departments are competent under the
delegated powers to issue such sanctions without reference to the
Finance Department after necessary funds have been provided in the
 1.73

budget) . The administrative departments should also take steps to have

the necessary re-appropriations sanctioned as early as possible in those
cases in which the additional expenditure was proposed to be met wholly
or in part from savings.
Instructions given in para 92 apply mutatis mutandis in respect of
supplementary grants or appropriations.
170. Deleted
SECTION - IV
EXCESS GRANTS AND APPROPRIATIONS
171. Under clauses 1 (b) and 2 of Article 205 of the Constitution, if any
money has been spent on any service during a financial year in excess
of the amount granted for that service and for that year, demand for such
excess amount has to be presented to the Legislative Assembly and is to
be dealt with in the same way as if it were a demand for a grant.
172. A demand for an excess grant differs from a demand for a
supplementary grant in that, while the latter is essentially a demand for a
grant the need for which is foreseen during the currency of a year and is
presented in the year to which it relates, a demand for an excess grant is
presented to regularise expenditure incurred in excess of the grant made
in a past year. A demand for an excess grant can be laid before the
Legislative Assembly only after all the expenditure of the year has been
audited and the Appropriation Accounts of the year have been compiled
by the officers of the Comptroller and Auditor General of India and
considered by the Committee on Public Accounts. The work of
compilation of the Appropriation Accounts by the Accountant General
and their consideration by the Committee on Public Accounts, however,
take some time.
173. The same principles and procedure apply to an excess in the total
appropriation for charged expenditure under the heads of accounts
included within a grant or under the separate charged appropriations :
the only difference being that an excess in respect of charged
expenditure does not require the vote of the Assembly.
 1.74

CHAPTER XV
FINANCIAL IRREGULARITIES
174. The incurring of expenditure by Government officers is governed by
the following essential conditions :
(1) that there should be provision of funds authorised by
competent authority fixing the limits within which expenditure
can be incurred ;
(2) that the expenditure incurred should conform to the relevant
provisions of the Appropriation Act, the Constitution and the
laws made thereunder and should also be in accordance with
the financial rules and regulations framed by competent
authority ;
(3) that there should exist sanction, either special or general,
accorded by competent authority, authorising expenditure ;
and
(4) that the expenditure should be incurred with due regard to
broad and general principles of financial propriety [see para 12
(iii) of Chapter I].
It is difficult to define exactly and comprehensively the meaning
of the term "financial irregularity." But a large majority of financial
irregularities fall under one or the other of the following categories. The
list is only illustrative and is not exhaustive :
(1) Excess over a grant voted by the Assembly or over a charged
appropriation.
(2) Defective or inaccurate budgeting, necessitating large
surrenders or resulting in excesses.
(3) Defective control of expenditure resulting in -
(a) unnecessary or excessive supplementary grants,
(b) unnecessary or excessive re-appropriations,
(c) injudicious re-appropriations and surrenders, causing
excess over allotments,
(d) unspent and unsurrendered appropriations,
(e) unremedied or uncovered excesses, and
(f) late allotments.
(4) Misclassification of expenditure.
(5) Re-appropriations which are not made in accordance with the
rules in this Manual or which have the effect of increasing
expenditure on an item the provision for which has been
specifically reduced by a vote of the Legislative Assembly.
 1.75

(6) Expenditure on a service not covered by a vote of the

Assembly, unless the requisite funds have been arranged by
obtaining an advance from the Contingency Fund before
incurring expenditure.
(7) Expenditure incurred without sufficient sanction.
(8) Expenditure incurred without allotment of adequate funds.
(9) Loss of public money or property due to fraud,
misappropriation or carelessness in accounting.
(10) Drawing from treasuries of money not required for immediate
use.
(11) Abandonment of revenue without proper sanction, e.g., sale of
Government property below market rates, or reduction of dues
payable under a license or lease without the sanction of the
competent authority in each case.
(12) Any large claim against another Government, local body or
other outside party allowed to remain outstanding for an unduly
long time.
(13) Any irregularity connected with a contract, such as -
(i) Placing of a contract without obtaining competitive
tenders in an open and public manner except in cases
where the necessity for obtaining such tenders has been
waived by any general or special rule or order by the
competent authority (see Appendix XIX to the Financial
Handbook, Volume V, Part I);
(ii) Acceptance without adequate reason, of a tender other
than the lowest.
(iii) inadequate scrutiny of tendered rates before acceptance ;
(iv) unsuitability of the form of contract ;
(v) failure to complete all necessary formalities connected
with a contract, including the obtaining of expenditure
sanction before permitting the contractor to start work ;
(vi) deviation from the contractual terms in favour of the
contractor or varying the terms without the approval of the
competent authority ;
(vii) omissions to enforce the conditions of a contract, such as
those requiring the deposit of security or levy of penalty.
(14) Any irregularity connected with purchases, such as -
(i) purchases which contravene the rules for the purchase of
articles for the public service;
(ii) purchase in excess of reasonably anticipated
requirements ;
 1.76

(iii) purchase of materials of inferior quality.

(15) Any extraordinary or apparently unnecessary expenditure,
such as-
(i) payments made as acts of grace except where permitted
by any rule or order ;
(ii) compensation paid for damage sustained except in cases
in which a claim for such damage could be enforced in a
court of law or in which such compensation is admissible
under any rule or order;
(iii) payments in excess of amounts admissible under statute,
contract or rule;
(iv) payments necessitated by failure to enforce the terms of
a contract ;
(v) irrecoverable balances of advance payments made on
account of services, etc., which were ultimately not
rendered.
(16) Any uneconomical or apparently wasteful expenditure due to -
(i) the inception of works without adequate investigation of
their utility or feasibility and without conducting proper
preliminary surveys and preparing detailed estimates of
cost and obtaining necessary administrative and technical
approval to the estimates ;
(ii) the inception of deposit works for local bodies, etc.,
without the requisite deposits having been obtained from
the parties concerned ;
(iii) execution of works by a Government agency which lacks
the ability or the facilities to execute them properly ;
(iv) the unsatisfactory working of Government commercial
undertakings ;
(v) the fixation of incorrect rents of residential buildings ;
(vi) other causes.
(17) Any irregularity connected with a grant-in-aid, such as neglect
(i) by the sanctioning authority of conditions precedent to the
grant or (ii) by the grantee of the conditions, expressed or
implied, attached to the grant by the sanctioning authority.
(18) Any instance of the absence of administrative regulations and
procedure sufficient to secure a proper and effective check
upon monetary transactions.
 1.77

CHAPTER XVI
APPROPRIATION ACCOUNTS, FINANCE ACCOUNTS AND
AUDIT REPORTS THEREON
175. Appropriation Accounts - The Appropriation Accounts and the
Audit Report thereon are prepared by the Comptroller and Auditor-
General of India for each year in accordance with the provisions of the
Constitution and procedure laid down by the Comptroller & Auditor
General of India. Their object is to present the audited accounts of all the
expenditure of the year, whether voted or charged, in the form of a
separate Appropriation Account for each grant / appropriation, with any
important observations considered necessary to make as a result of the
audit investigation. They also include the comments deemed to be
necessary to make upon the result of the audit of trading, manufacturing
and profit and loss accounts and balance-sheets kept in respect of
Government commercial or quasi-commercial concerns and upon the
examination of accounts of receipts and of stores and stock. In order that
only agreed statements of facts and completed cases are included in the
reports, a convention exists between the Comptroller and Auditor-
General and the State Government whereby cases relating to any
previous year which become ready for inclusion after the last report was
written are included in the report of a subsequent year.
176. Finance Accounts - Besides the Appropriation Accounts, the
Comptroller and Auditor-General of India also compiles the Finance
Accounts of the State Government in respect of each financial year. This
compilation presents the accounts of the receipts and outgoings of the
Government for the year, together with a report on the financial results
disclosed by the different accounts and other data coming under
examination; that is to say, both the revenue and capital accounts, the
accounts of the debt and the liabilities and assets of the Government as
deduced from the balances recorded in their books and other
information.
177. Preliminary action in the Finance Department on receipt of the
Appropriation Accounts, the Finance Accounts and Audit Reports
thereon - On receipt of the authenticated copies of the Appropriation
Accounts, Finance Accounts and the Audit Reports thereon, in terms of
the provisions of Article 151 (2) of the Constitution, from the Comptroller
and Auditor-General of India, the Finance Department will obtain the
orders of the Governor for laying the copies before the Legislature and
then move the Legislative Department to arrange for the item relating to
the laying of these documents before both the Houses of the Legislature
being included in the agenda of business of the Houses.
178. Reference to the Committee on Public Accounts :
(i) After the Appropriation Accounts, the Finance Accounts and
the Audit Reports thereon are laid on the table of the House,
they shall stand referred to the Committee on Public
Accounts for examination and report.
 1.78

(ii) If they are received by the Assembly Secretariat at a time

when the Assembly is not in session, then these may be
referred to the Committee on Public Accounts by order of the
Speaker.
Note : All functions which relate to the public undertakings /
Corporations of the State shall be outside the purview and
jurisdiction of the Committee on Public Accounts. The functions
relating to the public undertakings / corporations are vested in
the Joint Committee on the Public Undertaking and Corporations
(See Appendix II).
179. The Committee on Public Accounts is a Committee of the
Legislative Assembly and is constituted under Rules of Procedure and
Conduct of Business of the Uttar Pradesh Legislative Assembly (See
Appendix II).
180. Constitution and function of the Committee on Public
Accounts - The constitution and functions of this Committee are
described in rules 229 and 230 of the Rules of Procedure and Conduct of
Business of the Uttar Pradesh Legislative Assembly 1958. (See
Appendix II).
181. The other general rules of procedure applicable to the Committee
on Public Accounts as well as to the other Committees of the Legislative
Assembly are contained in Rules 200 to 269-K, of the Rules of
Procedure and Conduct of Business of Uttar Pradesh Legislative
Assembly, 1958. (See Appendix II).
182. The Comptroller and Auditor General of India, or his representative
the Accountant General, Uttar Pradesh and the Finance Secretary or his
representative are invited to attend the meetings of the Committee.
These officers may offer their advice on any matter which comes under
discussion.
183. The Committee is entitled to offer criticism and make
recommendations or suggestions upon any matter discussed in the
Appropriation and Finance Accounts and the Reports thereon received
from the Comptroller and Auditor-General of India in respect of both
receipts and expenditure (voted or charged) or any other matter referred
to it or which the Committee deems necessary to scrutinize.
184. Presentation of the Committee’s Report before the Legislative
Assembly - The report of the Committee on Public Accounts will be
presented to the Assembly by the Chairman of the Committee.
Thereafter, copies of the report will be sent by the Assembly Secretariat
to the Administrative Departments of the Secretariat for taking necessary
action on the recommendations of the Committee and also to the
Accountant General, Uttar Pradesh, the Finance Department, the
Comptroller and Auditor-General of India, other States and the
Government of India, for information. Action taken by the Departments
 1.79

concerned on the recommendations of the Committee shall be

communicated by them to the Assembly Secretariat, the Finance
Department and the Accountant General :
Provided that the Committee may, if it so desires, direct that any
of its recommendations be sent to the departments concerned for
immediate necessary action without waiting for the report to be
presented to the Assembly. In such a case, a copy of recommendations
of the Committee shall also be sent to the Accountant General and the
Finance Department for information. Action taken by the department
concerned on such a recommendation shall be communicated by the
department to the Assembly Secretariat, the Finance Department and
the Accountant General.
185. The departments and officers concerned shall keep secret all
papers concerning the action taken on the recommendations of the
Committee sent to them in advance till the report is laid on the table of
the Legislature.
186. Action to give effect to the recommendations of the Committee and
of the Legislative Assembly will be taken by the departments concerned
but the Legislative Assembly Secretariat is responsible for seeing that
such action has been taken.
187. A memorandum showing the action taken, or proposed to be taken,
on the recommendations of the Committee by the various departments of
the Government shall be prepared by the Assembly Secretariat in
consultation with the Finance Department, and shall be placed before the
Committee. The Committee after considering it may make such
recommendations as may seem necessary and submit its report to the
House.
188. The Committee will examine the replies regarding the action taken
and will report to the House in its next report whether it considers the
action taken by the departments to be adequate or otherwise.
189. Accountant General’s comments on the action taken on
Committee’s recommendations - The Accountant General in the next
and subsequent Appropriation Accounts and his reports thereon and the
Comptroller and Auditor-General of India in his comments on those
Accounts may refer to the action which has been taken by the
Government in respect of cases previously reported by him and may
comment on the adequacy or otherwise of the action taken by the
Government.
190. Excess Grants - The procedure for dealing with the demands for
excess grants has been described in Section IV of Chapter XIV.
 1.80

CHAPTER XVII
COMMITTEE ON ESTIMATES

191. Deleted

192. Deleted

193. Deleted

194. Deleted

For Rules and Functions of the Committee on Estimates please

see Appendix II.
 1.81

CHAPTER XVIII
PUBLIC ACCOUNT OF THE STATE
195. Besides the normal receipts and expenditure of Government which
relate to the Consolidated Fund, certain other transactions enter
Government accounts, in respect of which, the Government acts more as
a banker, for example, transactions relating to provident funds, other
deposits such as security deposits made by contractors or court deposits
or deposits by a local body for execution of projects through a
government agency, etc. The moneys thus received are kept in the
public account and the connected disbursements are also made
therefrom. Generally speaking, public account funds do not belong to
Government and have to be paid back some time or the other to the
persons and authorities who deposited them. Legislative authorisation for
payments from the public account is, therefore, not required. In a few
cases, a part of the revenue of Government is set apart in separate funds
for expenditure on specific objects like sugar development, maintenance
of roads, industrial development, replacement of depreciated assets of
Irrigation Department, Public Works Department. These amounts are
withdrawn from the Consolidated Fund with the approval of State
Legislature and kept in the public account for expenditure on the specific
objects. The actual expenditure on the specific objects is, however, again
submitted for vote of the State Legislature even though the moneys have
already been earmarked by the State Legislature for transfer to the
funds.
196.The main divisions of the public account of this State are -
I. Small Savings, Provident Fund etc.
(b) State Provident Funds.
It includes General Provident Funds, Contributory
Provident Fund, All India Services Provident Fund, Contributory
Provident Pension Fund, Provident Funds of Employees of
Educational Institution.
(c) Other Accounts
It includes Insurance and Pension Funds, Special
Deposits and Accounts.
J. Reserve fund
(a) Reserve Funds bearing Interest
It includes Depreciation Reserve Funds – Government
Commercial Departments and Undertakings, General and Other
Reserve Funds.
(b) Reserve Funds not bearing Interest
It includes Sinking Funds, Famine Relief Fund, Roads
and Bridges Fund, Depreciation / Renewal Reserve Fund,
 1.82

Revenue Reserve Funds, Development and Welfare Funds,

General and Other Reserve Funds
K. Deposit and Advance
(a) Deposits bearing Interest
It includes Civil Deposits, Deposits of Local Funds and
Other Deposits
(b) Deposits not bearing Interest
It includes Civil Deposits, Deposits of Local Funds and
Other Deposits
(c) Advances
It includes Civil Advances.
L. Suspense And Miscellaneous
(b) Suspense
It includes Suspense Accounts, Accounting Adjustment
Suspense
(c) Other Accounts
It includes Cheques and Bills, Departmental Balances,
Permanent Cash Imprest, Cash Balance Investment Account,
Security Deposits made by Government, Deposits with Reserve
Bank, Remittances into Banks / Treasuries
(d) Accounts with Governments of other Countries
(e) Miscellaneous
It includes Miscellaneous Government Accounts
M. Remittances
(a) Money Orders and other Remittances
It includes Money Orders, Cash Remittances and
adjustments between officers rendering accounts to the same
Accounts Officer, Other Remittances
(b) Inter-Government Adjustment Account
It includes Adjusting Account between Central and State
Governments, Inter-State Suspense Account,
197. Deleted.
198. Deleted
199. Deleted
200. Deleted
201. Deleted
202. Deleted
 1.83

CHAPTER XIX
MISCELLANEOUS
203. All Heads of Departments and other controlling and disbursing
officers, as well as the officers of the administrative departments in the
Secretariat who have to deal with budgets and the sanctioning of
expenditure, are expected to make themselves thoroughly familiar with
the rules contained in this Manual. Adequate knowledge of the important
financial and accounting rules contained in the various Financial
Handbooks and in the various Departmental Codes and Manuals is also
necessary for them. Ignorance of rules is never accepted as a plea for
absolving an officer from the responsibility devolved on him in financial
matters.
204. The need for effective control and strict economy in expenditure has
repeatedly been emphasised in various Government Orders issued from
time to time. In spite of this, cases often come to notice in which it is
revealed that some waste of public money has taken place. In relation to
certain official transactions, the amounts wasted may be small sums. For
example, lights and fans may be left turned on unnecessarily; slower and
costlier means of communication might have been used where quicker
and cheaper ones would serve the purpose. In other cases the amounts
wasted may be very large sums, e.g., when tools and plant or equipment
are ordered without sufficient care and are later on found to be
unsuitable for the purpose; stores and materials are stocked very much
in excess of requirements and deteriorate due to lack of care or passage
of time. At times, the execution of large works is taken up without proper
approved designs or estimates and even without availability of land
resulting in wasteful expenditure.
The employment of unnecessarily large staff in Government
offices, failure to enforce reasonable standards of work and outturn,
failure to take proper care of Government property, failure to ensure that
the State gets its full money's worth when purchases are made on its
behalf of goods or services, are some of the other forms of wastefulness
which often come to notice. It is the duty of every public servant to strive
to the utmost of his capacity to eliminate all unnecessary or infructuous
expenditure.
It is needless to add that any drive for economy in public
expenditure can be successful only if the large majority of public
servants, and in particular, the senior officers in charge of the important
spending departments, participate in the drive and co-operate with the
Government to the fullest possible extent. The Heads of Departments
and other senior officers can do much by precept and example, by
supervision and by control to make their subordinates truly economy
minded.
205. It must be added here that the mere observance of rules and
regulations will not result in all the economy that is possible. The
observance of the rules and regulations will certainly eliminate many
 1.84

losses which would otherwise have occurred; and to that extent

Government money will undoubtedly be saved. But rules and regulations
are in general designed only to delimit the sphere of any particular type
of expenditure and to prevent malpractices. Within that delimitation or
restriction, however, there is always considerable scope for the exercise
of discretion, specially in regard to the extent of expenditure, on the part
of the spending officer. This discretion, if properly exercised, ensures that
Government money is spent in the most economical manner possible. If
the discretion is improperly or carelessly exercised, the rules will merely
ensure that the expenditure is not technically irregular. They cannot
ensure that the expenditure has been as economical as possible. To put
this in other words, spending officers must not only act in strict
accordance with the various rules and regulations but also apply those
rules and regulations in a spirit of devotion to the interests of the State.
The rules should be administered not just mechanically but in an
intelligent manner so that the intention behind the rules is fully realised.
Spending officers should constantly remind themselves of the fact that
every public officer is expected to exercise the same vigilance in respect
of expenditure incurred from public moneys as a person of ordinary
prudence would exercise in respect of expenditure of his own money.
The best way of ensuring economy in public expenditure is for every
officer to always keep this principle in the forefront of his mind.
206. A related question to which a reference must also be made is the
elimination of certain kinds of expenditure. It may be that a particular
existing scheme or service is being administered with due regard to
economy. But it may be possible either to give up the scheme altogether
(because it has outlived its utility or has not come up to expectations or
changed circumstances have made its continuance unnecessary), to
amalgamate it with some other allied scheme or service, or at least to
modify it in such a manner that the expenditure incurred on it is
appreciably reduced.
It is also necessary that the projects / schemes should be
prioritized and such projects / schemes taken up which are financially
and economically viable and have higher returns. There is also a need to
avoid thin spreading of resources and multiplicity of schemes with similar
objectives.
207. Expenditure on contingencies has to be incurred with utmost care.
Attempts are sometimes made, in the closing weeks of the financial year,
to use up the full provision for contingencies by making purchases which
are either unnecessary or of no real urgency. This practice must stop and
no purchase whatsoever of furniture and office equipment, etc, for use in
office or in touring should be allowed after February 15 in any financial
year.
The supervisory and inspecting officers in the course of their visit
or inspections of their subordinate offices must make a point of checking
the details of contingent expenditure and satisfying themselves that the
above instructions have not been infringed, that no expenditure has been
incurred on avoidable items and that in respect of items which are
 1.85

necessary, no lavishness has been indulged in. If any case comes to

notice in which Government instructions have not been observed, the
question of taking suitable disciplinary action against the officials at fault
should be examined in accordance with proper procedure.
Pro forma Accounts for commercial undertakings
208. As far as possible pro forma accounts should be maintained in
respect of all schemes and undertakings of Government which have
been declared as "commercial" in such details as may be prescribed by
Government in consultation with the Accountant General, and the latest
known profit and loss position of each such scheme or undertaking
should be indicated when proposals for provision of funds for expenditure
are submitted to Government.
Other miscellaneous provisions
209. The Finance Department will maintain a list of official and of non-
official institutions and individuals to whom copies of the budget literature
are to be supplied free of cost or on payment. Copies will be supplied to
them as soon as they are released for issue.
210. A calendar showing the more important dates of the budget
programme is given in Appendix VI.
211. Zero-base budgeting : Under the conventional system of
budgeting, the on-going schemes are rarely put to serious test.
Provisions are generally made for the on-going schemes year after year
without any scrutiny regarding the basic need to continue the schemes.
Adjustments are usually made only for changes in prices and rates, as
also new expenditure on expansions and new starts.
In order that on-going programmes and schemes and the
provision of funds for them are critically reviewed periodically, the
Government introduced the system of Zero-base budgeting under which
the expenditure on even the on-going activities has to be justified. The
concept encompasses both non-development and development
expenditure. Zero-base budgeting requires identification and sharpening
of objectives, examination of various alternative ways of achieving those
objectives, selecting the best alternative through cost-benefit and cost-
effectiveness analysis, prioritization of objectives and programmes,
switching of resources from programmes with lower priority to those with
higher priority, and identification and elimination of programmes which
have outlived their utility. The objective of Zero-base budgeting is not just
to cut the expenditure but to make a more purposive allocation of
resources to various programmes.
While reviewing various schemes, the following points should
also be kept in view -
(a) Details of income and expenditure on various services
provided by the Government may be prepared and
revision of fees and user charges etc. considered
periodically.
 1.86

(b) Review of the cost of collection of revenue should be done

vis-a-vis revenue collected with a view to ensuring that the
collection of revenue is cost-effective.
(c) Consequent on the availability of improved versions of
office devices staff norms should be revised as a part of
regular exercise.
(d) Grant-in-aid and subsidies are provided by the State
Government under various schemes. Such assistances as
have outlived their utility should be discontinued.
(e) Work procedure should be simplified as also the forms of
various returns and their number reduced wherever
possible.
(f) Wherever possible, work should be outsourced instead of
engaging staff on contract.
(g) Disposal of surplus and un-serviceable stock and stores
(including tools and plant) should be done under time
bound programme.
212. Guidelines for Formulation and Appraisal of Schemes /
projects : Rigorous project formulation and appraisal have a major
bearing on the relevance and impact of projects as well as on their timely
implementation. Additional time and effort spent at the project formulation
and appraisal stage would result in qualitative improvement in terms of
ultimate project impact.
The following guidelines are laid down for formulation and
appraisal of Government funded schemes/projects, covering all sectors
and departments :
(i) Project identification : Feasibility report : The project
preparation should commence with the preparation of a
Feasibility Report (FR) by the Administrative Department.
The project will be considered for 'in-principle' approval by
the Planning Department and the Finance Department for
inclusion in the Plan based on the FR. The FR should
focus on analysis of the existing situation, nature and
magnitude of the problems to be addressed, need and
justification for the project in the context of government
priorities, alternative strategies, initial environmental and
social impact analysis, preliminary site investigations,
stake holder commitment and risk factors. The FR should
establish whether the project is conceptually sound and
feasible and enable a decision to be taken regarding
inclusion in the Plan and preparation of a Detailed Project
Report (DPR). The FR should present a rough estimate of
the project cost. Consultation with stakeholders should be
held to ensure involvement of stakeholders in the project
concept and design.
 1.87

(ii) Preparation of DPR : The administrative department

should prepare the DPR for the project/scheme after
obtaining 'in-principle' approval of the Planning
Department. The various stakeholders in the project
should continue to be associated while preparing the DPR.
The services of experts/professional bodies may be hired
for preparation of the DPR, if considered necessary. The
DPR must address all issues related to the justification,
financing and implementation of the project/scheme. A
generic structure of the DPR is at Annexure-A. The Terms
of Reference (TOR) for preparation of the DPR should
cover all aspects of the generic DPR structure. In addition,
sector/project specific aspects should be incorporated in
the TOR as required. The requirements of the Expenditure
Finance Committee (EFC) / Public Investment Board
(PIB) format may also be kept in view.
(iii) Inter-Departmental consultations : The final DPR should
be circulated along with draft EFC/PIB Memo to the
Finance Department, Planning Department and any other
concerned departments for seeking comments before
official level appraisal. Techno economic clearance should
also be obtained from State and Central Government
agencies, wherever required. Thereafter, the EFC/PIB
memo along with appraisal note/comments of the relevant
departments and Planning Department should be placed
before EFC/PIB for consideration.
(iv) Applicability : These guidelines will apply to all schemes /
projects, including social sector schemes / projects,
costing Rs.5 crores and above or such limit as may be
prescribed by the Government from time to time. In sectors
where a number of sub-projects are taken up under a
scheme, this limit will apply to the umbrella project under
which the sub-projects are included.
(v) Identical process for public sector projects requiring
budgetary support or entailing contingent liability on
Government : The process for seeking approval would be
identical both for new public sector projects requiring
budgetary support, as well as those entailing contingent
liability on Government.
(vi) Evaluation : Evaluation arrangements for the project,
whether concurrent, mid-term and/or post-project, should
be spelt out in the DPR. It may be noted that continuation
of projects/schemes from one Plan period to another will
not be permissible without an independent, in-depth
evaluation. Evaluation work may be outsourced to reputed
institutions, if required.
 1.88

(vii) Time and Cost over-run :

(1) Designs of all functional, non-residential and
residential buildings should be standardized.
(2) At least eighty percent of the budget allotted for
capital works to a department shall be utilized on ongoing
projects/ schemes. Not more than twenty percent of the budget
allotted shall be available for taking up new projects/ schemes/
works.
(3) New capital works shall not be launched without first
ensuring availability of adequate funds. In order to prevent cost
escalation, and ensure timely returns from the bigger projects,
priority should be accorded to the completion of ongoing
projects rather than launching new projects. Departments
should provide forty percent of the estimated cost in the first
year, forty percent in the second year and the remaining
twenty percent in the third year. In case of longer duration or
shorter duration projects, suitable phasing may be done with
the prior consent of the Finance Department.
(4) Before commencing construction work, the
department concerned shall ensure execution of proper
Agreement / Memorandum of Understanding with the work
agency.
(5) The departments and the work agencies will ensure
that no additions and alterations in the approved design,
drawings and estimates are done without the prior written
orders of the competent authority. With a view to obviating
any possibility of time-and-cost over-run and substandard
quality of work, the departmental officers concerned shall
exercise close supervision on the work agencies and ensure
that :
(i) the work progresses as per time schedule without
compromising with the quality thereof;
(ii) funds are released as per physical progress of the
work.
(6) The instructions given in (5) above shall apply
mutatis mutandis in respect of the capital works financed by
way of government grant-in-aid.
(7) The Principal Secretaries / Secretaries of the
departments concerned shall ensure monthly review of all
incomplete projects, and in respect of the projects where the
cost over-run and/or time over-run have/ has exceeded ten
percent of the approved limit, send reports to the Planning
Department. The Planning Department will compile reports
received from all the departments and submit a report to the
 1.89

Chief Secretary every quarter. A check-list for determining the

responsibility for the time and cost over-runs is at Annexure-B.
Provided that any individual case may be submitted by
the Chief Secretary to the Chief Minister which he deems
necessary.
(viii) These guidelines will not supersede any specific
dispensation approved for a department by the
Government.
(ix) The register of buildings is a record of Government
property. It should be brought up-to-date by the local
officer when there is a change in capital value. The
inspecting officers / audit officers during their inspection
will see to it that the aforesaid register is properly
maintained and kept up-to-date.
 1.90

ANNEXURE - A
GENERIC STRUCTURE OF THE DPR
(i) Context/background : This section should provide a brief
description of the sector/sub-sector, the government priority,
strategy and policy framework as well as a brief description of the
existing situation.
(ii) Problems to be addressed : This section should elaborate the
problems to be addressed through the project/scheme at the
local/regional/State level, as the case may be. Evidence regarding
the nature and magnitude of the problems should be presented,
supported by baseline data/surveys/reports. Clear evidence should
be available regarding the nature and magnitude of the problems
to be addressed.
(iii) Project Objectives : This section should indicate the Development
Objectives proposed to be achieved, ranked in order of
importance. The deliverables/ outputs for each Development
Objective should be spelt out clearly. This section should also
provide a general description of the project.
(iv) Target beneficiaries : There should be clear identification of
target beneficiaries. Stakeholder analysis should be undertaken,
including consultation with stakeholders at the time of project
formulation. Options regarding cost sharing and beneficiary
participation should be explored and incorporated in the project.
Impact of the project on weaker sections of society, positive or
negative, should be assessed and remedial steps suggested in
case of adverse impact.
(v) Project strategy : This section should present an analysis of
alternative strategies available to achieve the Development
Objectives. Reasons for selecting the proposed strategy should be
brought out. Involvement of NGOs should be considered. Basis for
prioritization of locations should be indicated (where relevant).
Options and opportunity for leveraging government funds through
public-private partnership must be given priority and explored in
depth.
(vi) Legal Framework : This section should present the legal
framework within which the project will be implemented and
strengths and weakness of the legal framework in so far as it
impacts on achievement of project objectives.
(vii) Environmental impact assessment : Environmental impact
assessment should be undertaken, wherever required and
measures identified to mitigate adverse impact, if any. Issues
relating to land acquisition, diversion of forest land, rehabilitation
and resettlement should be addressed in this section.
(viii) On-going initiatives : This section should provide a description of
ongoing initiatives and the manner in which duplication will be
 1.91

avoided and synergy created through the proposed project.

(ix) Technology issues : This section should elaborate on technology
choices, if any, evaluation of options, as well as the basis for
choice of technology for the proposed project.
(x) Management arrangements : Responsibilities of different
agencies for project management and implementation should be
elaborated. The organizational structure at various levels as well
as monitoring and coordination arrangements should be spelt out.
(xi) Means of Finance and Project Budget : This section should
focus on means of finance, evaluation of options, project budget,
cost estimates and phasing of expenditure. Options for cost
sharing and cost recovery (user charges) should be considered
and built into the total project cost. Infrastructure projects may be
assessed on the basis of the cost of debt finance and the tenor of
debt. Options for raising funds through private sector participation
should also be considered and built into the project cost.
(xii) Time frame : This section should indicate the proposed 'Zero' date
for commencement and also provide a PERT / CPM chart,
wherever relevant.
(xiii) Risk analysis : This section should focus on identification and
assessment of project risks and how these are proposed to be
mitigated. Risk analysis could include legal/contractual risks,
environmental risks, revenue risks, project management risks,
regulatory risks, etc.
(xiv) Evaluation : This section should focus on lessons learnt from
evaluation of similar projects implemented in the past. Evaluation
arrangements for the project, whether concurrent, mid-term or
post-project should be spelt out. It may be noted that continuation
of projects/schemes from one Plan period to another will not be
permissible without an independent, in-depth evaluation being
undertaken.
(xv) Success criteria : Success criteria to assess whether the
Development Objectives have been achieved should be spelt out
in measurable terms. Base-line data should be available against
which success of the project will be assessed at the end of the
project (Impact assessment).In this regard, it is essential that base-
line surveys be undertaken in case of large, beneficiary-oriented
projects.
Success criteria for each Deliverable/Output of the project should
also be specified in measurable terms to assess achievement
against proximate goals.
(xvi) Financial and economic analysis : Financial and economic
analysis of the project may be undertaken where the financial
returns are quantifiable. This analysis would generally be required
for investment and infrastructure projects, but may not always be
 1.92

feasible for social sector projects where the benefits cannot be

easily quantified.
(xvii) Sustainability : Issues relating to sustainability, including
stakeholder commitment, operation and maintenance of assets
after project completion, and other related issues should be
addressed in this section.
Note : Requirements of the EFC/PIB format may also be kept in
view while preparing the DPR.
 ANNEXURE - B

CHECK LIST FOR DETERMINING THE RESPONSBILITY

FOR TIME AND COST OVER-RUNS

A- ADMINISTRATIVE AND PROCEDURAL DELAYS

Failures Agency / person
responsible
* Sanction letter

Delayed issue


Not defining cost, accountability etc.


Others (Specify)

* Processing of Revised Cost Estimates

Delay in submission


Delay in Pre-PIB/EFC meeting


Delay in circulation


Delay in appraisal


Delay in PIB/EFC meeting


Others (Specify)

B- LAND ACQUISITION
Failures Agency / person
responsible
* Assessment of requirement/suitability

Not assessed


Area of land not indicated


Site/location not surveyed


Inspection/soil testing not done


Inspection / testing not professional


Others (Specify)
* Acquisition process

Advance action not taken

Action taken but not possession


Possession not on time


Possessed but with encroachment


Forest land clearance not obtained


Rehabilitation of displaced not done
.

Others (Specify)

 1.94

C - FUND CONSTRAINTS

Failures Agency/person
responsible
* General



Requirement not properly assessed



Sanctioned without adequate funds



Late request for release



Delayed release of funds



Additional projects taken up affecting
fund availability for this project


Others (Specify)

* Foreign loan/grant

Not tied up on time



Tied up but delay at DEA



Alternative funding not identified

.

Others (Specify)

* Internal Resources



Inadequately assessed

.

New projects taken up affecting
funding of the project


Others (Specify)
* Institutional Finance

.

Advance action not taken



Others (Specify)
* Matching resources from beneficiaries etc.

Due consent of contributors not


obtained



Funds not released on time



Released but partly



Others (Specify)
 1.95

D - TECHNICAL/DESIGN PROBLEMS

Failures Agency/person
responsible
* Faulty Technical Parameters



1st stage clearance required but not
obtained


Poor quality of Detailed Feasibility/

Project Reports



Short listing of Consultants not done


Alternatives not adequately defined


Lay-out plans/design not got approved
from competent authorities

Others (Specify)
* Change in Scope / Quantity / Technology

Inadequacy of investigations/surveys



Change in size/scale



Additions foreseeable but not foreseen



Additions not foreseeable (new

regulations, environmental etc.)



Under-estimation



Wrong choice of technology



Non-identification of alternative
technologies in advance


Non-identification of suitable vendors

Others (Specify)
* State of preparedness of the PSU

Project team not appointed on time



Statutory clearances not obtained in


advance



Lay-out plans / designs not prepared
on time


Basic engineering not done on time


Delay in technical clearances

Others (Specify)
 1.96

E - TENDERING/CONTRACTING

Failures Agency/person
responsible
* Advance action



Size/specifications etc. not finalized



Contractors/suppliers not identified



Contract terms not formulated properly



Job packages unprofessionally made



Others (Specify)
* Time schedule for tendering



Not drawn up



Delay in preparation of tender
documents


Delay in issuing tender notice


Delay in opening and evaluation of

tenders

Delay in awarding the contract

Others (Specify)
* Ineffectiveness of contractual clauses:

Liquidated Damages Clause not


included



Liquidated Damages Clause not
invoked


Liquidated Damages Clause not

adequate



Poor performance of the contractor


Contractor's failure due to missing
linkages

Others (Specify)
 1.97

F - IMPLEMENTATION PLAN AND MONITORING MECHANISM

Failures Agency/person
responsible
* Commissioning Schedule :



Commissioning Schedule not realistic



Sequencing and scheduling of
activities not professional


No Bar Chart / PERT diagram

prepared

Others (Specify)
* Implementation Plan :



Key personnel not placed on time



Delay in finalization of modalities for
execution


Linkages not properly assessed


Risk / uncertainties not identified


Others (Specify)
* Monitoring Mechanism at Project Level



Nodal Officer (Chief Executive) for the
project not designated


Periodical review was not done


Progress reviewed but no corrective

action taken



Others (Specify)
* Monitoring Mechanism at Department
level


Not set-up


Progress not monitored periodically


Progress reviewed but no action taken


Problems not brought before

competent authority

Others (Specify)

Note : Requirements of the reviewing authority may also be kept in

view while preparing the check list.