1

GOVERNMENT OF JAMMU AND KASHMIR

Jammu and Kashmir BUDGET MANUAL

FINANCE DEPARTMENTBUDGET DIVISION

SRINAGAR

AUGUST, 2011

2

Abdul Rahim Rather Finance Minister,Jammu & Kashmir

MESSAGE

Soon after taking over the responsibilities of Finance

Department in the present Coalition Government, I had re-started my

old practice of holding periodical review meetings, separately for each

of the Department of Accounts and Treasuries, J&K Funds

Organization, Commercial Taxes Department, Excise Department

and FA & CAOs of the Secretariat. During one of such meetings, the

necessity of revision and updating of the age old Manuals and Codes

was strongly felt. I had directed the Finance Department to get the

Budget Manual, J&K Treasury Code (Volume I & II) and J&K Funds

Manual thoroughly revised and updated by outsourcing this task to

the outside experts, preferably experienced and retired government

officers who had long exposure in the respective fields.

Finance Department had initiated action accordingly. I am

happy to note that the thoroughly revised and updated Budget

Manual is now ready for printing. The concerned expert and officers

in Finance Department who have richly contributed in giving the new

Budget Manual its final shape need to be fully complimented.

I am sure that the new Budget Manual will provide

comprehensive and lucid guidance to all the officers who are

engaged in the annual exercise of budget formulation for the

government. The Manual shall also be helpful in giving deep insight

3

to the students, academicians and other sections of our society who

are eager to understand our system of public finances.

(Abdul Rahim Rather)

4

FOREWORD

This Budget Manual is third in the series. The first edition of

Budget Manual was brought out in late nineteen forties which was

revised and reprinted in September, 1970. Since then, many changes

have taken place in the budgetary processes and procedures, which

were implemented through the mechanism of instructions and

guidelines but not formally documented as part of the Budget

Manual.

2. The most important developments that have taken place in

the intervening period were of revised Structure of Government

Accounts and the Classification System of 1987, revision of forms

used for Budget Estimates especially forms B-1 to B-4 and the Fiscal

Responsibility & Budget Management legislation of 2006. There was,

therefore, a felt need for bringing out a thoroughly revised, simplified

and enriched version of the Budget Manual to put together the entire

Budget related features and activities in a logical sequence. This

edition of Manual unravels, in concise form, the detailed process

involved in the entire gamut of Budget preparation.

3. With a view to ensuring correctness in usage of various

Sections of the Constitution in obtaining sanctions of the Governor

and also to serve as a standing guide for various other

communications, model formats seeking sanctions of the Governor

and communications to be addressed to other dignitaries in the

course of presentation and passing of the Budget including moving of

demands for grants, appropriation bills etc. have also been made part

of this compilation for the first time. A new form ‘Form B-1(a)’ has

been introduced to track arrears of revenue with their age profile for

keeping a close watch on this important aspect of augmenting scarce

resources of the State in all possible manner.

5

4. This Manual would impart deeper understanding to the

Administrative Secretaries, HoDs and other Controlling Officers and

officials of field functionaries of their roles and responsibilities in the

handling of budget related features and activities. It is expected to

serve as a guidebook for uniform administration of the Budgeting

processes, procedure and practices in the State Government at all

functional levels.

5. I would like to place on record the excellent work done by

the Director General Budget, who has steered through the entire

exercise with deep sense of professionalism soliciting from time to

time my advice and also able guidance of Shri J.A. Khan, Economic

Advisor to Govt. of J&K in transforming this Manual into a real one-

stop reference material.

6. Finally, I would like to state that no document of this nature

is ever static. It has to evolve to be relevant. Therefore, I would

welcome suggestions to bring about further improvements. I would

be equally appreciative of error, inaccuracy or omission, if any, are

brought to my notice for correction.

SrinagarAugust 29, 2011

(Sudhanshu Pandey)

Finance Secretary

6

PREFACEBudget Manual is a compendium of general provisions and

procedures relating to Budget making to be followed by all those

officers in the State Government as are involved in the budgeting

exercise and dealing with matters relating to Budget. It also provides

an insight into various constitutional provisions and legislature

procedures related to Budget. Organizational aspects brining out

roles and responsibilities of various wings of Executive in the Budget

making process are also incorporated in this compendium. Such a

Manual is not complete if it does not impart clear understanding of

the structure of Government Accounts, the Classification System and

the three funds viz. Consolidated Fund of the State, the Contingency

Fund and the Public Account being very crucial for any analysis of

Budget and related aspects.

The existing ‘Budget Manual’ is the oldest document which was

originally published by Finance Department in late nineteen forties

and revised and reprinted in September, 1970. With the passage of

time, it had lost relevance on many counts in the context of later

developments and felt needs of Finance Department of a thoroughly

revised, updated and comprehensive version capturing all important

changes that had taken place over time in the procedures and

practices of budgeting; more particularly the developments like Fiscal

Responsibility & Budget Management enactment of 2006 and shifting

to the Ways & Means mechanism of Reserve Bank of India w.e.f.

April 1, 2011, both measures aimed at discipling the fiscal system in

the State.

The 6- Part Manual outlines in a linear fashion the entire gamut of

events leading to the presentation of the State Budgets in the

Legislature, passing of related Appropriation Bills and the

7

expenditure control in the follow-up, both at Executive and

Legislature levels.

An attempt has been made to re-write the Manual from the view-point

of bringing together entire Budget related features and activities,

procedures and practices, various processes involved as there was a

felt need for a comprehensive improved version to serve not only as

a guiding and educational material but also as a real one-stop

reference book. While the redundant and outdated contents of

existing Budget Manual have been removed, a lot of additional

material by way of new chapters, appendices, annexures and all has

been incorporated for providing a more holistic perspective on all

related matters, be it Constitutional provisions, legislative procedures,

composition of three funds viz. the Consolidated Fund, Contingency

Fund, Public Account, structure of Government Accounts,

Classification System, Control over expenditure exercised by

Executive and the Legislature through its various Committees,

arrangement of resources for funding the Budget and post-budget

cash management in its implementation, Ways and Means forecast,

re-appropriations, reconciliation, audit scrutiny or the role and

responsibility of various wings of Executive in the Budget making

process.

With a view to ensuring correctness in usage of various Sections of

the Constitution in obtaining sanctions of the Governor and also to

serve as a standing guide for various other communications, model

formats of seeking sanctions of the Governor and communications to

be addressed to other dignitaries, in both ‘Full Budget’ and ‘Vote-on-

Account’ situations, for the presentation and passing of the Budget

including moving of demands for grants, appropriation bills etc. have

also been made part of this compilation for the first time.

While all forms relevant to Budget estimation and preparation have

been given a whole new look on more scientific lines, a new from

‘Form B-1(a)’ has been introduced to track arrears of revenue with

8

their age profile for keeping a close watch on this important aspect of

augmenting scarce resources of the State in all possible manner.

I would have felt difficulties in accomplishing this stupendous task in

a short time had I not the privilege of untiring and able secretarial

assistance of S. Robinder Singh working with me as Junior

Stenographer. He demonstrates a performance level, which can be

envy of even some of his senior colleagues in the line.

SrinagarAugust 29, 2011

( RAVI MAGOTRA )

Director General (Budget)

9

J & K BUDGET MANUALCONTENTS

CHAPTER DESCRIPTION PAGE NO

PART- I

1. Important budget related terms 14-26

2. Introduction to the Budget and itsimportance

> General outlook 27-28> Legal frame of the state budget 28> Divisions of the budget 28-31

3. Classification in Government Accounts

> Constitutional provisions having bearing 32-38on classification in Government Accounts

> Classification within the three Divisions 38-44mentioned in the Constitution

> Codification of account heads 44-48> Classification of Plan expenditure 48-50> Nature of revenue receipts and their 50-52 classification> Expenditure within revenue accounts 52> Capital expenditure outside revenue 52-53

account> Public debt 53-55> Loans and advances 55> Public account 55-60> Deposits and advances 60-61> Suspense and Miscellaneous and 61-62

Remittances> Overall view of the pattern of 62-64 classification> CHART 65

PART-II4. Budget preparation

> General 67-71> Budget Calendar 71-72

5. Estimates of Revenue Receipts

> General 73> Revenue Collection Officers 74> Estimating of Revenue Receipts- 74-79

Role of Revenue Collecting Officer> Estimates Of Revenue receipts - 79-81

Role of Controlling Officer> Comparative role of authorities 81

connected with Revenue Budget formulation> Tax Revenue 81> Non-Tax Revenue 82-86> Grant in aid from Central Government 86-88

10

> Additional resource mobilization 88-90> Transfer of the resources from State to 90-91

Local Self Governments> Overall view of Revenue Receipts Budget 91

6. Estimates of Expenditure within RevenueAccount

> General 92> Administrative levels for estimation 92-94> Components of expenditure within 94-95

Revenue Account> Estimates of establishment costs 95-99> Estimates of other fixed costs 100-106

7. Estimates of Capital ExpenditureAnd Public Account

> Estimates of public works 107-113> Establishment Budget of Public 113-114 Works Departments

> Estimates under Suspense 115> Other Capital Expenditures 116> Public Debt Estimates 116-119> Loans and Advances 119-122> Public Account 122-123

8. Budget estimates in respect of New 124-125Services

PART-III

9. Consolidation of the Budget

> General 127> Ways & Means estimation 127-128> Fiscal Responsibility 128-129> Holding of Budget Cabinet Meeting 129-130

10. Passage of Budget in the Legislature

> General 131-132> Presentation of Budget 132-134> Moving of Demands for Grants 134-137> Consideration of Appropriation Bills 137-139> Money Bill and Finance Bill 139-141> Vote on Account 141-142> Supplementary Grants 142-143> Additional Grants 143> Excess Grants 143-144> Exceptional Grants 144> Token Grants 144> Procedures in Financial Matters 144-145

11

11. Distribution of Budget

> Distribution of Budget 146-151

12. Control over Expenditure

> General 152-156> Control over expenditure by Drawing 156-158

and Disbursing Officers> Control over expenditure by 159-161

Controlling Officers.> Control over expenditure by 161-162

Administrative/ Finance Department> Budgetary control at Treasury 162-173> Adjusting Accounts 173-174

13. Revised Estimates

> General 175-176> Modified Grant 176> Re-appropriations 177-181> Appropriation Accounts 181-182

> Appendices to Part- III 183-389

PART-IV

14. Cash management for Budgetimplementation

> General 391-392> Determination of Forecast periods 392-393> Authorities to be involved in Ways and 393-395

Means forecasting> Methodology for working of Ways & 395-406

Means forecast> Devolution of resources from Centre 406-411

to the State> Control over Institutional Finances 411-412 and Market Borrowings

15. Bank account of the State Government 413-415

16. Resource Arrangement 416-417

> Appendices to Part- IV 418-472

PART-V

17. Contingency Fund 474

12

18. Systems to ensure correct classificationof Expenditure / Receipts and to checklegitimacy of Expenditure incurred

> Appropriation Accounts 475-481> Reconciliation of expenditure and receipts 482-486> Coordination of Expenditure 486-487> Draft Paras 487-488> Objections—settlement of. 488-489> Special Audit and Inspections 489> Administrative Inspections 489-490> Stock Verification 491

> Appendices to Part- V 492-537

PART-VI

Budget Forms: B1 to B11 539-552

--.--

13

PART-I

14

PART- IChapter 1

IMPORTANT BUDGET RELATED TERMS

1.1.0 Unless the subject or context otherwiserequires, the following terms have been usedin the Manual in the sense hereby explained.Words and expressions used in the Manualwhich are defined in the Constitution ofJammu and Kashmir, or in the rules or ordersframed under that Constitution bear themeaning assigned to them in those definitions.

1.2.0 ‘Accounts’ or ‘Actuals’ of a year are theamounts of receipts and disbursements for thefinancial year as finally recorded in theAccountant General’s books (as audited byComptroller & Auditor General of India).

1.2.1 Administrative Approval of a scheme,proposal or work as defined in the FinancialCode Volume-I is the formal acceptancethereof by the competent authority forincurring expenditure on a work initiated by, orconnected with the requirements of theDepartment. In the case of works executed bythe Public Works Department, it is in effect anorder to that department to execute a certainspecified work, at a stated sum to meet theadministrative needs of the departmentrequisitioning the work.Note- Administrative Approval is not by itselfan authorization to take up execution of awork unless there is a special provision offunds for that work and technical sanctionstands accorded to its detailed estimates ofquantities and costs.

1.2.2 Annual Financial Statement (or Budget)means the statement of estimated receiptsand expenditure of the State Government as

15

per its policy in respect of a financial yearand caused to be laid by the Governor beforethe two Houses of Legislature in terms ofSection 79 of the Constitution.

1.2.3 Appropriation means the amount authorizedby the Legislature for expenditure under aspecific unit of appropriation or part of thatamount placed at the disposal of a DisbursingOfficer by a controlling authority, out of fundsplaced at its disposal.

1.2.4 Appropriation Accounts are the accounts inrespect of a financial year prepared by theComptroller & Auditor General of India foreach grant or appropriation indicating theamounts of appropriation, including modifiedallocations under Revised Estimates and theamounts spent against such appropriations asa whole. Important variations in theexpenditure and sanctioned allotments,whether voted or charged, are dulycommented upon by him in the AppropriationAccounts. Under Article 151(2) of theConstitution of India, the Comptroller &Auditor General submits the AppropriationAccounts and the Audit Report of the Stateto the Governor to be laid before theLegislature.

1.2.5 Appropriation Bill refers to a bill introducedin the Legislative Assembly under Section 81of the Constitution to provide for theappropriation out of the Consolidated Fund ofthe State of all moneys required to meet:- (a) the grants so made by the Assembly; and

(b) the expenditure charged on theConsolidated Fund of the State [Section79(3) of the Constitution] but notexceeding in any case the amountsshown in the Annual

16

Financial Statement previously laidbefore the House.

1.2.6 Budget - see Annual Financial Statement.

1.2.7 Budget Calendar means the calendar fixedby the Government for preparation of Budgetand its completion up to the stage of passingof Appropriation Bills.

1.2.8 Budget Estimates are the detailed estimatesof receipts and expenditure for the Budgetyear.

1.2.9 Budget year or Financial year means theyear commencing on the April 1st and endingon the March 31st following.

1.2.10 Budget Note means a note prepared byFinance Department explaining the mainvariations between the estimates to beadopted and those proposed by theDepartments. It also discusses broad policyobjectives, estimates of receipts andexpenditures both under non-plan and plan asalso the scheme of financing the envisagedPlan size, the provision of resources fordelivery of the same after taking into accountthe Balance from Current Revenues (BCR),the total central assistance and the extent ofneed to go for market borrowings for gapfunding. The note may also analyzeperformance of any department in respect ofits receipts, expenditure, reconciliation andcompilation of accounts and matters incidentalthereto.

1.2.11 Budget Estimates are the detailed estimatesof the receipts and expenditure of the Budgetyear.

17

1.2.12 Charged Expenditure means suchexpenditure as is charged on theConsolidated Fund of the State and whichis not subject to the vote of the Legislatureunder Sections 79(3), 108(3) and 136 of theConstitution.Note – Sums relating to charged expenditureare printed in italics in the detailed estimatesand grants and form part of the AppropriationBills.

1.2.13 Constitution means the Constitution ofJammu and Kashmir.

1.2.14 Consolidated Fund means the fund asdefined in Section 115 of the Constitution,comprising all revenues received by theGovernment, all loans raised by issue oftreasury bills, loans or ways and meansadvances and all the moneys received by theGovernment in repayment of loans.

1.2.15 Controlling Officer means a Head ofDepartment or other departmental officer whosubmits estimates to Government and isresponsible for controlling the incurring ofexpenditure and/or the collection of revenueby the authorities subordinate to thedepartment.

1.2.16 Contingency Fund means the Fundestablished under Section 116 of theConstitution the Corpus of which is ` onecrore at present. Contingency Fund is in thenature of an imprest placed at the disposal ofthe Governor of the State and is intended toprovide advances to the government to meetunforeseen expenditure arising in the courseof a year. The amounts drawn from theContingency Fund are recouped after theLegislature approves the SupplementaryDemands.

18

1.2.17 Deficit Budget - In case the total estimatedexpenditure exceeds total receipts, the Budgetis said to be Deficit Budget. As the Statescannot seek vote for expenditure withoutmatching income, it is implied that the Statescannot have deficit budgets. Budget balancinghas to be done to arrive at a zero deficitbudget by going for additional resourcemobilization, expenditure compression wherepossible and by market borrowings.

1.2.18 Demands for Grants- The estimates ofexpenditure from the Consolidated Fundincluded in the Budget Statements andrequired to be voted by the LegislativeAssembly are broken into the Demands forGrants in terms of Rule 220 of J&K LegislativeAssembly Business Rules. Normally aseparate Demand is required to be presentedfor each Department or the major servicesunder the control of a Department. Each suchDemand includes the total provisions requiredfor a service, i.e. provisions on account ofrevenue expenditure, capital expenditure,grants to autonomous bodies, local bodiesetc. and also loans and advances relating tothat service. Estimates of expenditureincluded in the Demands for grants are forgross amounts. The receipts and recoveriestaken in reduction of expenditure are shownby way of below the line entries. The estimateof expenditure in the Demands for Grants forthose amounts for which the vote ofLegislative Assembly is required are shownseparately, and is called ‘voted’ expenditure.The estimates for ‘charged’ expenditure underany head which are not subject to vote of theLegislative Assembly, are also indicated in theDemands for Grants but in italics. When thereis no estimate for expenditure under any headrequiring vote of Legislative Assembly, then itis not called a Demand. It is called

19

‘Appropriation’ and included as such in the listof Demands.

1.2.19 Departmental Estimate is the estimate ofreceipts or expenditure of a department inrespect of any year submitted to Governmentby a Controlling Officer as the material onwhich to base its Budget Estimates.

1.2.20 Drawing and Disbursing Officer is an officerwho is authorized to operate upon a treasuryto the extent of the funds placed at hisdisposal. List of such authorities is fixed fromtime to time by the concerned AdministrativeDepartment in consultation with its FinancialAdvisor and Chief Accounts Officer in respectof the heads of accounts related to thatDepartment.

1.2.21 Disbursing officer - means a Head of Officeand also any other Gazetted Officer sodesignated by a Department of the StateGovernment, a Head of Department or anAdministrator, to draw bills and makepayments on behalf of the State Government.The term shall also include a Head ofDepartment or an Administrator where hehimself discharges such function.

1.2.22 Excess Appropriation/ Grants is grantpassed by the Legislative Assembly underSection 82 of the Constitution to meet theexpenditure which at the close of the financialyear is found through Appropriation Accounts,to have been in excess of the amount grantedfor a function.

1.2.23 Exceptional Grant is Grant made by theLegislative Assembly under Section 83(3) ofthe Constitution to meet expenditure whichforms no part of the current service of anyfinancial year.

20

1.2.24 Expenditure charged on the ConsolidatedFund - see ‘Charged Expenditure’ para1.2.12.

1.2.25 Financial Year - see para 1.2.9.

1.2.26 Fiscal deficit is the excess of aggregatedisbursements (net of debt repayments)over revenue receipts, recovery of loans andnon-debt capital receipts.

1.2.27 Function represents a major division of theefforts of the Government in any field of itsactivity.

1.2.28 Fiscal Indicators are such indicators as maybe prescribed for evaluation of the fiscalposition of the Government.

1.2.29 Fiscal targets are the numerical ceilings andproportions to the total revenue receipts orGSDP for the fiscal indicators.

1.2.30 Grant- see Demands for Grants.

1.2.31 GSDP means Gross State Domestic Productat current market prices.

1.2.32 Major and Minor Works:-

(a) Major Work means a work other than theminor work.

(b) Minor work means an original work or a workof repair or of improvement the estimated costof which exclusive of departmental chargesdoes not exceed the ceiling fixed in the PublicWorks Department in consultation with theFinance Department and Planning &Development Department. The Public WorksDepartment includes all the departments

21

having responsibility of execution of worksunder rules, including Forest Department.

1.2.33 Legislature means the Legislature of Jammuand Kashmir as defined in the Constitution.

1.2.34 New Service as appearing in Section 82(1)(a)of the Constitution means expenditure arisingout of a new policy decision not brought tothe notice of Legislature earlier, including anew activity or a new form of investment.

1.2.35 New Instrument of Service or Schememeans relatively large expenditure arising outof important expansion of an existing activityas envisaged in Section 82(1)(b) ofConstitution.

1.2.36 Public Works Department includes Roadsand Buildings, Irrigation and Flood control,Public Health Engineering, PowerDevelopment and any other branches ofPublic Works Department inclusive ofengineering and construction wings of Forest,Rural Development and other Departments.

1.2.37 Public Account as defined in Section 115(2)of the Constitution comprises all publicmoney received by or on behalf of theGovernment other than those credited to theConsolidated Fund of the State.

1.2.38 Public Debt is an important source of raisingmoney by the Government as loans ofdifferent kinds and in different forms includingloans received from the Central Governmentin any arrangement for meeting its urgentdevelopmental needs and other socialobligations even while resources are scarce.Such expenditure should, however, have thepotential of considerable revenue generationand creation of both employability and

22

employment opportunities for educated youth.Public Debt comprises Internal Debt, ExternalDebt and Loans & Advances from the CentralGovernment.

1.2.39 Programme is a definite type of plan whichis formulated for achieving the objective ofa function.

1.2.40 Revenue Deficit means excess of therevenue expenditure over revenue receipts.

1.2.41 Revenue Surplus means the excess of totalrevenue receipts over revenue expenditure.

1.2.42 Re-appropriation means the transfer ofsavings from one unit of appropriation to meetadditional expenditure under another unitwithin the same grant ordered by acompetent authority.

1.2.43 Recurring expenditure is that which involvesa liability beyond the financial year in which itis originally sanctioned.

1.2.44 Revised Estimates are the estimates of theprobable receipts or expenditure of a financialyear under the various major and minor headsand their primary units of appropriation,framed in the course of that year on the basisof the actual transactions recorded till thenand in the light of any fact(s) which may beknown as regards the remainder of the year.A revised estimate is in no way a provision forexpenditure, and an entry in it carries with itno authority for expenditure of any kind.Revised Estimates are neither ‘budget’ orappropriations of money nor do theysupersede the budget estimates as the basisfor the regulation of expenditure. The inclusionof increased expenditure in the revisedestimates does not supersede the necessityfor applying for an additional appropriation nor

23

the revised estimates are the proper channelfor such applications. Similarly, the revisedestimates do not obviate the necessity forformal surrender of sums unlikely to be spent.

1.2.45 Schedule of Excess Demand for Grantsand Appropriations means the statement ofexcess expenditure over total finalappropriations under the several grants,whether in the ‘charged’ or ‘voted’ sections,as ascertained through the AppropriationAccounts presented to the Legislature afterclose of the year to which it relates.

1.2.46 Supplementary Demands for Grants –means the statement of supplementarydemands laid before the Legislature in termsof Section 82 of the Constitution, showing anestimated amount of further expenditurenecessary in respect of a financial year overand above the expenditure authorized in theAnnual Financial Statement for that year.

1.2.47 Schedule of New Expenditure is a statementof items of expenditure not included in theprevious budget.

1.2.48 Supplementary Statement of Expenditureis the one presented to the Legislature underSection 82 of the Constitution.

1.2.49 i. Sector represents a major division offunctions of the Government.

ii. Sub-sector represents a group of alliedfunctions within a sector.

iii. Major and Minor Heads:- (a) Major Head means a main head of account for

recording and classifying the receipts andexpenditure of the revenue of the State undera particular function and is further broken into

24

Sub-Major Head(s) for convenience ofclassification where felt necessary.

(b) Minor Head means a head subordinate to amajor head or a sub- major head.

Note – The introduction of any new Major orMinor head and the abolition or change ofnomenclature of any of the existing Major orMinor heads requires the approval of theComptroller & Auditor General of India.

iv. Sub-major head represents a group ofallied functions under a major head.

v. Sub-minor head represents a definiteactivity under a minor head.

vi. Detailed Account Head means the lowestaccounting unit below primary unit underwhich transactions are recorded in theDepartmental Accounts and is also the lowestunit by which amounts are given in BudgetEstimates. This is also referred to as Object ofExpenditure

vii. Object of expenditure represents inputimplementation of a programme.

1.2.50 Surplus Budget - When it is a case thatestimated aggregate of all receipts, bothrevenue and capital, exceeds the estimatedaggregate of all expenditure, both revenueand capital, the budget is said to be a ‘SurplusBudget’.

1.2.51 Technical Sanction means sanction of thecompetent authority to the technicalspecifications, calculations of quantities ofitems of work and material; and a properlydetailed estimate of the cost of work. As itsname indicates, it amounts to no more than aguarantee that the proposals are structurally

25

sound and that the cost estimates arecalculated and based on adequate data.

1.2.52 Token Demand is a demand made to theLegislative Assembly for a nominal sum of` 100 when it is proposed to meet the entireexpenditure from savings out of thesanctioned budget grant. The expenditurewill constitute a “new service notcontemplated in the sanctioned Budget of theyear and it should not be incurred without thespecific vote of the Legislature. Fundsrequired in this connection are appropriatedwhen the Appropriation Bill is enacted.

1.2.53 Total Liability means the liabilities under theConsolidated Fund of the State and thePublic Account of the State and includesborrowings by the Public Sector Undertakingsand the Special Purpose Vehicles and otherequivalent instruments including guaranteesby government where the principal and theinterest are to be serviced out of the budget.

1.2.54 Trading Account – For ensuring equitabledistribution to consumer public at large andgeneration of healthy competition amongplayers in the private sector for makingavailable quality products at reasonableprices, Government undertakes schemes thatare purely commercial in nature but havesocial security purpose to be served. MilkSupply Schemes, schemes for providingquality seeds, fertilizers, agricultureimplements, irrigation pump sets to growersare few of such examples. These areessentially trading activities having bothexpenditure and receipts aspects and do notform an item of ‘Budget’ in strict sense of theterm. Government, therefore, maintainstrading account of such schemes to watchthat income matches the outgo and in case ofsubsidization, the accounts are squared up at

26

the close of the financial year by crediting thesubsidy component built in the normal Budgetto the trading account.

1.2.55 Vote on account means a grant in advancemade by the Legislative Assembly underSection 83 of the Constitution pendingcompletion of the detailed procedure asprescribed in Section 80 of the Constitutionrelating to the voting of grants and passing ofthe Appropriation Bill before thecommencement of the Budget Year.

1.2.56 Voted Expenditure means expenditure whichis subject to the vote of the Legislature.

1.2.57 Ways and means represent forecasts ofinflow and outflow of cash for a financial yearbased on envisaged budget estimates for thatyear.

______________________________________________

27

Chapter 2

INTRODUCTION TO THE BUDGET AND ITSIMPORTANCE

2.1.0 General outlook

2.1.1 The annual exercise of budgeting is a meansfor detailing the roadmap for efficient use ofpublic resources. Budgeting involvesdetermining for a future time period on what isto be done and achieved, the manner in whichit is to be done and the resources required forthe same. It requires the broad objectives ofthe Government to be broken down intodetailed work plans for each programme andsub-programme, activity and projects for eachunit of the Government organization. Thebudget is compiled for governance, utilizationof natural, financial and human resources forsocial upliftment and economic developmentby way of creating infrastructure, commercialbusiness enterprises, construction of projects,human resource management etc.

2.1.2 Since the volume of Governmental activities ishuge, wide spread and varied in its nature itbecomes necessary to have a definedstructure of a budget to be followeduniformally which is given a legal sanctity withthe help of provisions made for the purpose inthe Constitution. Objectively, therefore, thegeneral frame of the budget is rigid to bemodified only after detailed deliberations andundergoing a pre-defined process. Themethodology for development of contents of abudget does generally aim at:-

28

01 Setting up of goals and how thesecan be reached with comfort;

02 making available financial databoth historical and current forvarious appraisals;

03 finding out of deficiencies inexisting systems and policy forappropriate remedial measures;

04 Linking of costs with the resultantout come of investment made orto be made and helping inequilibrium between socio-economic and governanceparameters at local, national andinternational levels.

2.1.3 In essence, therefore, every budgetaryexercise is influenced by the need of the fieldof activity to be covered as also thecircumstances obtaining at the time when it ismade, fitting at the same time the conclusionsinto a pre-determined structural frame.

2.2.0 Legal frame of the State Budget :

A government budget is defined as a legaldocument that is passed by the Legislature,and approved by the Governor. The two basicelements of any budget are the revenues andexpenses. The Budget is designed for optimalallocation of scarce resources taking intoaccount larger socio-political considerations.Section 79 of the Constitution refers to thebudget as ‘Annual Financial Statement’.

2.2.1 Divisions of the Budget: The Constitutionprovides the broad framework in which a

29

budget has to be compiled. The following threefunds have been established under Sections115 and 116 of the Constitution:-

01. Consolidated Fund - (Section 115 of Constitution)02. Contingency Fund - (Section 116 of Constitution)03. Public Account - (Section 115 of Constitution)

2.2.2 The budget is prepared on annual basis. That isto say, there is one budget for one financialyear. In order, however, to enable theLegislature to appreciate the estimatesproposed in a year’s budget document,information on the following is also given:

01. Figures of actual expenditure inrespect of the financial yearpreceding to that in which a budgetis prepared.

02. Estimates and the revised estimatesin respect of the year in which thebudget is prepared.

2.2.3 This information is given in respect of everyindividual item of receipt and expenditure andhelps in making comparative analysis forassessing the reasonableness or otherwise ofthe proposed estimates which is also judgedwith reference to the assumed growth rates.For a better and broad budget analysis, it isequally necessary to examine various modelsunderlying the economic growth which form thebasis of the budget estimates. This becomes allthe more necessary in the present day fastchanging economic scenario.

2.2.4 Budget is prepared on gross basis. Thismeans that in a budget receipts andexpenditure are shown separately. Expenditure

30

on a function is not shown after adjusting thereceipts accruing there from. Expenditure isaccounted for separately and the receipts arealso reflected separately on gross basis. In thismanner it is possible to ascertain the directfinancial return from the investments in variousprogrammes. This does not, however, apply torecoveries under a Major head which are takenas deduct receipt. In such cases, grossexpenditure under a capital Major head isaccounted for obtaining the vote of theLegislature.

2.2.5 Budget is prepared on cash basis i.e. on thebasis of what is expected to be received in cashand paid also in cash during a budget year.This, in other words means that unspentbalances at the close of a year lapse andsimilarly the liabilities, if any, are carriedforward from year to year. The StateGovernment in the Finance Department mayorder compilation of the Budget on accrualbasis for which it may issue appropriate guidelines as and when required.

2.2.6 The annual budget makes it possible tomeasure achievements of the Governmentagainst the budgeted targets through themechanism of Appropriation Accounts, FinanceAccounts and Audit Reports brought before theLegislature through the modalities provided forthe purpose in the Constitution.

2.2.7 Apart from giving minute details in respect ofthe expenditures proposed for variousprogrammes, the budget also indicates theoverall position of the receipts andexpenditures. In this way, the budget alsobrings out how far the expenditure falls short ofreceipts or how far the receipts exceed

31

expected expenditure. In the former situationi.e. when expenditure exceeds the receipts, thebudget is known as a deficit budget and in thelater case when receipts exceed theexpenditure/ the budget is surplus. When thebudget is deficit steps to be taken to bridge thegap, have also to be considered and spelledout for approval of the Legislature. This is sobecause the demands are enormous and theresource scarce and balancing a budgetunder these circumstances is a complexproposition. States have no mechanismavailable for covering the deficit and as suchthe budget balancing has to be done to arrive ata zero deficit budget by going for additionalresource mobilization, expenditure compressionwhere possible and meet the remaining gap bymarket borrowings. Attempt of the Governmentis to ensure that every available resource isutilized for promoting welfare of the society inan efficient manner. An ideal situation is thatthe budget should be a reasonably surplus oneso that it may provide for scope to bridge thegap between the rich and the poor sections ofthe society by taxing the affluent sections andusing the receipts to raise the standard of livingof the weaker sections.

_________________________________________

32

Chapter 3

CLASSIFICATION IN GOVERNMENTACCOUNTS

3.1.0 Constitutional provisions having bearingon classification in Government accounts

3.1.1 Article 150 of the Constitution of Indiaprovides that the accounts of the Union and ofthe States shall be kept in such form as thePresident may, on the advice of theComptroller & Auditor General of India,prescribe.

3.1.2 The basic requirement of classification is thatit should be covered by the authority of thePresident who shall accord such an authorityon the proposals worked out in this behalf bythe Comptroller & Auditor General of India.This provision in the Constitution enables toensure that a similar system of classification isfollowed through out the country. The systemof classification is the same for different statesof the Union and the Union Government. Inthe diversity of conditions prevailing in India,uniformity in preparation of budget andcompilation of accounts is essential. It helps ina comparative study analyzing economictrends in different regions and states andfacilitates working of Finance Commission,Planning Commission and others connectedwith fiscal management of the country.National averages can be drawn underdifferent socio-economic and administrativefields according to acclaimed parameters forinter-state comparisons to facilitate applicationof corrective wherever and wheneverrequired.

33

3.1.3 The general frame in which accounts have tobe maintained and a budget prepared hasalso been laid down in the Constitution. Thethree Divisions of the accounts, namelyConsolidated Fund, Contingency Fund andPublic Account have been described in detail.Every type of transaction has to be accountedfor in these Divisions according to its nature.Deviation from the procedure thus set, is notpermissible except with the amendment in theConstitution.

3.1.4 In the Consolidated Fund transactions relatingto all the revenues raised by the Governmentby way of imposition of taxes, collection ofrevenues attributable to various Governmentalfunctioning and loans raised from time to timein different forms, are accounted for. Moneysreceived in repayment of loans and advancesmade by the Government have also to becredited to the same Fund. A distinction hasbeen made between loans raised by theGovernment and the amounts received inrepayment of loans and advances made bythem. This being so there are three distinctcategories into which receipts of theGovernment have to be categorized, namely: -

01. Revenues Receipts comprisingrevenues raised/received as a resultof imposition of taxes, by normalfunctioning of the administrativemachinery and by way of statutoryand other transfer of resources fromCentre to the states (excluding loansreceived from the CentralGovernment);

34

02. Public Debt accounting for moneysraised as loans of different kindsand in different forms including loansreceived form the CentralGovernment under any arrangement;and

03. Loans and Advances, representingrecovery of loans and advances bythe Government for various socialand economic purposes includingloans and advances given toGovernment employees.

3.1.5 The Government may from time to timeauthorize withdrawal of money form the saidFund to meet its requirements in accordancewith the law and under authority of theLegislature. This is done through themechanism of Annual Financial Statement.While presenting its demand of funds to theLegislature in the prescribed manner, theGovernment is required to maintain distinctionbetween revenue and capital expenditures.Section 79 of the Constitution which dealswith this subject, among other things,prescribe “... and shall distinguish expenditureon revenue account from other expenditure”.

3.1.6 Revenue expenditure is incurred for meetingnormal Government commitments like runningof administration, maintenance of law andorder, as also the expenditure, which does notresult in creation of assets and is in the formof maintenance of level of developmentalready reached. On the other hand, the termother expenditure used in this Section of theConstitution is in the form of creation of assetsor reduction in debts or any other futureliability. Obviously, therefore, there have to be

35

two sub-divisions in the Consolidated Fund forrecording transactions relating to expenditure,viz:-

01 Expenditure within the RevenueAccount

02 Capital expenditure outsideRevenue Account

3.1.7 It has already been mentioned that on thereceipt side of the Consolidated Fund, thetransactions relating to loans raised by theGovernment and recovery of loans advancedby it have to be classified distinctively. Thatbeing so, similar treatment is given to theexpenditure side of this transaction as well.Thus, apart from two sub-divisions mentionedabove, there are two more sub-divisions onthe expenditure side of this Fund, namely;

01 Public Debt Repayments 02 Loans and Advances

3.1.8 To sum up, the Consolidated Fund has thefollowing sub-divisions.

Consolidated Fund receipts 01 Revenue receipts

02 Public Debt receipts 03 Loans and advances recoveries

Consolidated Fund disbursements

01 Expenditure within Revenue Account 02 Capital expenditure outside revenue

Account 03 Public debt repayments 04 Loans and advances disbursements

36

3.1.9 Section 115 of the Constitution lays down thatall other public moneys received by or onbehalf of the Government shall be credited toPublic Account of the State.

3.1.10 The transactions other than those, which fallin the domain of Consolidated Fund have tobe classified in a separate division captionedPublic Account. The following types ofreceipts and disbursements have beenrecognized to be classified in the publicAccount:-

01 Those in respect of whichGovernment has to act as abanker The moneys received bythe Government in this capacityare in the form of provident fundsand small savings. These are inthe form of saving deposits heldby the Government for and onbehalf of employees and thepublic in accordance with the rulesand regulations which are framedto govern these deposits.

02 Those in respect of which theGovernment has to act as atrustee i.e. holding the moneys forsome time on behalf of certainpersons or bodies and have to bereturned as per specified termsand conditions. These accountsare kept as reserve funds,depreciation fund, developmentfund etc. and all other depositaccounts like civil deposits, publicworks deposits, forest deposits,deposits of local bodies etc.

37

03 Those as are in the nature ofadjusting accounts such asremittances, inter governmentaladjusting accounts, suspenseaccounts and the like.

3.1.11 Accordingly, the public account has followingsub-divisions, which have both receipts anddisbursement sides: -

01 Small savings, provident funds etc.02 Reserve funds03 Deposits and advances04 Suspense and miscellaneous05 Remittances06 Cash balance

3.1.12 The third Division of accounts classificationhas been created by Section 116 of theConstitution. This Division is called‘Contingency Fund’.

3.1.13 The Contingency Fund is an imprest kept atthe disposal of Head of the State. Out of thisFund advances are given to the Governmentfor meeting such expenditures which have notbeen provided for in the budget andappropriations authorized based thereon andare thus of unforeseen nature. Funds oncedrawn form the Contingency Fund are to berecouped, and the availability of funds thereinis brought to the authorized level. At the timeof recoupment of the amounts, these becomepart of the supplementary budget and it isthrough this mechanism that these arebrought to the notice of Legislature for theirapproval. The essence of maintenance of thisFund is to enable the Government to meetsuch type of expenditure, need for which

38

arises because of various unforeseenconsiderations like, occurrence of naturalcalamities, satisfying of legal decrees etc. anddo not therefore, form part of the budgetpassed by the Legislature. In this wayrequirement of the Constitution that theGovernment can incur expenditure from andout of Consolidated Fund only with theauthorizations made by he State Legislature ismet.

3.1.14 It is thus clear that whatever be the structureof classification, it has to be within the generalframework as prescribed in the Constitution ofIndia. Even within this structural frame, microplans of classification in Government accountshave not been left to absolute authority of theGovernment. These have to be adopted withthe approval of the President who accordssuch an approval on the advice of theComptroller & Auditor General of India.

3.2.0 Classification within the three Divisionsmentioned in the Constitution

3.2.1 It will not be sufficient to record financialtransactions of the Government within thethree Divisions i.e. Consolidated Fund,Contingency Fund and the Public Account asenvisaged in the Constitution, for it will notmeet the requirements of running ofadministration, planning, implementation andmonitoring of developmental and otheractivities. The classification has to be muchmore broad based and transactions relating tothe Functions, Programmes and Activitieshave to be brought out clearly in every systemof classification.

39

3.2.2 The meaning of the terms “Function”,“Programme” and “Activity” is as under :-.

Function represents a major division of theefforts of the Government in any field of itsactivity. The term does not, refer to the policyobjectives such as removal of poverty orreduction in regional disparity but to thedistinct type of services such a defense,education, agriculture etc designed to securedpolicy objective of the Government.

Programme is a definite type of plan, which isformulated for achieving the objective of afunction such as primary education under thefunction education and prevention of foodadulteration under public health.

Activity identifies a scheme undertaken inpursuance to the programme framed forimplementation of a function like ‘primaryschools (boys)’ under ‘Primary Education’ and‘testing labs’ under ‘Prevention of FoodAdulteration’.

3.2.3 The programmes and activities aresubdivisions of a Function, which are framedto secure its smooth implementation andcontrol. In other words sum total of theexpenditure transactions classified underdifferent activities indicate expenditure undera programme and a similar aggregation ofexpenditure under variousprogrammes of a function will be the totalexpenditure under that function.

3.2.4 It is also not sufficient to book transactionsunder various Functions, Programmes andActivities. In order to have a properunderstanding of Government Accounts, it

40

should be possible to identify the functionsand group these under different sections andsub-sections. The functions of allied natureare brought under relevant section/ sub-section. The sections known as sectors ofclassification are: -

01 General Services02 Social and Community Services03 Economic Services04 Grants-in-Aid & Contributions

3.2.5 All the functions of the Government are fittedinto these Sectors according to their nature asunder: -

General Services: groups functions whichare essential for running of administration likethe Governor, Legislature, Judiciary, generaladministration, maintenance of law and orderetc. etc.

Social & Community Services: include suchof the functions which provide social andcommunity services like education, medical,public health etc.

Economic Services: include efforts made toimprove economy and increase in theproduction capacity besides creation ofeconomic infrastructures such as,development of agriculture, industry, miningetc.

Grants-in-Aid & Contributions: includesgrants given by the Central Government to thestate for various purposes and assignments tothe local bodies and Panchayati RajInstitutions.

41

3.2.6 Technically a Function is known as MajorHead of account. The programme and activityare referred to as Minor and Sub-Minor headsof account respectively. In order to give betterpresentation to the developmentalprogrammes (Plan schemes) Sub-Sectors andSub Major heads of account have also beenprescribed, wherever required.

3.2.7 An ‘Activity’ or a ‘Sub-Minor head’ of accountis further divided into objects of expenditure.These are also known as detailed heads ofaccount. This is the last tier of classification.The Object of Expenditure or a Detailed Headof Account helps in having an itemized controlof expenditure on various inputs of an activityand are in the shape of salaries, wages,materials and supplies, maintenance etc.

3.2.8 To sum up, the general outlook ofclassification in government accountsemerges as under:-

Sector: Represents a major division offunctions of the Government viz. GeneralServices, Social and community Services,Economic Services and Grants-in-aidcontributions.

Sub- Sector: Represents a group of alliedfunctions within a Sector like health and familywelfare under social and community services.

Major Head: Represents a distinct functionunder a Sector/Sub-sector like ‘Administrationof Justices’ under general services – Organsof State, or ‘Medical’ and ‘Public Health under‘Social and Community Services’.

Sub-major head: Represents a group ofallied functions like ‘urban health services’

42

under ‘social and community services - Healthand Family Welfare.

Minor head: Represents a Programmeundertaken to meet objectives of a functionlike ‘Hospitals and Dispensaries’ under ‘Socialand Community Services - Health and FamilyWelfare - Urban Health Services’.

Sub minor head: Represents a definiteactivity under a programme like ‘SMHSHospital’ under “Social and CommunityServices - Health & Family Welfare - Hospitaland Dispensaries.”

Object of expenditure: Represents basicexpenditure input of a programme like‘salaries’ under social & community services -Health and Family Welfare - Hospitals andDispensaries - SHMS Hospital.

3.2.9 It will be seen from the above that expenditureon Salaries in SHMS hospital will get reflectedin Government Account as: -

“Consolidated Fund - Social & CommunityServices - Health & Family Welfare -Hospitals and Dispensaries - SHMSHospital- Salaries.”

3.2.10 It is now clear that the financial transactions inthe Government Account have to be classifiedaccording to the Function(s) to which theserelate. Thus, the system is oriented towardsFunctions, Programmes and Activities. Thedepartments where these originate are notrelevant for this purpose. The expenditure onconstruction of a school building thoughoriginating in the public works department hasto be classified as expenditure on the

43

“Function “Education” and not on “PublicWorks”. Similarly, ‘Takavi loans’ disbursed bythe revenue agencies has not to be classifiedas expenditure on district administration butas agriculture expenditure to which theexpenditure relates. In other words accountsclassification is designed to enable workingout of position of financial transactions on aFunction. It is not however, possible to applythis rule strictly in respect of certainexpenditures. At the apex of the administrativeset up of the Government generally more thanone Function is assigned to an Administrativedepartment to deal with the policy formulationand monitor its implementation in the field.Every secretariat department deals with anumber of functions. It will be cumbersome ifexpenditure on Secretariats is provided forunder different Functions to meet therequirements of functional classification. Thealternative is to book such expenditure initiallyunder the Major Head relevant to the Functionpredominantly attended to by anAdministrative Department and then distributeit on pro rata basis to the involved MajorHeads of Account but this will be equally adifficult accounting problem. In order toovercome such a situation, the expenditure onAdministrative Department is booked under“Secretariat -General Services”, “Secretariat -Social Services” “Secretariat EconomicServices” without distributing it among theMajor Heads falling in a Sector. It may alsohappen that a Secretariat Department isdealing with Functions falling under more thanone sector. In that event, it is accounted forunder the Secretariat Major Head in theSector to which the major part of their workrelates.

44

3.2.11 Investments in Public Sector and otherGovernmental Industrial Undertakings hasalso to be classified under the relevantFunctional Major Heads of accountirrespective of the department incurring theexpenditure in connection with suchinvestments. Similarly, loans and advancesgiven by the Government for various purposesmay originate in one single department foradministrative and other reasons, theexpenditures relating thereto have to bebooked under relevant Functional MajorHeads of account.

3.3.0 Codification of account heads

3.3.1 Each Division in the Consolidated Fund andthe Public Account is divided into sectors,which may in some cases be further dividedinto sub-sectors and then into the six tiers ofaccounting classification. The number ofclassification in the Detailed Demands forGrants are not allowed to go beyond thestandard six tiers indicated as under-

1. Major Head- 4 digits (Function);2. Sub-Major Head- 2 digits (Sub-Function);3. Minor Head- 3 digits (Programme);4. Sub-Head- 2 digits (Scheme);5. Detailed Head- 2 digits (Sub-Scheme);

and6. Object Head- 2 digits (Object Head or

Primary Unit ofAppropriation)

3.3.2 Same sectoral classification has beenprescribed for Expenditure within RevenueAccount and Capital Expenditure out side theRevenue Account. Nomenclature of theaccount heads is also the same except for thewords “Capital outlay on” or “Loans for” as the

45

case may be being prefixed to every suchhead of account in the Capital Account.Distinction of account heads is made withreference to the code numbers pre-fixed toevery Account Head. The code is of four digits(xxxx). The first digit indicates whether themajor head is a Receipt head / revenueexpenditure head / capital expenditure head /Loans and Advances head or a Public Debtshead. These code numbers have beenallotted in blocks as under:-

01. Revenue receipts/ - 0020 - 1606 Grant-in-Aid and contributions

02. Revenue expenditure - 2011 - 3506

03. Capital expenditure - 4046 - 5475

04. Public debt - 6001 - 6005

05. Loans and advances/ - 6075 - 8000 Inter-state settlement/ contingency fund

06. Public account/ - 8001 – 8999 Miscellaneous

Capital Receipts are classified under MajorHead – 4000.

3.3.3 Coding Pattern

a. Major Head

A Four digit code has been allotted to theMajor Head, the first digit indicating whetherthe Major Head is a Receipt Head or RevenueExpenditure Head, or Capital Expenditure

46

Head or Loan Head. If the first digit is ‘0’ or ‘1’,the Head of Account will represent RevenueReceipt, ‘2’ or ‘3’ will represent RevenueExpenditure, ‘4’ or ‘5’ – Capital Expenditure,‘6’ or ‘7’ Loan head, (4000 for Capital Receipt)and ‘8’ will represent Contingency Fund andPublic Account.

Adding 2 to the first digit of the RevenueReceipt will give the number allotted tocorresponding Revenue Expenditure Head,adding another 2 – the Capital ExpenditureHead and another 2 - the Loan Head ofAccount, for example:

0401- Receipt Head for Crop Husbandry

2401- Revenue Expenditure Head for CropHusbandry

4401- Capital Outlay on Crop Husbandry

6401- Loans for Crop Husbandry

b. Sub-Major Head

A two digit code has been allotted, the codestarting from ‘01’ under each Major Head.Where no sub major head exists it is allotted acode ‘00’. A standard nomenclature ‘General’has been allotted code ‘80’ so that even afterfurther sub-major heads are introduced thecode for ‘General’ will continue to remain thelast one.

c. Minor Head

These have been allotted a three digit code,the codes starting from ‘001’ under each Sub-Major/Major Head (where there is no SubMajor Head). Codes from ‘001’ to ‘100’ and

47

few others like ‘750’ to ‘900’ have beenreserved for certain standard Minor Heads.For example, Code ‘001’ always representsDirection and Administration. Non StandardMinor Heads have been allotted Codes from‘101’ in the Revenue Expenditure series and‘201’ in the Capital and Loan series, where thedescription under capital/loan is the same asin the Revenue Expenditure Section, the codenumber for the Minor Head is the same as theone allotted in the Revenue ExpenditureSection. Code number ‘900’ is alwaysreserved for Deduct Receipt or DeductExpenditure Heads.

The Code for ‘Other Expenditure’ is ‘800’while the codes for other grants/otherschemes etc. where minor head ‘OtherExpenditure’ also exists is kept as ‘600’. Thishas been done to ensure that the order inwhich the Minor Heads are codified is notdisturbed when new Minor Heads areintroduced.

The coding pattern for Minor Heads has beendesigned in such a way that in respect ofcertain Minor Heads having a commonnomenclature under various Major/Sub-majorHeads, as far as possible, the same three digitcode is adopted.

Computer Cell of the Controller General ofAccounts organisation is required to beconsulted before any new code is allotted orexisting code (at whatever level) is altered.

d. Sub Head/Detailed Head/Object Head

Sub Head represents schemes, the detailedhead represents Sub-Schemes while the

48

Object Head represents the objects/items(e.g. Pay, DA, HRA, Rewards, Gratuity, etc.)on which the expenditure is incurred. Each ofthese levels has been allotted a two digitcode. Wherever it is not feasible to break upthe objects of expenditure into such details,the codes provided for aggregates of certainitems may be used instead for computerprocessing. For example, where it is notpossible to indicate Pay, DA, HRA, CCA etc.separately, the code for salaries may be usedfor representing the aggregate of these items.The Object Heads have been prescribedunder Government of India’s Orders belowRule 8 of Delegation of Financial PowerRules. The power to amend or modify theseobject heads and to open new Object Headsrest with Department of Expenditure ofMinistry of Finance on the advice of theComptroller & Auditor General of India.

The Budget Heads exhibited in estimates ofreceipts and expenditure framed by theGovernment or in any appropriation ordershould conform to the prescribed rules ofclassification in accordance with Rule 74 ofthe General Financial Rules.

3.3.4 Such codification is necessary forcomputerization of the budget andmaintenance of Government Accounts.

3.4.0 Classification of Plan expenditure

3.4.1 Expenditure on different Functions of theGovernment is either non-plan expenditure orplan expenditure. Broadly, non-planexpenditure is that which has to be incurredfor running of administration, maintenance ofassets already created or meeting of

49

pensionary and debt obligations of theGovernment. In other words, such expendituredoes not result in creation of assets orextension in the existing level of developmentin different spheres of activity. Planexpenditure, on the other hand, refers to theactivities, which are undertaken as a result ofimplementation of pre-conceived plans. Suchexpenditures are either developmental innature or such which help in undertaking adevelopmental programme. Inspite of such avivid difference between plan and non-planexpenditures, all transactions relate to one orthe other activity under the three Sectors ofaccounts classification viz. General Services,Social Services and Economic Services.Therefore, an activity has both plan and non-plan components and both have to beclassified as such. Thus, same classification isused for both plan and non-plan expendituresalthough the two are exhibited separately sothat extent of developmental and non-developmental efforts under every activitycould be ascertained at any time directly fromaccounts.

3.4.2 Recognizing the fact that taking up of activitiesunder a Programme of a Function may varyfrom state to state as also from time to time,the State Government may open through theBudget Wing new Sub-Heads, Detailed Headsand Object Heads as may be needed to suitits own requirements. However, the sub-heads should not be multiplied unnecessarilyand new ones are advised to be opened onlywhen really necessary. Thus, for a newactivity to be taken up in the process ofimplementation of developmental plans orotherwise, a new sub-head can be openedunder the relevant Minor and Major head of

50

account. In this manner therefore, thefunctional or Major head, Sub-Functional orSub-Major head and the Programme or MinorHead alone are fixed and can besupplemented or changed with the priorapproval of the Comptroller and AuditorGeneral of India except to the extent permittedby him as a general rule, if any. Sub-Minorheads and objects of expenditure can beintroduced or deleted by the StateGovernments at their own level and accordingto their requirement.

3.4.3 Orders in this behalf shall be issued byBudget Wing of Finance Department based onthe proposals drawn for the purpose by thePlanning & Development Department.

3.5.0 Nature of revenue receipts and theirclassification

3.5.1 Revenue receipts are those which accrue tothe Government as a result of its functioningon recurring basis. These are different ascompared to the capital receipts which arisefrom sale of assets, recovery of loans andadvances etc. Broadly, the sources of revenuereceipts are grouped as under:-

Tax revenue: which accrue as a result ofimplementation of Acts passed by theLegislature and other statutory orders issuedby the Government.

Non-tax revenue: accruing from thevarious Functions of the Government otherthan tax revenue.

Grants-in-aid/contributions representtransfer of resources from Centre to the

51

States on the basis of the awards of theFinance Commissions or for plan purposes onthe basis of the settlements reached with thePlanning Commission.

3.5.2 Independent heads of account are providedfor recording transaction of every tax effortand for every major non-tax source of income.Under every Major Head of account, Minorheads have been opened for recording detailsof receipts for various accounting andmanagerial purposes. In this process refundsof tax and non-tax revenues are booked undera separate head “Deduct Refunds”. Sincetaxation is a major revenue realization effort,“Deduct Refunds” is provided under eachSub-Head, subordinate to a relevant taxrevenue Major Head of account. In case ofnon-tax revenue, however, Deduct-Refunds”.is provided as a Sub-Head under theconcerned Major Head of Account.

3.5.3 Transfer of resources from Centre to theStates in the form of “grants-in-aid” and“Share in Central Taxes/Duties”, are recordedin the section “Grants-in-aid/Contribution”.Under the Constitution of India it is necessaryfor the Central Government to pay grant-in-aidto the federating units to enable them to covergaps in their income and expenditure.Similarly, there are some taxes, which arelevied and collected by the UnionGovernment. Proceeds of these taxes arealso shared by the Centre and the states inaccordance with a formula evolved andadopted in this behalf by the FinanceCommissions appointed for the purpose atperiodical intervals of five years in accordancewith the provisions made in this behalf in theIndian Constitution. The Finance

52

Commissions also determine the level ofgrants-in-aid to be paid to different states.

3.6.0 Expenditure within Revenue Account

3.6.1 Major heads relating to the expenditure withinthe Revenue Account are grouped into thefollowing sectors: -

01 General Services 02 Social and Community Services

03 Economic Services

3.7.0 Capital expenditure outside Revenue Account

3.7.1 Capital expenditure in general terms refers tothat which results in creation of assets orreducing a recurring liability. Expenditure ontrading activities is also treated as capitalexpenditure outside the revenue accountunder certain circumstances. Normally, suchactivities are of a commercial nature andshould not, therefore, be handled by theGovernment exclusively. These have to be leftto the Public Sector or private entrepreneurs.Where, however, Government intervention isnecessary, it is accounted for as capitalexpenditure. The receipts as a result of suchactivities are taken as “Deduct Recoveries onCapital Account” so that net position thereofbecomes available conveniently at one placeof accounting. Net receipts i.e. when receiptsare more than expenditure are taken to therelevant major head under “revenue receipts.”On the other hand, where the expenditureexceeds the receipts, the gap is in the form ofsubsidy and is transferred to the concernedMajor heads under “Expenditure within theRevenue Account.”

53

3.7.2 The capital major heads of accounts havebeen grouped into the same Sections as havebeen provided for expenditure within therevenue account viz. ‘General Services’ SocialServices’ and ‘Economic Services’.

3.8.0 Public Debt

3.8.1 Public debt, as the name implies, is animportant source of public finance for theGovernment to fund its urgent developmentneeds and meet social obligations even whileresources are scarce. Such expenditureshould, however, have the potential ofconsiderable revenue generation and creationof both employability and employmentopportunities for the educated youth. Financialtransactions on account of channelisation ofinstitutional and non-governmental funds forvarious developmental activities should,therefore, find appropriate reflection in theBudget.

3.8.2 As a result of developmental planning processsaving capacity improves and it will be onlyappropriate that these are optimallychannelised for further developments.Similarly, buoyancy in industry, trade andcommerce and for that matter in any othersector of economy can also be tapped forimproving resource mobilization by theGovernment. After all, tax and non-taxrevenue has its own limit. Income from suchsources cannot be stretched beyond areasonable and tolerable limit.

3.8.3 The Public Debt as a source of public financefor the Government is grouped as under:-

01 Internal debt

54

02 Institutional Finance and OpenMarket Borrowings

03 Loans and advances fromthe Central Government

3.8.4 Internal Debt:- Generally comprise of loansraised against treasury bills and issue ofsecurities and other instruments. In case ofGovernments these also include ways andmeans advances obtained to tide overtemporary short falls, which are caused byshort-term excess of expenditure over theincome and are generally liquidated beforeclose of a financial year. Such advances arein fact in the form of over drafts.

3.8.5 Institutional Finance and Open MarketBorrowings are contracted for funding thegap that may still exist between resources ofthe State including share in central taxes/duties and other Central Assistance and thecost of development needs. States areauthorized by the Planning Commission ofIndia and the Ministry of Finance, GoI to raiseinstitutional finance and also go for openmarket borrowings upto the limits fixed everyyear in the “Approved Scheme of Financingthe Annual Plan”. The institutions from whichthe loans are generally available at softerrates are LIC, NABARD, REC. Open marketborrowings are contracted through themechanism of auctions conducted by RBI.

3.8.6 Loans & Advances from the CentralGovernment:- The Central Governmentadvances loans to the State for various planand non-plan purposes. Generally the loansare given under pre-defined arrangements.Plan loans are based on the parameters fixed

55

for plan financing by the PlanningCommission, likewise some of the non-planloans are given according to the yard sticksfixed by the Finance Commissions. Somesavings like small savings are mobilized at thenational level under the over all managerialcontrol of the Central Government. Theresource thus built has to be shared by theCentral and State Governments.

3.8.7 As already pointed out debt obligations of theGovernment have to be much moretransparent. It has to be noted that receipts asalso disbursements are recorded under thesame relevant head of account so that netposition of outstanding in respect of everydebt obligation is properly brought out.

3.9.0 Loans and Advances

3.9.1 The process of development or employeeswelfare involves giving of loans and advancesfor social and economic purposes. Theseloans and advances sometimes involve inter-state settlements also. As in case oftransaction relating to ‘Public Debt’ thereceipts and disbursements of loans andadvances are also recorded under the sameFunctional (Major) Head of Account so thatnet outstanding in respect of each such loansand advances is easily ascertained at anygiven time or as and when required.

3.10.0 Public Account

3.10.1 Nature of the transaction falling under thisdivision of accounts as envisaged in theConstitution has already been describedearlier. Nature of the transactions grouped

56

into different sections under the Major Headsof account is discussed hereunder: -

3.10.2 Small savings, provident funds etc.:-Transaction relating to Small savings throughits various schemes like Saving Deposits,Saving Certificates, State Provident Funds,Public Provident Funds, Trusts andEndowments, Insurance and Pension Fundsand Special Deposits and accounts. In respectof all these accounts the Governmentoperates as a trustee. The fact, however,remains that these Funds become availablefor undertaking developmental works and thusboost the economy of the State.

3.10.3 Saving deposits and saving certificates areraised at the national level and therefore everyState of the country has a share in theresources, thus mobilized. The presentpractice is that eighty percent of thecollections thus made in a State are advancedas loans to that State, bearing interest and apredefined schedule of repayment. Thesecollections made by Government of India,though retained by them as a trust in PublicAccount are transferred to the states asCentral Loans who have to classify theseunder “Public Debt”.

3.10.4 State Provident Funds and Public ProvidentFunds become available both to the Statesand the Central governments. These are inthe form of compulsory deductions made formthe salaries of the employees both in publicand private sector as also matchingcontributions made thereto by the employers.The accounts relating to all such truncationsare maintained separately by the respectiveGovernments and the net proceeds during a

57

year retained by them also. This is equallytrue about the Trusts and Endowment as alsoInsurance and Pension funds.

3.10.5 For regulation of Savings as also Funds asindicated above every scheme has its ownrules. This is true about the Provident andPension Funds created and maintained in theprivate sector also. The regulating authoritiesof these Funds in this sector, generally havetheir own policy and rules for makinginvestments there from. It is not compulsoryfor them to keep such deposits only with theGovernment. Sometimes these authoritiesmay decide to make investments inGovernment bonds etc or lend money tothem. In such situations the amounts receivedor repaid from these Funds of the privatesector are taken as loans from them andclassified as such in the “Public Debts”. Suchdeposits are kept within the Government, assuch, these are accounted for in the “PublicAccount” and do not form part of the“Consolidated Fund” as it happens in theearlier situation.

3.10.6 Detailed accounts in respect of each accountin this category are maintained by theDesignated Authorities, which reflect positionin totality as also for individual accounts.

3.10.7 Reserve Funds: - These Funds are createdto meet both foreseeable and unforeseenliabilities that may come up in future to be metby the Government. These Funds help indischarging such liabilities without any seriousdrain on the State Exchequer. ForeseeableReserve Funds are in the nature of Reservefunds, sinking funds, and other developmentalfunds. The unforeseen reserve funds are like

58

Disaster Response Fund. A portion of normalrevenue is kept apart on annual basis and thebalances that may thus accumulate are usedin future, as and when need arises.

3.10.8 General Reserve Funds :- These includedevelopmental funds created out of theGeneral Revenues of the State from year toyear for creating a corpus for undertakingfuture development works not otherwiseprovided for in the approved Five Year orAnnual Plans of the State like “DevelopmentFund for Agriculture purposes”, “GeneralInsurance Fund”, “Contribution to the ReserveFund for Electricity” and “General Reserve” fordevelopment of departmental commercialundertakings.

3.10.9 Sinking Fund: - Debt is an obligation, whichhas to be discharged by the Government inaccordance with the terms and conditionsregulating such debts. In order to meet thisrequirement without any difficulty, a SinkingFund is created. This Head is credited with theamounts each year for the purpose out of theGeneral Revenues of the Government. Theseamounts are transferred to the Sinking Fundby obtaining an Appropriation from theLegislature through provision made under therelevant Major Head (2048- Appropriation forReduction or Avoidance of Debt) in theConsolidated Fund. Sinking Fund can be forindividual debts or for all loans floated by theGovernment. The Sinking Fund is, however,created only when it is obligatory to do sounder law or undertaking given by theGovernment in any loan raised by it. Sinkingfunds can be invested in a manner so thatcash is readily available at the time ofdischarging a debt liability. Profits if any,

59

realized on such investments are also creditedto the Sinking Fund Investment Account. Itmay, however, be noted that in order to bringrepayment of debts within the preview of thelegislative control these are provided for in the‘Public Debt’. The balances in the SinkingFund Account are transferred to themiscellaneous Government Account (ledgerbalance adjustment account), which falls inthe Public Account.

3.10.10 State Disaster Response Fund: - This isgenerally a Statutory Fund, which is createdfor meeting unforeseen eventualities onaccount of natural calamities. It is creditedwith transfers made from Revenue Accountand interest/gains raised from investmentsmade form such Funds. Payments out of theDisaster Response Fund for the purposes(s)for which it has been established areregulated through Consolidated Fund. Again,the idea being that such expenditures shouldbe authorized by the Legislature. The termdisaster is to be interpreted in its widest senseto cover natural calamities of all types, suchas floods, drought, earthquakes etc.

3.10.11 Central Road Fund: - This Fund isconstituted out of the Excise and ImportDuties on Motor Spirits and is earmarked fordevelopment of roads. The amountsanctioned each year for credit to this fund istransferred by the Central Government to theStates, to the extent of 80% of theaccumulations. Transfer of these funds to theStates is related to the road works approvedto be taken up as Central Road Fund Worksfrom year to year. The funds received by theStates from the Centre are classified in theiraccounts as ‘Subvension from Central Road

60

Fund’ under the section “Deposits andAdvances”. Expenditure on such works isinitially booked by the states under therelevant Major Head of account in theConsolidated Fund which is then set aside bytransfer to account head ‘Subvension fromCentral Road Fund’ at the close of each year.

3.11.0 Deposits and Advances

3.11.1 Deposits are both interest bearing and non-interest bearing. Grouping of transactionsinto these categories depends upon the termsand conditions attached to the acceptance ofsuch deposits by the Government or lawrelating to their regulation. The Deposit andAdvance heads relating to railways, defense,post and telecommunications are operatedupon by the Central Government. TheDeposits and Advances of Local Funds, Civiland Others are, on the other hand, operatedupon both, by the Central and Stategovernments.

3.11.2 The deposits of Local Funds include depositsof the Municipal Corporations, Municipalitiesand Town Area and Notified Committees.Deposits of Housing Boards, State ElectricityBoards and of other autonomous bodies arealso accounted for as deposits of LocalFunds. The Government Companies,Corporations etc. can also open depositaccounts with the State Government.

3.11.3 Deposits made in the Judicial and Revenuecourts on various accounts are alsoaccounted for in this section. Payment ofcompensation to be made for acquisition ofland for various public purposes are also partof Revenue Deposits. Security Deposits from

61

the contractors in case decided to be retainedby the Government under certaincircumstances are also accounted for here.Other deposits include personal deposits,deposits of educational institutions, depositsof trusts etc.

3.12.0 Suspense & Miscellaneous andRemittances

3.12.1 This section of Public Account is intended forclassification of such of the transactions,which cannot be taken to the final heads ofaccount at the time of their occurrence due toone reason or the other. Public works, forestand other commercial departments areauthorized to draw their financial requirementor deposit their collections into the treasury inlump and maintain their detailed account attheir own level as departmental chest holders.The departments render accounts direct to theAccountant General, J&K. Transactions ofthese departmental chest holders with thetreasury are temporality accounted for underthis section of the public account. Similarly,cash remittances from one treasury to anotherand resultant cash in transit are alsoaccounted for here. The coinage accounts,cash balances including permanent cashimprests and deposit balances together withcash balance investments, security depositsof the government are also components ofpublic account.

3.12.2 Adjusting Account as also Settlementaccounts of officers rendering accounts to thesame or different Accounts Officers togetherwith the Adjusting Accounts as betweendifferent Governments within or outside the

62

Country form part of this section of the PublicAccount.

3.13.0 Over all view of the pattern of classification

3.13.1 The over all view of the pattern ofclassification, in other words structural frameof the budget and accounts is presented in theCHART appended to this chapter.

3.13.2 The functional classification as has beenmade clear is followed with a twin objective ofbooking the public expenditure on anidentified Function in a manner so as topresent an over all view of its implicationsirrespective of the department/organizationauthorizing it and co-relating thedevelopmental (plan) and non-development(non-plan) expenditures on a Function. It hasbeen, found that the planning machinerycontinues to follow the earlier planexpenditure classification with somemodifications here and there. Planprogrammes are no doubt provided for in thegeneral budget according to the approvedsystem of classification - a legal requirementfor obtaining Appropriations from theLegislature and expenditure is also booked bythe implementing agencies accordingly. Thefact, however, remains that the planexpenditure classification adopted in the plandocument is different which makes the co-relation between the outlays and theexpenditures booked there against in theGovernment Accounts a difficult process.Under these circumstances, the planningmachinery mainly depends upon theexpenditure booked by the variousdepartments and other agencies of theGovernment at their own level. Since

63

such accounts are not linked to thetransactions originating in the treasury (a focalpoint for maintenance of GovernmentAccounts) their dependability is debatable,more so for various account settlementsincluding Devolution of Resources fromCentre to the States. In the plan formulationSectoral classification is followed as againstthe Functional pattern prescribed for thecountry under Constitutionally valid orders.Continuing with the earlier system ofclassification for plan purposes is because noattempt has been made to bring it at par withthe budget. It may be also because theconventional system of plan classificationgives more liberty to the plan implementingagencies to make adjustments in the outlaysas may be required from time to time. Thisargument is not, however, well founded asnew pattern of classification can also givesuch liberties besides being more meaningfuland purposeful in its content. A lot of thoughthas gone into its development and it is inkeeping with the national requirements of thefinancial management. Even withoutstretching this argument too far, following asimilar structural framework for providing ofoutlays and expenditures has necessarily tobe followed as otherwise there will be nocomparisons of the two, which is highlyessential for eventual analysis of inputs andoutputs.

3.13.3 Under these circumstances, two data basisare also created - one based on Departmentalfigures and the other on the figures computedby the Accountant General. The two sets offigures seldom reconcile leading to aconfusing situation, which needs to berectified. Once the new system of

64

classification is followed for plan purposesalso, it will besides bringing out a clear picturealso facilitate computerization of accounts andformulation of the budget. It needs to be notedthat Functional system of classification has aninbuilt orientation for computerization. Codenumbers have been prescribed for all the tiersof classifications and in order to ensure itsuniformity throughout the country no changecan be brought about in this scheme ofcodification except with the sanction of thecompetent authority. Accounting classificationfor the planning purposes has to berestructured. It will no doubt make changes inpresentation of a plan document but it will notat the same time involve any change in thefundamentals of the whole planning processright from conceptual stage to the conclusionof evaluation. A co-relation between plan andnon-plan expenditures should therefore befollowed for which a mechanism should beevolved in a joint exercise by the Finance andPlanning & Development Departments.

65

CHART(referred in Para 3.13.1)

GIA= Grants-in-aid, L&A=Loans & Advances, ISS= Interstate SettlementsTCF= Transfer to Contingency Fund

______________________________________________________________

BUDGET/ACCOUNT

ConsolidatedFund

Contingency Fund Public A/c

Rev.Rcpts

Ex. withinRev. A/c

CapitalA/c

CapitalGIA

ReceiptsL&A

ISS TCF

Tax

Non Tax

GIACont.

Gen.Services

SocialServices

Econ.Services

Gen.Services

SocialServices

Econ.Services

Small Saving& Prov. Fund

Deposits &Advances

Remittances

ReservesFunds

Suspense& Misc.

CashBalance

66

PART-II

67

PART- II

Chapter 4

BUDGET PREPARATION

4.1.1 The responsibility for formulation of the Statebudget lies with the Finance Department. It isthe Finance Minister who presents the budgetto the State Legislature for and on behalf ofthe Government. The Finance Departmentcannot complete this assignment withouteffective help from within and outside theGovernment. Every AdministrativeDepartment is therefore, called upon toformulate the proposals in respect of thefunctions falling within its jurisdiction.Similarly, the Comptroller and Auditor Generalof India through the Accountant General of theState is also required to render all possiblehelp and inputs, which mainly includes supplyof previous actuals and also estimates inrespect of programmes and activitiescontrolled by that authority. Finance Ministeris equally at liberty to have consultations withthe organizations and those connected withpublic finance and general economics. In thisprocess, every possible attempt is made tomake the budget an effective tool foraccomplishment of various objectives, whichare carefully identified with respect to thenational and local requirements. In the presentday scenario of the open market economy,global socio-economic and other factors alsobecome important considerations forfinalization of a budget.

4.1.2 The detailed estimates of expenditure areprepared by the Heads of Offices andControlling Officers according to their

68

assessments of requirements for the ensuingyear, keeping in view the actual expenditure inthe past, current year’s trends of expenditure,any new decisions taken by the Governmentwhich will have a bearing on the fundingrequirements etc. The following paragraphsbring out broadly the process of estimationand their collation which leads to thepreparation of Budget Estimates.

4.1.3 The estimates of expenditure are preparedseparately for Capital and Revenue as aconstitutional requirement and split into Planand Non Plan in keeping with the existingclassification system. The estimates of Planexpenditure are made on the basis of the planallocations approved by the PlanningCommission of India and intimated toAdministrative Departments by the StatePlanning & Development Department.

4.1.4 Budget is prepared by the Budget Division ofFinance Department and approved by theLegislature for one Financial Year. Drawing ofdetailed estimates of expenditure and receiptsby various departments of the Governmentand their subordinate authorities and theirinclusion in the budget has, therefore, to be atime bound programme drawn in a mannerthat the approval of the Legislature becomesavailable before commencement of theFinancial Year.

4.1.5 Considering the importance of timelycompletion of the budget it is highly essentialthat there is complete coordination betweenvarious Departments and other agenciesinvolved in this exercise aiming at making theproposed budget document a meaningful

69

reflection of all the envisaged Programmesand Activities to be accomplished within thedefined period of time. The estimation has tobe as accurate as possible to be actualizedduring one year. Not only that, it should alsoreflect full details of the expenditure inputsand expected income. The budget for a yearis an action plan for the Government to beimplemented by its field formation. Anyambiguity in details of a Programme/Activitiesand financial provision made therefor, maycause delay in implementation and thushamper accomplishment of the envisagedobjectives.

4.1.6 The Departments responsible forDevelopmental Planning follow a different timeframe for completing estimation of theirfinancial requirements for implementation ofidentified Developmental Programmes. Theresult is that the estimates in respect of thisimportant component of a budget are notreflected in detail and in a transparentmanner. The estimates or outlays, as theseare called in planning terminology, areprovided in the budget as lump sumprovisions and that being so, these are notdirectly available for operation to theimplementing agencies even after the budgetis approved by the Legislature. Suchprovisions are subsequently broken intoProgrammes and Activities by the Planning &Development Department through theinstrument of executive orders. The genesis ofthe budget law that the Government can incurexpenditure out of public funds only with theapproval of the Legislature, who accord suchan approval for specific purposes to beaccomplished within specified appropriationand time frame, is diluted to this extent.

70

4.1.7 Attempts have been made to develop acomplete co-relation between Plan and Non-Plan budget estimates. The structural frame ofthe budget or pattern of accountsclassification in force at present with a legalbacking is a step in this direction. Whilerecognizing the need for uniformity in thebudget structure it also gives flexibility to theGovernment who are authorized to modify,introduce or delete any Sub-Minor andDetailed Heads, which in essence are theActivities and basic expenditure inputsrespectively under a Minor head, which is aProgramme. The only requirement, therefore,is effective implementation of the presentscheme of classification which calls for realcoordinated effort between Planning &Development and Finance Departmentscharged with the responsibility of budgetformulation.

4.1.8 Every Developmental Programme has twocomponents, viz committed and expansion.The details of committed expenditure are byand large, firm and there should be no reasonto bring about major modifications in suchestimates during a budget period. Thisyardstick can be equally applied to expansionprogrammes as well, provided estimatescovering these components of the budget areworked out thoughtfully. At the micro level,therefore, rigidity rather than flexibility shouldbe the norm for budget formulation and itsimplementation more so when the period to becovered in these processes is only a year.

4.1.9 Even in decentralized planning process withpeople’s participation the above approachshould be followed. The estimates can be

71

finalized according to a time schedule, to helptheir incorporation in the budget at anappropriate time so that appropriations areobtained from the Legislature well beforecommencement of a Financial Year and thesebecome straight away available to theimplementing agencies. Sometimes ithappens because of some exigencies that thePlan size and Scheme/Programme detailsremain undecided causing difficulties for theirinclusion in the budget. Such a situationshould, however, arise only in respect of newProgrammes or Expansion Component of aDevelopmental Plan. Estimates in such casesalone should be provided in the budget inlump sum to be broken into various details atthe earliest possible opportunity andLegislative approval obtained through RevisedBudget at the appropriate time. In short,inclusion of lump sum provisions in abudget has to be exceptional and notfollowed as a rule.

4.2.0 Budget Calendar

4.2.1 There can’t be any set dates as such to befollowed as ‘Budget Calendar’ but broadlyspeaking, since while preparing budgetestimates both in respect of receipts andexpenditure for the ensuing financial year, theactuals of first six months of the ongoingfinancial year are also to be indicated, theexercise at the level of Heads of Offices andControlling Officers can conveniently startsoon after the accounts for Septemberbecome available, say by 5th of October. Theestimates alongwith budget notes then can beconsolidated at the level of HoDs/otherControlling Officers by 15th of October and

72

simultaneously forwarded with detailed notesto the concerned Administrative Departmentsand the Finance Department latest by 20th

October. Administrative Department may carryout due scrutiny of the estimates and forwardtheir detailed recommendations to the FinanceDepartment not later than 10th November sothat after their examination in the FinanceDepartment, the discussions on theseproposals with HoDs/other Controlling Officersand Administrative Departments are started inthe Finance Department soon after opening ofoffices in Jammu and the numbers crunchedfor incorporation in the Budget. Samecalendar can be followed, by and large, forpreparation of plan proposals and the taskof numbers crunching in the Planning &Development Department can beaccomplished by end December.

4.2.2 Detailed guidelines about the Calendar andfor filling of the requisite forms are circulatedby Finance Department sufficiently inadvance, to serve as a reminder, as also forhighlighting the latest requirements for theensuing budget.

_________________________________________

73

Chapter 5

ESTIMATES OF REVENUE RECEIPTS

5.1.0 General

5.1.1 Revenue accrues to the State Governmentfrom tax and non-tax sources. Receipts alsoaccrue to the States by transfer of resourcesfrom the Central Government.

5.1.2 Whatever may be the source, revenuerealization has to be controlled either byregulatory orders of the Government or lawspassed by the Legislature and in force for thetime being. Thus, every item of revenue has asanction for collection.

5.1.3 A source of revenue is called effective if itdoes not result in large scale accumulation ofarrears and also if its cost of administration isreasonable. It is highly essential that revenuereceipts are recovered promptly and notallowed to fall in arrears. If the arrears cross areasonable time limit, the situation becomesabnormal calling for detailed analysis of all therelevant facts and figures. Managementlapses may also be responsible for suchaccumulation of arrears calling for appropriateaction by the concerned AdministrativeDepartment who will submit a report in thisbehalf to the Finance Department. In certaincases it may also be prudent to order recoveryunder Land Revenue Act.

74

5.2.0 Revenue Collection Officers

5.2.1 The authorities empowered to collect revenueaccruing to the Government are identified andnotified by the Competent Authority(Administrative Departments in consultationwith the Finance Department) from time totime. For example, Commercial Tax Officersfor collection of General Sales Tax and VAT,Forest Officers for collection of Forest Royaltyor Executive Engineers/Doctors for collectionof user charges from consumers. RevenueCollection Officer is adequately empowered tomake recoveries as and when these fall due.These Officers work under the supervisionand control of respective Controlling Officers.

5.3.0 Estimating of Revenue receiptsRole of Revenue Collecting Officer

5.3.1 It is Revenue Collecting Officer who canassess revenue receipt estimates for a yearwith reasonable degree of accuracy andtherefore working out of these estimatesshould be initiated at this level. However,revenue collection targets can also beassigned to him by higher / controlling officers.

5.3.2 Revenue receipts broadly fall into followingtwo categories namely: -

01 – Fixed charges

02 – Fluctuating charges.

Fixed charges are those, which becomerecoverable at fixed rates from year to yearexcept when these are changed as a result ofmeasures undertaken for additional resource

75

mobilization or due to any other reason.Fluctuating charges on the other hand arerelated to the volume of operations andrationalization at the applicable rates.

5.3.3 The basic records should be maintained bythe Revenue Collecting Officer in a manner sothat these can at any time indicate how muchis recoverable and from whom. These recordsobviously form basis for formulation of theestimates to be recommended for adoption ina year’s budget at this level. While doing so,due regards has to be given to the followingfactors: -

01. Estimates have to be calculated on thebasis of the existing duties and taxes,rates and fees etc sanctioned by thecompetent authority and in force forthe time being. Care has to be taken toensure that these estimates are notworked out on the basis of theproposed increases/decreases or anyrationalizations in the existing rates asmay be considered necessary by theCollection Officers. But at the sametime it also needs to be ensured thatno trader, consumer or user is left outwhile making assessment of demandof revenue.

02. Since the budget is prepared on cashbasis projecting the estimates ondemand without considering how muchof this demand can be realized in cashwill not be correct. The estimatesshould be based on the considerationas to what is actually expected to bereceived in cash. But, care also needs

76

to be taken that the assessed demandis not allowed to fall in arrears unlessthere are cogent reasons to make anyconcession in any particular year withthe approval of Competent Authority.The left over demand should, however,be recovered in the first opportunityand not allowed to accumulate foryears. In a situation, where resourcesare scarce, there aught not to be alarge mismatch between assesseddemand and actual collection. If suchlaxity is allowed, it is likely to createdifficulties in budget implementation asa whole.

03. In case of fixed charges, the estimatesshould be based on actual demand. Incase it is not possible to recover theactual demand in full, the recoveryshould be estimated reasonablyexplaining the reasons for the shortfalls if any and the same should bemade good in the succeeding financialyear.

04. Total amount of outstanding arrearsshould be worked out thoughtfully sothat a clear picture of dead andrecoverable arrears emerges. Deadarrears are those, which have no doubtfallen due for recovery under theexisting rules and regulations butcannot be recovered due to onereason or the other. Review of arrearsshould be constantly done and thecases where recoveries are doubtfulshould be referred to the ControllingOfficer for write off or for taking any

77

other appropriate action by thecompetent authority. It may also benecessary to investigate as to howthese arrears have becomeirrecoverable for application ofcorrective measures and taking ofrequired administrative action.

05. Past actuals also provide an importantclue for projecting future estimates.Care has, however, to be taken thatsuch actuals are not as such taken asa base for future estimation. Theseactuals should be analyzed and itshould be seen as to how far othercircumstances responsible forcollections in the earlier years arelikely to remain similar before futureestimates are based on them.

06. Effects of any special factor should notbe ignored, special factors play animportant role in estimating. Thesefactors among others include naturalcalamities, which throw an adverseeffect on the prospects of revenuerealization. The favorable weatherconditions yielding bumper crop canraise the hope of better collectionsduring the forecast period. Thus, it isnecessary that justification for everyitem is fully scrutinized before it isincluded in the forecast.

07. Estimation should be based onexpected gross realizations in cash.Gross realization means expectedrecoveries without accounting for

78

refunds, if any, that may have to bemade during a forecast period.

08. Refunds have to be provided forseparately under a head of accountsubordinate to the Major Head ofAccount relevant to the source ofrevenue. In certain cases accounthead “Refunds” is provided under eachMinor Head of a Major Headdepending upon the magnitude ofanticipated refunds. For clarificationList of Major and Minor Heads ofAccount issued by the Comptroller &Auditor General of India should beconsulted and instructions giventherein followed. Refunds are causeddue to various reasons generallybecause of acceptance of appealsagainst the recovery made under theorders of the Revenue CollectingOfficer. It is necessary that quantum ofsuch refunds becomes known forvarious administrative purposes andthus provided for separately. Therecannot be any hard and fast rule forforecasting such refunds, which arethus provided for on the trend of pastactuals.

09. As a matter of prudence, in the case ofcost recovery of user charges for theservices provided, there should be astanding formula of upward revision ofcost of user charges by 10% everyyear on cumulative basis so that nopublic outcry is faced in revising suchcharges, which can be a case when asubstantial upward revision is effectedafter a long gap. While such a step

79

ensures avoidance of public criticism, italso yields scope for buoyancy in non-tax revenues of the state.

10. In respect of receipts of themiscellaneous nature, such as saleproceeds of unserviceable deadstocks, old machinery, old tools andplants, old stocks of newspapers etc,past actuals are generally a guidingfactor for forecasting.

11. It can happen that recoveries undertwo or more separate account headsare made through a common process,such as electricity consumptioncharges (non-tax revenue) along withElectricity Duty (tax revenue). In suchcases, estimates and collections haveto be separately classified underrespective Account Heads.

5.4.0 Estimates Of Revenue receiptsRole of Controlling Officer

5.4.1 The basic proposals drawn by a RevenueCollecting Officer are subject to furtherexamination at the level of the ControllingOfficer. They are finally settled in the FinanceDepartment after obtaining approval of theState Cabinet wherever necessary. Suchcabinet approvals are generally involved in thefollowing cases:-

(01) When there is difference of opinionbetween Administrative Department andthe Finance Department which can havesubstantial effect on budget forecast.

80

(02) When the current rate structure isproposed to be rationalized and ormodified.

(03) When new measures are proposed tobe implemented for augmenting therevenue receipts of the Government.

5.4.2 While, a Collecting Officer has limitedjurisdiction in forecasting revenue estimates,the Controlling Officer is fully responsible forcollections falling due to the Government inrespect of a Function which has been put toits charge. Such an authority has, therefore,an important role in finalizing the revenuebudget estimates. In the process ofexamination of the proposals of the CollectingOfficer, the Controlling Officer may have tomodify these estimates on the basis of latestpolicies, decisions and improved / betterinputs available with him. The proposals havealso to be checked at this level with referenceto the previous actuals. In this way, it isnecessary for the Controlling Officer to satisfyhimself about the reasonability of theproposals received before submitting these tothe apex level for final adoption. Such anexercise provides the Controlling Officers withyet another opportunity to review the workingof their Departments. It can also be found asto how far it is necessary to revise orrationalize the existing structure of a source ofrevenue for various reasons. It has to benoted that such revision/rationalizationschemes have not to form part of the routinebudget proposals. These schemes with fulljustification and analysis need to be submittedto the Government separately as these formpart of additional resource mobilization tobe used for developmental purposes. The

81

Controlling Officer thus provides an importantlink between policy framing authority and theimplementing agency.

5.5.0 Comparative role of authoritiesconnected with Revenue Budgetformulation

5.5.1. Development of a revenue budget forecast inthe manner as described revolves arounddifferent authorities as under:-

RevenueCollectingOfficer

ControllingOfficer

Administrative/Finance Dep-artment

Legislature

Maintenance ofdemandRegisters.Forecasting cur-rent demand onexisting ratesEstimatingrecovery ofarrears dete-rminatiion ofirrecoverablearrears with rea-son there-for

Modifying fore-casts of revenuecollectingofficersSuggestingRationalizationof existing rates.Recommendingnew measuresTalking a viewon non revcove-rable arrearsand recommendits write off etc.

Adoption of fore-casts.Adoption ofRationalizationand newproposals.Decision onirrecoverable arr-ears.Adoption ofadditionalresourcemobilization(ARM) proposals

Approvals to therationalization andnewproposalswhereverrequired.

5.6.0 Tax Revenue

5.6.1 The tax revenue broadly falls into the followingtwo categories: -

01 Taxes on Property and Capitaltransactions.

02 Taxes on Commodities and Services.

82

5.7.0 Non-Tax Revenue

5.7.1 Non-Tax revenue accrues to the State as aconsequence of undertaking variousadministrative and socio-economic Functions.These receipts also become due to theGovernment from recovery of interest onloans and advances given by it from time totime, besides, dividends from investmentsmade in Government Companies or whileparticipating in joint ventures. The non-taxrevenues are, accordingly grouped into thefollowing categories:

01 Fiscal services02 Interest receipts, dividends and profits03 Other Non-Tax revenues

Individual Functional Heads of Account havebeen provided under these sub-sections asindicated in the ‘List of Major and Minor Headsof Account’ as published by the Comptroller &Auditor General of India.

5.7.2 In the present day dispensation, theGovernment generally operates as a facilitatorfor the over all socio-economic growth,besides, maintenance of law and order andundertaking various regulatory measures. Inview of this, commercial aspects of variousFunctions are left to the public sector. Trendof privatization is emerging very fast. Thereceipts from the functions left to the StateGovernment’s direct involvement are not,therefore, substantial. Nevertheless,estimation of whatever receipts accrue fromsuch activities provides a full opportunity tounder take review of implementation of theprogrammes under various Functions. Say for

83

example, admission fee from the schools canindicate coverage provided to children forimparting of education. Sale of out patienttickets in a hospital can create data fordetermination of adequacy or otherwise ofproviding of health coverage. Working out ofsuch estimates should not therefore be takenas a routine. Generally, such forecasting isdone with reference to the trend of pastactuals. A better approach would be to relatethese to the targets and their actualization,which can provide a far better opportunity tofind out effectiveness of implementation of theProgrammes where from such receipts,accrue to the Government.

5.7.3 In certain cases it becomes necessary for theState Government because of itscommitments to the public, to take upProgrammes, essentially of socio-economicnature, receipts where from are notcommensurate with the expenditure incurredthereon. In other words, such a short fall in thereceipts expected from a Programme take theform of subsidies, such as subsidies given onthe sale of agricultural inputs or the supportprice for purchase of various products. Thereceipts from such Programme do not formpart of the receipt budget. These programmesare either implemented by the Government orby other autonomous agencies generallyowned by the Government. In caseimplementation is directly with theGovernment, receipts from these activities aretaken as deduct receipts under the relevantFunctional Heads so that net effects ofexpenditure becomes visible at a glance. Thishas to be on account of the subsidies only butsome times other factors also contribute tosuch excess expenditures which, therefore,

84

call for an analysis of all relevant factors forapplication of necessary correctives. Whenthese functions are left to be undertaken byautonomous organizations, the component ofsubsidy carefully worked out becomespayable to them.

5.7.4 Receipts from such activities when estimatedneed to be worked out, apart from otherthings, with reference to the envisaged targetof sales/procurements. If such parameters arenot enforced cautiously, the effective controlover grant of these subsidies may slip andthus cause avoidable burden on the stateexchequer.

5.7.5 Massive assistance for implementation ofvarious Programmes with social orientation isreceived in kind from various national andglobal bodies. Sale proceeds of such materialobtained by the Government in accordancewith the terms and conditions attaching tosuch assistance need to be forecast andprovided for in the budget distinctly under therelevant Functional Head of Account.

5.7.6 Although the forecasts of Non-Tax Revenuesare generally based on current demand butsome times arrears also get accumulated.Such activities, generally include interestreceipts, dividends and profits, policedeployed for dealing with law and order andfor security requirements of othergovernments and private parties, sale ofgoods/ manufactured by the prisoners, testingfees, sale of stationery and gazettes, rent ofgovernment buildings, contributions towardsleave and pensionary benefits, receipts fromwater supply schemes, recoveries from localbodies, sale of agriculture inputs, sale of

85

timber and other forest produce, receipts fromirrigation schemes, receipts from sale ofpower, rent from industrial estates, sale of livestock, poultry, fish, auction proceeds ofcondemned vehicles, dead stock etc. In allsuch cases, while handling forecasting of therecoveries it becomes necessary to take intoconsideration the quantum of arrearsrecoverable during a budget period. Theexercise can also provide an opportunity toanalyze reasons for accumulation of arrearsfor the required administrative action. Deadarrears may have to be written off for recordedreasons by the authority competent to do sounder rules and regulations prescribed for thepurpose. Such sources are major non-taxrevenues and forecasting of income therefrom has to be done objectively. That is,targets have to be determined according tothe existing installed capacities and the levelof their utilization on a most scientific basis.The estimation from these sources of revenuedoes not have to be adhoc or exclusivelyrelated to the past actuals. In other words, wehave to find out potentials and how these canbe optimally achieved. Better tapping of thesesources can also contribute to bringing aboutimprovements in the general economic healthof the State.

5.7.7 Stocks are also created by undertaking someof the activities, for example, goods producedin jails and as a result of trainings imparted invarious industrial and social welfare fields.The stocks are also created in public worksdepartments. Accumulation of such stocksresults in blockage of capital, which is notdesirable. Forecasting of receipts under suchrelevant functions should therefore, take intoconsideration reduction in level of stocks and

86

keeping these within permissible limit. Buildingof unnecessary inventories results inavoidable costs, as these have to bemaintained involving provision of space,security, accounting etc. Thus such of thestocks, which should not be retained afterproper survey, need to be disposed offfetching whatever money is possible. Holdingof stocks of whatever nature beyondprescribed or reasonable limits is a financialirregularity.

5.8.0 Grant in aid from Central Government

5.8.1 The most important source of non-taxrevenue, which accrues to a State, is onaccount of Grants-in-Aid from CentralGovernment. These grants mainly comprise: -

01 non-plan grants;

02 grants for state plan schemes;

03 grants for central plan schemes;

04 grants for centrally sponsored planschemes,

05 grants for special plan schemes; and

06 grants for various individualprogrammes.

In short the Central Grants are either for non-plan or plan purposes. The non-plan grantsare given by the Centre to the State pursuantto the provisions made in the IndianConstitution and rule and regulations madethere under. Bulk of these grants is based onthe recommendations of the Finance

87

Commission. Some of the grants comeoutside these recommendations also likesubvension from Central Roads Fund, Grantsfor Relief and Rehabilitation of Displacedpersons, grants in lieu of pensioncontributions and other grants. On the otherhand, plan grants are given to the states bythe Central Government on therecommendations of the PlanningCommission of India. The Ministries inchargeof Central Plan and Centrally Sponsoredscheme also release grants to the states tocover expenditure on implementation of suchProgrammes entrusted to them from time totime.

5.8.2 Whereas the Statutory Grants based on therecommendations of the Finance Commissionare ear-marked on five yearly basis, thequantum of plan grants is fixed on annualbasis. The grants for purposes other thanthese are based on annual requirements ofthe states for implementation of theprogrammes of national importance.

5.8.3 Finalization of forecasts and other data, onwhich the Union Government or the respectiveauthorized agencies base theirrecommendations are compiled in the FinanceDepartment who generate these details withthe help of various field formations. In order toget the optimum benefit of the said scheme oftransfer of resources from Union to the State,it becomes necessary for the Finance andother Administrative Departments to keepthemselves abreast with the: -

01 details of various entitlements fromthe Union Government;

88

02 details of the Central Plan schemesand the Centrally Sponsored Planschemes, which are available fromvarious Ministries of the UnionGovernment; and

03 procedures to be followed forclaiming transfer of resources fromthe Union Government on variousaccounts.

5.8.4 These are thus, special type of budgetingprocesses relevant to the subject, which arenot covered by general rules and regulations.The quantum of receipts expected on thebasis of the recommendations of the FinanceCommission is determined on the forecasts ofreceipts and expenditures and other datacompiled in accordance with the guidelines ofthat body and are spread over a period of fiveyears, which are not reviewed during thisperiod. For receipts estimates on account ofGrants for implementation of DevelopmentalPlans, the exercise is made by preparation ofa financial resource statement for Planfunding. Such a forecast adopted for fiveyears is reviewed annually. Sometimesmidterm appraisals are also undertaken.

5.9.0 Additional Resource Mobilization

5.9.1 Rationalization of the existing sources andidentification of new measures to be taken upfor additional resource mobilization has to behighly thoughtful exercise because theseproposals not only effect the economy of theState but also should carry with it publicacceptability as far as possible. The additionalresource mobilization proposals forming partof the budget can be both in the tax and non-

89

tax categories of revenue receipts. Any suchgood measure has the following maincharacteristics: -

01 should be well manageable;02 should have buoyancy i.e. potential

for a good sustained growth;03 should involve minimal reasonable

administrative costs;04 should have public acceptability;05 should be in keeping with deference

for economic and socialgoals/commitments at the State andNational levels.

5.9.2 In case the new measures fall under TaxRevenue, these should, besides other things,help also in reduction in disparities betweenthe standards of living of different sections ofpopulation. Increased income accrues as aresult of investment made by the Governmentinto the economy by way of implementation ofDevelopmental Plans. If a portion of thisadditional income is withdrawn through theprocess of taxation for reinvestment inDevelopmental Programmes it has to beviewed as reasonable. Occasion for criticizingsuch measures arise only when these areharsh and cause genuine difficulties for thetax payers. Evolving of tax measures bothdirect and indirect has to be a highlythoughtful exercise so that these besidesmeeting all the economic parameters are wellabsorbed by the public who have to bear theirbrunt.

5.9.3 Taxation becomes all the more difficult andtricky for the State Government because ofthe nature of the sources left to its jurisdictionunder the present Constitutional dispensation.Whereas, the sources available to the Central

90

Government have more buoyancy, those leftto be tapped by the State are inelastic. Notonly that, in the present scenario of openmarket economy and liberalized trade andcommerce it becomes equally necessary thatthe taxes are not levied in a manner that willhamper facing of competitive conditions by thelocal manufacturers. It is, therefore, essentialthat reasonably good data banks are createdby the Taxation Department so that any newmeasure is carefully linked to such availablefacts and figures. Effects of taxation need tobe kept under constant review by thisDepartment for application of necessarycorrectives as and when required.

5.10.0 Transfer of the resources from Stateto Local Self Governments

5.10.1 There are some sources of tax revenue, whichin essence are within the domain of LocalBodies but for certain administrative reasonsare levied and collected by the StateGovernment. Sometimes such taxes arelevied by the Local Bodies and collected bythe State Government. Such Local Body taxesgenerally take the form of entertainment tax,octroi, non-judicial stamps and urbanimmovable property tax. Whereas some ofthese taxes are shared between State andLocal Self-Government, some are to bepassed on to these Bodies, after deduction ofcollection charges. Such arrangements are,however, regulated according to the mutuallyaccepted terms and conditions. Any way,proceeds from these taxes have to bebudgeted for distinctly. Similarly, accounts inrespect of the payments made to the LocalBodies have also to be maintained separately.The Major Heads provided for the purpose in

91

the List of Major and Minor Heads of Accountcarry specific Minor Heads, generallycaptioned “deduct payments to the localbodies.” Sometimes, these collections arealso passed on to these Bodies as grants-in-aid to cover the recovery of taxes and otherrevenue for and on their behalf or for anyother purpose(s).

5.11.0 Over all view of Revenue Receipts Budget

5.11.1 Deducing from what has been stated in theforegoing paras, forecasting of revenuereceipts can be projected as under: -

I & E = Income & Expenditure, P & CT =Property & Capital Transaction, C&S=Commodities & Services, D & F =Dividends and Profits, GS = GeneralServices, SS = Social Services, ES =Economic services GIA = Grants-in-aid.

___________________________________________________

Revenue Receipts

Tax Revenue Non Tax Revenue

TaxesOn I&E

Taxes onP&CT

PP&CT

Taxeson C&S

FiscalServices

InterestD&F

Others

GSSS

SS SS GIA

92

Chapter 6

ESTIMATES OF EXPENDITURE WITHINREVENUE ACCOUNT

6.1.0 Estimates of expenditure within RevenueAccount are also described as estimates ofordinary expenditure. Generally speaking, theserepresent committed expenditure i.e. thosenecessary for governance like running ofadministration and maintenance of law and ordermachinery. Maintenance of the level ofdevelopment already reached as a result ofundertaking of various DevelopmentalProgrammes from time to time is also taken asordinary expenditure. These types of ordinaryexpenditure under every Function of theGovernment is in the form of committedexpenditure and constitutes an importantcomponent of Expenditure within RevenueAccount. Another group of items of expenditurefalling in this category comprise general surveysand investigations, trainings and the like, whichthough necessary for developmental process butdo not result in creation of assets or reduction inrecurring liability. The Expenditure within theRevenue Account has, therefore, itspredetermined pattern and has to be allowed areasonable growth in relation to inflation in costs.

6.2.0 Administrative levels for estimation

6.2.1 Estimation of expenditure within the RevenueAccount starts from the grass roots level of theadministrative set up. The authority who has toimplement a Programme can alone be the bestjudge of its financial requirements, particularlywhen these are need based. For purposes of

93

accountability and putting the estimation made atgrass roots level in the general frame of thebudget, it is necessary that the forecasts made atthis level are scrutinized at higher levels also.The following levels of administrative set up areinvolved in expenditure forecasting: -

01 Disbursing officer

02 Drawing and disbursing officer

03 Controlling officer

04 Head of the department

05 Administrative department

06 Finance Department (Planning &Development Department in respect

of Plan expenditure)

6.2.2 Drawing and Disbursing Officers are placed indifferent areas and make drawals from therespective treasuries for disbursement withintheir jurisdiction. There are more than oneDrawing and Disbursing officers under thecontrol of a Controlling Officer. The Head of theDepartment exercises control over his ControllingOfficers. Administrative Departments, whoformulate expenditure policies, exercise controlover their Heads of Departments. The FinanceDepartment exercises financial control over allthe Administrative Departments.

6.2.3 Flow of data for formulation of budget moves inthe same manner. One Head of the Departmentlooks after one Function. Sometimes, however,more than one Head of Department control aFunction and for this purpose jurisdictions aremarked on geographical considerations. It is alsopossible that different aspects of the sameFunction are attended to by more than one

94

Department. Like, in case of Education,operation of Educational Institutions are underDirector of Education, the works relating theretoin the form of up keep of assets as also theircreation are carried out by the Public WorksDepartment and grant of education loans ishandled by some other Department. All theseDepartments, however, work out the estimatesand book the expenditures using the FunctionalAccounts Classification prescribed for theFunction. This equally holds good for otherFunctions. There has, therefore, to be closecoordination between different Departmentsperforming a Function. All of them prepare theestimates of their requirements, which areconsolidated in the Finance Department.

6.2.4 Every agency connected with forecasting of thistype of expenditure has to bear in mind thatestimates are to be drawn as accurately aspossible. Over budgeting is full of risks andexcess in an estimate is as much a financialirregularity as excess in expenditure. This isparticularly true about the estimates of ordinaryexpenditure, which are of a standing nature. Theexpenditure estimates of this nature provide animportant base for working out Ways and Meansbudget, which is drawn to plan timely and regularflow of cash during the budget year, an importantexercise, because evenness of such a flowthrough out the year is marred by variousconstraints. Faulty estimation can even lead tocash crunches and cause difficulties inimplementation of Programmes.

6.3.0 Components of expenditure within RevenueAccount

6.3.1 The main components of the expenditure withinthe Revenue Account are: -

95

01 Establishment Costs

02 Other Costs

6.3.2 The Other Cost include items like officeexpenses, travel expenses, maintenance andrepairs, tools and plants, machinery &equipment, materials and supplies, drugs &instruments, POL, Rent/Rates and Taxes,grants-in-aid contributions and the like.

6.4.0 Estimates of establishment costs

6.4.1 Establishment Costs comprise Salaries payableto the employees and include allowances. Thisexpenditure input assumes importance becauseit constitutes bulk of ordinary expenditure.Emoluments are given to the employees indifferent forms and according to the extant rules.The Object Of Expenditure Salaries includes: -

01 Basic pay/ Grade Pay

02 Special pay, if any

03 Dearness allowance

04 City Compensatory allowance

05 House Rent allowance

06 Risk allowance

07 Conveyance allowance

08 Washing allowance

09 Personal pay

10 Fixed medical allowance

11 Leave travel concession

12 Interim relief

96

13 Hardship allowance

14 Festival advance

15 Overtime allowance

16 Winter allowance

17 Kit maintenance allowance

18 Medical allowance/Medical reimbursement

19 Sumptuary allowance

20 Rural health allowance

21 Project allowance

22 Basta allowance

23 Cash in lieu of leave salary

24 Charge allowance

25 Officiating pay

26 Contributory Provident fund (employer’scontribution)

27 Pensionary Charges (employer’scontribution)

28 Compensatory allowance/Border allowance

29 Any other allowance

6.4.2 The object of expenditure ‘Salaries’ has not to bemistaken for Wages, estimation where undertakes care of payments to be made to daily ratedworkers irrespective of the periods for which theyare engaged. Wages are not of a standing orderand have not to be included in the Salaries.Similarly, the head Salaries also exclude workersengaged in connection with implementation ofworks and projects. Expenditure on suchestablishment generally termed as WorkCharged Employees form a component of thecost of the individual projects/works and have to

97

be treated as such for budget estimation.Casual/seasonal workers like safayee karamcharies, farm workers, nursery labour, who arepart time/seasonal workers in an office have notalso to be accounted for under Salaries. Insteadtheir cost is a charge on the head ‘Wages’.

6.4.3 The components of Salary as mentioned here-in-before are scale regulated and payable monthlyor on predefined dates. These do not includeTravel Expenses, which are reimbursed (unlesspaid in advance under relevant rule and adjustedsubsequently) to the employees after theyundertake tours under competent orders. Suchcharges are estimated and booked under TravelExpenses, which is a separate Object OfExpenditure. Conveyance Charges paid as partof Salary are accounted for under the head‘Salary’.

6.4.4 Details of estimates under Salaries are workedout on establishment budget forms, which aredesigned in a manner so as to bring out details ofSalary payable. The details are worked outsystematically individual by individual.Anticipated increases in the current level ofSalary by way of increments are also worked outaccording to the prescribed parameters. Theseestimates for Department are consolidated by theHead of the Department. The following are theimportant points, which have to be kept in viewwhile making this exercise:

01 Estimates have to be prepared in respectof the staff strength which standssanctioned for the Department and onthe approved rates of pay andallowances. No revision in such strengthand rates should be assumed even if thesame is strongly expected.

98

02 The estimates should take care of payand allowances expected to be drawnduring a budget year.

03 In case of vacant posts, the estimatesshould be proposed at the minimum ofthe scale of pay attached to such posts.

04 When an employee is on leave and asubstitute is engaged in such temporaryvacancy, provision should be made forboth leave salary payable to the originalincumbent as also the emolumentspayable to the substitute appointed inhis place, keeping in view also theperiod of leave sanctioned.

05 Since the intention is that the estimatesshould be as accurate as possible,provision for an employee working on ahigher post but placed in a lower scale ofpay should be made in the lower scaleonly. The implication of putting such anemployee in the higher grade during thecourse of a year gets reflected in therevised estimates for the year.

06 Salary for the month of March is drawn inApril. Therefore, establishment budgetestimates of a financial year areprepared from March to end of February.

6.4.5 Compilation of the establishment budgetprovides an opportunity for reviewing the staffstrength sanctioned and that in position forimplementation of an Activity. The Head of theDepartment should make this review so thatsurplus staff if any is identified and submit areport in this behalf as part of his budget

99

proposal to the Administrative Department whowill decide about the steps that should be takento deal with the surplus staff or arrangingadditional posts as per requirements inconsultation with the Finance Department. Thesecosts, if not, properly controlled becomeunsustainable. Down sizing of administration is acomplicated problem because it generally leadsto litigations. Once surplus staff is identified it canhelp in evolving suitable plans acceptable to theemployees for its down sizing by way ofadjustment in positions where it can beproductive. Such identification can also make theplanners and policy framers conscious of theavoidable expenditure incurred on the surplusstaff.

6.4.6 The staff particularly in respect ofSchemes/Activities, which form part ofexpenditure within the Revenue Account, shouldbe need based. The fact also remains that thegovernance is generally committed to providinggovernment jobs to educated unemployed youth.Attempt should be made to meet suchcommitments by resorting to the placements inthe Programmes/Activities, which can absorbsuch costs. Such approach should be adoptedfor plan formulations in respect of meeting theneed of infrastructural development in differentsectors. While doing so it becomes equallynecessary to adjust the already identified surplusperson power. Care has also to be taken that inthis process, the Developmental Plans do not getover loaded by establishment costs which canhave the implication of prolonging gestationperiods leading to cost over runs.

100

6.5.0 Estimates of other fixed costs

6.5.1 Estimates of fixed charges for running an officeshould be based on the average expenditureincurred during the past three years. In case ofitems of expenditure, which are governed byregular sanctions, such as engagement of labourand their rate of wages should be the guide forestimating financial requirements under theObject of Expenditure ‘Wages’.

6.5.2 Maintenance and Repairs of the existing assetsis also an important component of other fixedcosts. Assets are created with heavy investmentsand it will be only prudent to maintain these in aproper form. Generally, it has been observed thatthe assets are not kept in good condition.Estimates under the Object of ExpenditureMaintenance and Repairs need, therefore, to bedrawn carefully which may interalia, involvesurveying the assets and finding out their actualmaintenance requirements. There is a practice ofevolving norms for maintenance of assets, whichare approved by the competent authority beforeadoption. Generally such norms are fixed aspercentage of the capital investments. Suchnorms no doubt facilitate taking of decisions withregard to adoption of estimates under this objectof expenditure; the system has some inherentdeficiencies. Norms may not necessarily meetthe actual fund requirements for maintenance. Incase of newly created assets maintenancerequirements may not be substantial and urgent.Working out estimates in such cases on thebasis of the approved percentages of capital costcan cause over budgeting. Similarly, the capitalcost in respect of old assets is not such whichcan provide a suitable base for assumption ofmaintenance and upkeep estimates. The best

101

approach, therefore, is to evolve themaintenance estimates in two components i.e.actual need for upkeep of an asset based onproperly organized surveys, and routinemaintenance and upkeep requirements, whichcan be assumed with reference to the normsevolved on scientific grounds. These estimatesare worked out by Public Works Departmentseparately in respect of each Function. This willhave the advantage of earmarking funds forindividual Functions and watching their utilizationwith reference to the purpose for which these aregranted. The funds made available in thismanner should be made known to the respectiveFunctional Departments to enable them to pressof their utilization on maintenance of their assets.

6.5.3 Some of the Objects of Expenditure under OtherCosts are stock backed like Materials andSupplies, Tools and Plants, Machinery &Equipment, Clothing and Bedding, Furniture andFixture, Uniforms, POL, Rent/Rates & Taxes,Drugs & Instruments and the like. Estimatesunder these heads have to be adopted carefullybecause the user Departments have a tendencyto over estimate their requirements. Every suchbudget estimate, therefore, be backed bysufficient data and information. Every proposalfor adoption of these estimates should justify theestimated requirement with reference to thestocks already held, details of the assessment forthe year, basis taken for judicious assessment,estimated cost of the assessment madeindicating the source of the rates adopted for thepurpose. Inventory created in the process ofthese purchases has necessarily to be keptwithin reasonable limits as otherwise, there willbe blockade of capital, a serious financialirregularity calling for the required administrativeaction. At the same time, these requirements

102

should also not be under estimated particularly incase of consumables like drugs provided to theneedy through hospitals and dispensaries orclass room aids needed by the educationalinstitutions. Such under estimates eventuallybring disrepute to the Government, which is not agood situation.

6.5.4 Grants-in-Aid also constitute an importantcomponent under other Fixed Costs. These aregiven to Non Government Organizations (NGOs)to facilitate taking up of such of the Activities,which are normally supposed to be performed bythe Government as a part of their socio-economic commitments. Every Departmentconnected with payment of grants prepares andadopt a set of rules to regulate such payments.These Departments also maintain list of theorganizations that are given such grants.Estimates under this object of expenditure haveto be based on entitlements worked out inaccordance with the rules and regulations.Generally, this assistance is given to the NGOsas re-imbursement of expenditure alreadyincurred by them. That being so, it becomesnecessary to ensure that utilization certificates inrespect of the earlier grants are taken intoconsiderations while framing such proposals.Every Department reaches a level ofdisbursement of grants and any estimatescrossing this level beyond a reasonable limithave to be supported by full justification. TheNGOs receiving grants need also to be inspectedby the Designated Authority under relevant rules.These inspection reports should be taken intoconsideration while working out estimates underthe head Grants-in-Aid.

6.5.5 Institutional finances are also available to NGOsfor funding of their Schemes/Activities towards

103

accomplishment of their declared objectives.Availing of such funding facilities has to beencouraged in the interests of the overalleconomic development of the State. Forecastingrequirement of funds for grants should thereforetake into consideration the efforts made by anNGO in channelizing institutional finances into itsactivities.

6.5.6 In view of this, estimation under Grants-in-Aidsshould be based on: -

01 rule and regulations governing givingof GIAs,

02 utilization of the grants released earlier,

03 inspection report of the DesignatedAuthority under GIA rules,

04 efforts made in the area of pumping ininstitutional finances into its activities bythe organization claiming grants.

6.5.7 Interest obligations in respect of debts raised bythe Government internally and externally fromtime to time are yet another important charge onexpenditure within the Revenue Account. Theseestimates are worked out by the authorityrequired to maintain accounts of the loans raised.These loans are raised and received by theFinance Department who has therefore, tomaintain their accounts. Interest liability need tobe worked out in respect of every individual loanin accordance with the terms and conditionsattached thereto. The estimates have also to bereflected accordingly in the budget. The quantumof funds to be received or repaid during a budgetyear are known in respect of the loans likeMarket Borrowings, Loans from FinancialInstitutions, Loans from Central Government andthe like. The estimate of interest liability for such

104

loans has to be worked out accurately. In case ofcertain loans like Ways and Means advances(overdrafts) the estimates have to be forecast onthe basis of the envisaged level of inflow andoutflow of such over drafts during abudget year, which varies even on day to daybasis depending upon liquidity of theGovernment. The estimates on this accountshould, among other things, be also related tothe previous trend.

6.5.8 Generally, management of debt obligations andworking out of budget estimates related thereto istaken as an accounting problem. Theseestimates are not by and large analyzed at thelevel of their adoption. Since the debt servicingconstitutes a bulk charge on the expenditure,utmost care has to be taken while working outand adopting its forecasts. Such an exerciseprovides an opportunity to find out as to whatextent the available resources from Public Debtshave been tapped and whether their servicing isregular. Like in the case of Unfunded debts(GPF/CPF) it can be found as to what extentcoverage of such schemes has reached orwhether the loans available for Central PlanSchemes and Centrally Sponsored Schemeshave been raised in full. Short falls in availabledebt raising or their irregular servicing can causetremendous adversities in the financialmanagement and upset the whole plan, presentas well as future.

6.5.9 Subsidies borne by the State for various socio-economic purposes are also importantcommitments of Revenue Expenditure. Subsidiesmay be unavoidable in certain cases becausewith such measures, corrections can be appliedin disparities prevailing in standards of living ofdifferent sections of the Society or these can help

105

in increasing productivity for the ultimateeconomic health of the State. Management of thesubsidies should be highly effective so thatchances of pilferages, if any, are minimized.

6.5.10 Subsidies are in respect ofProgrammes/Activities managed by theGovernment itself or those, which are handled bythe Organizations/ Agencies outside theGovernment including Public Sector Enterprisesfully owned by the Government. In the formersituation, the subsidies represent net of thetrading activities initially provided for in thecapital expenditure sections of the budget. Forexample distribution and sale of agriculturalinputs like fertilizers and pesticides andagricultural tools, implements and equipments,food grains to the poorer sections of the societyetc. The Programmes/Activities-involving grantsof subsidy are also undertaken by PSUs andother autonomous organizations. Some of thePSUs whose operations are not financially viablebecause of one reason or the other or their beingplaced in a situation where they cannot wind upan activity or have to undertake Programmes onthe initiative from or under directions given by theGovernment are also subsidized for suchactivities. In their case the subsidies should beon reimbursement basis. But under certaincircumstances these are paid in advance also.Budgetary support given to the PSUs or even tothe Local Body setups are also types of subsidyas generally these loans are not repaid by them.

6.5.11 Where the Programmes involving grant ofsubsidy are implemented by various fieldformations of the State administrative set up, theforecasts are worked out on the basis of theexpenditure estimates for procurement /manufacture of the items to be distributed,

106

organizational set up for such distribution network and other costs which are then adjustedtowards sale proceeds. The gap between the twois the element of the subsidy. Expenditures andthe receipts thus, envisaged are initially providedfor in the Capital Expenditure Section of thebudget and accounts. The gap (subsidy) is thentransferred to the Revenue Account. In thisexercise care has to be taken that all the costsare provided for which also include interest onthe investments etc so that no element of thesubsidy remains hidden.

6.5.12 As regards subsidy given to the PSUs and otherAutonomous Bodies like Local Self-Governments, Universities etc, every Programmefor which subsidy is given needs a carefulexamination. In case of the Programmes, whichare implemented by these organizations for andon behalf of the Government, subsidizing theexpenditure to the extent of 100% is justified.This can hold good for the expenditurescommitted by them as a result of Governmentpolicy and directives. Where, however, budgetarysupport is given as a general policy it should belinked to the factors, which may eventually helpthese organizations to stand on their ownstrength. In other words, these subsidies need tobe treated as stop gap arrangements availableonly for short period durations. Such subsidiesshould, therefore, be on tapering basis and madesubject to the Organizations’ efforts to improvetheir financial health. In respect of PSUs,subsidies, which are classified as grants, have tobe provided for in the ‘Expenditure withinRevenue Account’ section of the budget underthe appropriate Major Head of Account.

_____________________________

107

Chapter 7

ESTIMATES OF CAPITAL EXPENDITURE ANDPUBLIC ACCOUNT

7.1.0 Estimates of public works

7.1.1 Expenditure on public works is broadly onaccount of Works, Establishment, Tools &Plants, Equipments and Suspensetransactions. Some expenditure is alsonecessitated as a result of undertaking ofsurveys and investigations and designing andplanning.

7.1.2 Works, whether original or of maintenancenature will be either works-in-progress or newworks. The works-in-progress are continuingworks which have been taken up earlier andfor which provision of funds in the budgetbecomes a first charge. New works, on theother hand, are those, which have to be takenup for the first time. These could be in turn,Major Works or Minor Works.

01.Works fall within the ultimatejurisdiction and control of the PublicWorks department like works relatingto construction of roads includingbridges, irrigation canals, khuls, watersupply schemes, power projects etc.and those which relate to otherDepartments such as construction ofschool buildings, medical buildings,culture buildings and other functionalbuildings. All the works have to beclassified under Functional Heads ofAccount to which these relate. Thus,the works are either those, which areinitiated and concluded in the Public

108

Works Departments, or those whichform part of the development of theFunctions under control of differentDepartments.

02. Generally, because of their technicalcompetence, all the worksirrespective of the Functions to whichthese relate are executed by thePublic Works Department and form apart of its budget. Exceptionally,however, works are also allowed tobe executed by the respectiveAdministrative Departments underspecial orders of the Government. Insuch cases the works expenditureestimates form part of the budget ofsuch Departments.

03. Funds for the works belonging to thePublic Works Department asmentioned at (01) above have to bearranged by that Department. On theother hand, funds for the works ofother Functional Departmentsentrusted to the Public WorksDepartment have to be initiallyarranged by those Departments.Once these form part of Public WorksDepartment it becomes responsibility

of that Department to arrange andcontrol funds earmarked for suchpurposes.

04. Works excepting those relating toRepairs and Maintenance and ofpetty nature within the pre-determined financial ceilings are ofdevelopment nature from generalsocio-economic point of view or in

109

certain cases these constituteinvestmental expenditure designed toyield suitable financial returns. Whereas, Maintenance and Repair worksas also Petty Works are treated aspart of non-plan budget, the othersare provided for in the Plan budget.However, since non-plan resourcesare scarce to meet the requirementsof maintenance, a decision has beentaken in recent times to earmark10-15% of capital component of Planof all departments for maintenance.Financial requirement in respect ofnon-plan works for their executionare provided in the budget as anormal course after their examinationlike any other non-plan budgetestimates. The work to be providedfor in the Developmental Plans, onthe other hand, involve examina-tionin depth not only because theseworks have wider financialimplications but also because theseprovide for infrastructures forsustained economic growth of theState. Techno-economic feasibility inrespect of such works has to beworked out meticulously. Once it isestablished beyond doubt that it isnecessary to take up suchworks/projects these form part of theFive Year and Annual Plans of theGovernment and are subjected toscrutiny at higher levels of planningprocess. The Governmentshall also constitute project clearancecommittee(s) for theirrecommendation to the taking ofthese as a part of the state budget. It

110

is incumbent upon the Planning &Development Department toconstitute such committees with theconcurrence of the FinanceDepartment

05. The development works projectshave their own gestation period. It ishighly necessary that these gestationperiods are carefully evolved,determined and controlled. It hasgenerally been seen that projectconstruction periods (gestationperiods) if not adequately controlledcan lead to time and cost over runsleading to the projects becomingunviable though considered to beviable at the time of their formulation.It then becomes difficult toaccommodate these within the pre-fixed Plan Outlays without affectingother Developmental Programmes. Incase of Major Project, PERT andCPM provide better guidelines fordetermination of financialrequirements on annual basis.

06. Some times, projects are funded byexternal agencies, which may, for theState projects include national levelfunding arrangements concluded forsuch purposes, with the CentralGovernment or any financialinstitution like HUDCO providingfunds for housing projects, PowerFinance Corporation, RuralElectrification Corporation for powerprojects, NABARD for agriculture andrural development and the like. Insuch situations it will be necessary to

111

follow the guidelines or theconditions, if any, prescribed by suchauthorities from time to time andaccepted to be followed by theproject implementing agency whileworking out the estimates for abudget period.

07. Some works are of strategic andnational importance such asconstruction of National Highwaysand border roads. These worksthough funded and executed by theCentral Government through theirown agencies except to the extentallowed to be taken up by the Stateas a special arrangement form part ofthe State budget. The expenditureforecasts for such works should beascertained from the respectiveauthorities for their incorporation inthe budget.

08. Certain road works are financed fromCentral Road Fund and aredescribed as CRF works. Subventionfrom this Fund is earmarked fortaking up of road works as approvedby the concerned Ministry ofGovernment of India. Estimates forsuch works should be incorporated inthe budget accordingly.

09. The Government of India has alsoconstituted a Fund captioned“National Highways PermanentBridges Fund” from out of theproceeds of levy of fees for servicesrendered relating to the use ofpermanent bridges on national

112

highways. The amount available tothe credit of this Fund is allocated bythe Central Government fordevelopment of National Highways inthe State, which is over and abovethe normal plan allocation. Theindividual works to be funded fromthis Fund have to be approved by theCentral Government according to theproposals made available to them bythe State Government. Estimates inrespect of such works should beincluded in the budget on this basis.

10. There are some public works, whichhave commercial orientation, apartfrom their being necessary to meetsocial commitments. Irrigation workshelp the farmers to increase theiragricultural production; powerprojects provide energy, which has itsown value or water supply schemesare designed to provide portabledrinking water. Objectively, everysuch project has to be included in abudget on the basis of their viabilitystudies. In case of some of theseprojects clearance for theirimplementation has also to beobtained from NationalLevel Authorities like Central WaterCommission (CWC), CentralElectricity Authority (CEA) andCentral Wildlife Board. It is therefore,necessary that such approvals alsoform part of the examination of theexpenditure forecasts in these cases.

11. It is equally necessary that thepreliminaries of Administrative

113

Approval and Technical Sanction etc.are completed before the provision ismade in the budget proposals – theidea again being that there should bea reasonable chance of the proposedbudget estimates being purposefullyutilized during a year.

12. In case of works-in-progress theproposals should be prepared withfull justification making these as mostrealistic particularly keeping in mindthe gestation period, the work alreadydone and that likely to be done duringthe budget period.

13. Minor works estimates may not beprepared in respect of individualworks as that will be cumbersomeand time consuming. Moreover, suchworks are generally stray worksnecessitated to be implemented dueto various reasons which cannot beaccurately foreseen. That being thereason, such estimates are generallybased on trend of past actuals(actuals for the last three years) to bemodified for the known reasons.

14. The Estimates for Repairs andMaintenance should also beprepared with adequate care.

7.2.0 Establishment Budget of Public WorksDepartments

7.2.1 The establishment of the Public WorksDepartment is regular establishment or workcharged staff. The work charged establishment

114

is either put into regular scales of pay orretained on daily wages. Expenditure on boththe categories of work charged establishment isdirectly attributable to the works and shouldtherefore be part of the expenditure of worksbudget estimates. As regards regularestablishment it is supervisory in nature andperforms at sub-divisional and other levels ofPublic Works Departments. Expendituresestimates in respect of this establishment areworked out in accordance with the sameguidelines as are applicable to the estimatesrelating to establishment of other Departments.Such estimates will, apart from Salaries,include other management expenditurerequirements also. The same staff also takescare of designing and planning as well. Asalready mentioned earlier Public WorksDepartments have to implement works relatingto different Functions undertaken by theGovernment. Ordinarily, the commonexpenditure in the form of establishment andplanning and designing should be providedunder relevant Functional Heads of Account butit is very difficult to do so because followingsuch a system will involve a lot of calculationswhich will make budgeting as also accountingcomplicated. In view of this, provision for thecost of combined establishment is made initiallyunder one Major Head of Account and then atthe close of year transferred to the relevantFunctional Heads on proportionate basis. Inorder further to reduce such adjustments, thecommon expenditures are distributed betweencommunication works, administrative andfunctional buildings and housing constructionProgrammes only.

115

7.3.0 Estimates under Suspense

7.3.1 Account head ‘Suspense’ has been providedfor such transactions, which cannot be taken tothe final head of account immediately on theiroccurrence, due to various reasons. Suchexpenditures are eventually transferred to therelevant account heads when details becomeknown and classification of expendituressettled. Thus, the account head ‘Suspense’ hasboth debit and credits. Making of provisionunder prescribed subheads of Suspense alsoenables exercise of control over suchexpenditures and their adjustments in theaccounts, Excess of debits over credit undersuspense is indicative of retention of stocks athigher levels, non rendering of accountsagainst the miscellaneous Public WorksAdvances drawn by the employees lookingafter execution of work etc. for application ofnecessary correctives. It has to be noted thatoutstanding balances under Suspense can beon account of the expenditures/liabilitiesalready created in the process ofimplementation of works programmes. Oncethe Suspense Head remains thus uncleared itindicates that full debit is not passed to therelevant schemes, which may result in claimingof lesser funds from the Central Government orany other agencies funding these. Getting oflesser funds than falling due may even lead tocash crunches. Handling of adoption offorecasts under this head of account should bebased on these considerations. Stock levelsand normal out standings under otherSuspense Heads is a serious exercise for thePublic Works Department. Once these arerationally fixed and followed, expenditurecontrol on execution of works becomes moreeffective and efficient.

116

7.4.0 Other Capital Expenditures:-

7.4.1 Apart from works, the other capital expenditure isin the form of trading activities undertaken by theState Government under certain specifiedcircumstances like public distribution system forgeneral and specific purposes. General publicdistribution involves purchase and sale ofessential commodities. Such distribution forspecific purposes arises frompurchase/manufacture and sale of suchcommodities which are essential for the effectivegrowth of various Sectors of economy likefertilizers, implements etc. for Agriculturaldevelopment.

7.4.2 Capital expenditures also include investments inPublic Sector Enterprises set up for variouseconomic purposes. Normally, these activitiesshould be left to be handled by Public or PrivateSectors outside the State Government who shouldintervene only as facilitators of such activities. Thisapproach becomes necessary in view of thesubjecting of the country’s economy to the openmarket forces.

7.5.0 Public Debt Estimates

7.5.1 Composition of Public Debt:-Public debtcomprises, Internal Debt, External Debt and Loansand Advances from the Central Government. TheInternal Debts are in the form of market Loans,treasury bills and connected securities issued bythe Government, compensation and other bonds,special securities and ways and means advancesraised from time to time. The External Debts arethose raised from other countries and globalorganizations. The loans from the CentralGovernment are for both plan and non-planpurposes.

117

7.5.2 The Internal Debts are authorized to be raised andmanaged by the authorities designated for thepurpose by the State Government from time totime. Accordingly, it becomes necessary for theDesignated Authority to compile budget estimatesin respect of Internal Debts. Management of thesedebts is vested with the Finance Department, whoare therefore, required to maintain all the relevantrecords as may be prescribed in consultation withthe Accountant General of the State.

7.5.3 Framing of Estimates:-.Every internal debt isbacked by an agreement to regulate itsmanagement. Such document therefore, formbasis of forecasting these budget estimates, whichhave both inflow and outflow commitments. Inflowestimates may or may not be backed byagreements. Such of the internal debts which areto be raised for the first time in a budget year areprovided for on the basis of assumption only. Onthe other hand, the Internal Debts which are ofperpetual nature like overdrafts obtained from thebank to tie over temporary financial difficultieshave to be estimated on the basis of previoustrend and such of the known factors which canchange the past behavior. Every Public Debtestimation both in respect of receipts and alsorepayments have to be based on the individualdispensations. Generally speaking budgetestimates of the account heads falling underPublic Debt have to be drawn keeping in view thefollowing parameters:-

1.0 Estimates of inflow of Public Debt 1.1 Description of the public debt 1.2 Source of the Debt

1.3 Terms and conditions of the debt 1.4 Estimated receipts for the year

118

2.0 Disbursements2.1 Outstanding if any including interest at the

beginning of the year preceding to that for

which budget is prepared

2.2 Additions to the debt including interest during

the above year

2.3 Repayment made during the above year

2.4 Payment of interest made during the above

year.

2.5 Opening balance of the debt in the budget

year for which estimates are drawn(2.1+2.2-

2.3-2.4)

2.6 Repayment of the debt during budget year

based on agreements etc.

2.7 Payment of interest during budget year.

2.8 Provision of funds proposed for repayments inthe said year.

7.5.4 It may sometimes happen that repayment ofdebts including interest during a year does notbecome possible due to one reason or otherwhich causes arrears. Every attempt has to bemade that such a situation does not arise asdebts falling in arrears causes avoidableinterest liabilities. Sometimes accumulation ofsuch liabilities give rise to penal interests andhandling of such situations becomes difficult.Debt servicing should therefore be a firstcharge on the resources available with theGovernment. Any mishandling of debtmanagement adversely effects futureDevelopment effects future Developmental

119

Programmes and even makes management ofresources a complicated issue.

7.6.0 Loans and Advances

7.6.1 These are third party Loans and Advances andare given for general, social, economic andother purposes. Giving of loans and advancesare part of Developmental Planning process.Almost every sector of Plan Development hasprovision for disbursement of loans as acomponent of the outlay earmarked for it, forinstance grant of education loan is a part ofplan outlay under education. Similarly, loansgiven for construction of houses is debitable tothe housing plan

7.6.2 In the present day financial managementscenario funds for capital and otherinvestments also become available fromfinancial institutions and commercial banks. It,therefore, becomes necessary that theseavailable resources are also channelised intothe economic developmental process. One ofthe important mechanisms to do so can be byway of giving of margin money loans to thePSUs, Local Bodies and other AutonomousOrganizations including NGOs to facilitateraising of further institutional finances. Thereare however, certain Sectors whereGovernment’s direct intervention becomesnecessary so as to ensure that the benefit ofsuch loans reaches the needy and their effect iswide spread as far as possible.

7.6.3 Every loan granted has its own terms andconditions which generally depend upon natureof such loans. The Loans and Advances givenby the Government are categorized as“Productive”, “Semi-Productive” and “Non-

120

Productive”. This classification thoughconventional is adopted to regulate such loansand advances. As otherwise any capitalinvestment has economic connotations, whichmay be tangible, intangible or both. TheGovernment, therefore, formulates its ownpolicy for grant of these third party loans whichare then managed in accordance with the Rulesand Regulations that may be framed pursuantto such policies in respect of every category ofsuch Loans and Advances.

7.6.4 Every endeavor has to be made to recover theloans during the prescribed period of recoveryinclusive of moratoriums if any provided. It hasgenerally been seen that most of the loans arenot recovered at the appropriate time during thestipulated period of recovery. This is particularly

true about Loans and Advances granted by theGovernment. The recovery of their arrears attimes and under certain circumstancesbecomes unmanageable. Formulation of thebudget estimates under the category Loans andAdvances provides an opportunity to reviewLoans and Advances disbursements and theirrecovery. Such an opportunity has to be madebest use of so that loopholes wherever noticedare plugged. The exercise also helps in findingout as to how the targets fixed earlier haveactualized so that defaulters if any, within andoutside management are suitably dealt with.Drawing of estimates under Loans andAdvances is therefore a serious exercise to bemade by those who are holding theirmanagement and maintenance of accounts.

7.6.5 Loans and Advances estimates are in respectof both envisaged inflows and outflows. Theestimation on both these sides has to be madeaccurately and the factors relevant to every

121

category of Loans and Advances play a vitalrole in this forecasting. The guidelines to befollowed in this exercise are indicatedhereunder:-

01 Estimates of recoveries anddisbursements need to be drawnseparately by the authorities entrustedwith the responsibility of managingthese Loans and Advances. At themicro level, the estimates need to beframed in respect of each individualloanee which are eventuallyconsolidated by the controlling officersunder prescribed heads of account.

02 Detailed individual accounts providean important clue for drawing of theseestimates.

03 While drawing the estimates, itbecomes necessary to ascertain thelevel of outstandings in respect ofdifferent categories of loans at thebeginning of the year in respect ofwhich budget is prepared. Whileworking out these arrears it is equallynecessary that these are groupedaccording to their age. Generally loansoutstanding for more than a year areshown separately so that an idea canbe framed as to how their recoveryshould be dealt with.

04 The controlling officers whileconsolidating the estimates relating toLoans and Advances should analyzethe position of outstanding arrears andfix the targets of recovery in a mostrealistic manner. Overstating theestimates of recovery disturbs theWays and Means position of the

122

Government causing serious cashmanagement problems.

05. While estimating disbursement ofLoans and Advances it will benecessary to keep in mind the fundsearmarked for the purpose in the Planoutlays under different Sectors of aDevelopmental Plan.

06 There are certain Loans and Advanceslike education loans, which aredisbursed, to loanees in a phasedmanner over a period of time. TheLoans and Advances thus given createa commitment which becomes firstcharge on the budget estimates drawnfor such categories of loans andshould therefore be dealt withaccordingly.

7.6.6 The estimates thus drawn should beaccompanied by a review of the loan accountsas also explanatory notes so as to facilitatetheir understanding and adoption.

7.7.0 Public Account

7.7.1 The composition of Public Account has beendescribed in detail in Chapter 3.

7.7.2 Estimation:- The main sections of PublicAccount are Small Savings, Provident Funds,Reserve Funds, Deposits and Advances,Suspense and Miscellaneous and Remittances.The transactions occurring under each of theseSections are by and large of adjusting nature.The accounts are maintained by the AccountantGeneral of the State except in respect of thecases where such responsibility is undertakenby the State Government. Generally SmallSavings, Provident Funds etc. accounts are

123

maintained by the State authorities. In respectof these accounts it is responsibility of therespective Account Maintaining Authorities toprepare budget estimates. These estimates aredrawn on the basis of trend of past actualswhich may however, be modified on certainknown facts, for example, it may be found thatfull coverage has not been given to theemployees in respect of their Provident Funds,Insurance Funds and Pension Funds. In thatscenario therefore, a drive may have to belaunched to bring more employees under theseSchemes resulting consequently in pitching theestimates at a comparatively higher level.

7.7.3 In respect of some Reserve Funds like FamineRelief Fund, Central Road Fund, Roads andBridges Fund, deposits of Local Fund etc. theestimates have to be worked out with referenceto the rules governing such Funds. Theexpenditures initially provided in the‘Consolidated Fund’ section of the Budget formeeting the purpose for which such Funds areinstituted are eventually transferred to the‘Reserves and Deposits’ section of the PublicAccount.

7.7.4 The estimates under Public Account need acareful appraisal as these may call foradjustments which may not have been carriedout earlier due to one reason or the other. Suchadjustments if not provided for and carried outproperly at the appropriate time may even leadto understating the expenditures under variousfunctions resulting in difficulties for settlementwith Government of India, other States andorganizations.

__________________________

124

Chapter 8

BUDGET ESTIMATES IN RESPECT OFNEW SERVICES

8.1.0 Generally speaking estimates relating to theexpenditure as may be necessitated due toadoption of a new policy or a new facility orsubstantial alteration in an existing service istreated as a “New Service” referred to in theConstitution. It may be mentioned that noprecise definition of the term has beenevolved so far. The general test applied in thisbehalf is to see whether any provision wasmade for a particular service in the previousyear’s budget before such a service could beclassified as a New Service. A substantialaddition to the existing services for whichprovision of funds exists is also treated asNew Service. In other words, any additionalexpenditure on account of ordinary expansionof an existing service does not attractlimitations for being classified as New Serviceexpenditure. Some of the guiding factors fordetermining whether expenditure is on a NewService or not are: -

01 Substantial increase in the existingstaff of a scheme.

02 Revision of pay scales involvingadditional recurring expenditureexcepting that, which is caused bytheir unifications.

03 Conversion of the temporary postsinto permanent one involvingadditional recurring expenditure overand above a pre-determined ceiling.

125

04 Revival of posts previously abolishedwith the cognizance of theLegislature.

05 Refund of amounts in pursuance ofa deliberate change in policy.

06 Purchase of new machinery, plant orother stock on non-recurring basisinvolving an expenditure of largescale.

07 Substantial increase in grants-in-aidgiven to various organizationsincluding NGOs.

8.2.0 Expenditure on a New Service can not beincurred unless it has been provided for in thebudget. For this purpose, therefore, it isnecessary that self contained proposals aredrawn, examined and sanctioned by thecompetent authority declared or set up in thisbehalf before their inclusion in the budget.

8.3.0 During the course of a year, it may sometimeshappen that expenditure on New Servicecannot be avoided and has to be incurred dueto one reason or the other. Under suchcircumstances, an advance is obtained fromthe Contingency Fund to be recoupedsubsequently when the Legislature meets.

_______________________________________________

126

PART-III

127

PART- IIIChapter 9

CONSOLIDATION OF THE BUDGET

9.1.0 Consolidation is summation of theestimates drawn under different Sectorsof Classification so that an overallposition of estimated receipts anddisbursements during the budget yearemerges. Such type of consolidationenables to find out deficit and surplus onvarious accounts for the requiredmeasures to handle such situation.

9.2.0 Ways & Means estimation

9.2.1 Inflow and outflow of funds does notremain uniform during different periodsof the budget year. Sometimes cashinflow is more than the outflow.Similarly, during some periods theoutflow exceeds inflow. Under the Ways& Means Advance (WMA) regime, thesurplus funds are invested in 14 daysIntermediate Treasury (IT) bills. This isin book entry form and issued for aminimum balance of ` 1 lakh and inmultiples of ` 1 lakh. These are non-transferrable and issued at a discountand redeemed at par on expiry of 14days from the date of issue. In the eventof shortfall in the revenue it becomesessential that the gap is bridged byresorting to WMA provided by RBI. Inorder to give a scientific base to therequirements of the cash management,it will be proper to formulate a Ways andMeans budget which also meansdrawing of fund flow forecast for the

128

budget year and watch its behaviourwhile the budget is underimplementation.

9.2.2 For the said purpose the budgetforecasts need to be bifurcated intoquarters of the year. This process willgenerate targets for the implementingagencies to be monitored at variouslevels of Government.

More details for making ways andmeans forecasting are given in Chapter15.0.0 titled “Cash management forBudget implementation”

9.3.0 Fiscal Responsibility

9.3.1 Consolidation of the budget casts aresponsibility on State Government inthe Finance Department to ensure thatthe data developed during variousbudgetary processes as discussed inthe foregoing chapters of this Manual isthoughtfully analyzed to ensureprudence in the fiscal management,value addition to the availableinformation and bringing about greatertransparency in the current fiscal policyand for matters connected therewith orincidental thereto. Obliviously, it is notsufficient to consolidate the forecastsand prepare the ways and meansestimates as indicated above.Consolidation should, therefore, aim atfinding out as to how fiscal stability canbe brought about mainly by progressivestrengthening of revenue surplus,reduction of fiscal deficit and prudentdebt management. The data needed toreach these objectives has tobe developed and presented in various

129

formats which have to be supplementaryto the normal budgetary exercise.

9.3.2 While moving in the above direction theState Legislature has enacted “Jammuand Kashmir Fiscal Responsibility andBudget Management Act, 2006.

9.3.3 The Finance Department shall in closecoordination with the Planning andDevelopment Department prepare allthe required statements and fill in theprescribed formats as envisaged in thesaid Act which shall form part of a year’sBudget. Minister-in-charge Finance mayconstitute a team of officers from hisown department as also the Planningand Development Department to do therequired exercise to the satisfaction ofthe Finance Minister for determination ofthe action as may be required to betaken to accomplish objectives ofcompilation of the budget for making it adocument for fiscal sustainability.

9.4.0 Holding of Budget Cabinet Meeting

9.4.1 Once consolidation of the Budget iscompleted, the Minister in chargeFinance Department shall arrangeconvening of a Cabinet meeting wherethe proposals shall be discussedand approved to be laid before the State

Legislature on a date fixed for thepurpose. The Memorandum forSubmission to the Budget Cabinet asapproved by the Finance Minister shall,inter-alia, specify:

130

01. the overall financial health ofthe State Government onvarious economic indicators,

02. overall position of theestimates of receipts anddisbursements, spelling outthe measures to be taken tobridge the deficits and howthese can be converted intosustainable surpluses,

03. financial policy statementsboth short term and mediumterm,

04. disclosures required to bemade before the StateLegislature while presentingthe budget, and

05. any other matter considerednecessary to be brought tothe notice of the cabinet forapproval or information.

9.4.2 It is necessary for the Minister in chargeFinance Department to ensurecompliance with the provisions of the“Jammu and Kashmir FiscalResponsibility and Budget ManagementAct, 2006” and rules made thereunder,the full texts whereof are appended atthe end of this Part of the Manual.

________________________________________________

131

Chapter 10

PASSAGE OF BUDGET IN THE LEGISLATURE

10.1.0 General

10.1.1 All the matters relating to a budget are dealt within Legislature in a special annual session called“Budget Session”. The budget as compiled bythe Government is placed before both theHouses of Legislature on a date fixed by theHead of the State namely, the Governor.

10.1.2 Budget session generally starts around the lastweek of February or first week of March everyyear. The Legislature is required to complete thewhole process of passing the budget andadopting the Acts of Appropriation beforecommencement of the financial year to whichthey relate. Under certain exigencies, say duringan election year, the Budget Session may beheld at some other time of the financial year afterthe newly elected Government assumes office.

10.1.3 The deliberations of Legislature take place in thefollowing stages: -

01 Presentation of budget.

02 Moving of Demands for Grants.

03 Consideration of Appropriation Bill and

04 Adoption of the Appropriation Act.

10.1.4 All these stages of budget examination and itsapproval by the Legislature have necessarily tobe backed by sanctions of the Governor forwhich Chief Minister makes a special request to

132

Governor soon after holding of customary BudgetCabinet meeting. These sanctions are theinstruments issued separately as under: -

01. Memorandum from Chief Minister to theGovernor.

02. Sanction of the Governor to thepresentation and consideration of thebudget.

03. Sanction of the Governor for moving ofDemands for Grants.

04. Sanction of the Governor forintroduction and consideration ofAppropriation Bills.

The model drafts for these memo, and sanctionsas relating separately to ‘Full Budget’ and ‘Voteon Account’ are placed as Appendices F.1 toF.20 and Appendices V.1 to V.13 to this Part ofthe Manual at the end.

10.1.5 Passage of the budget in all the above-mentioned stages is discussed in the followingparas: -

10.2.0 Presentation of Budget

10.2.1 Presentation of budget is a very importantoccasion for the Legislature and the State as it ison this day various fiscal plans relating togovernance, developmental programmes andother regulatory measures with economicconnotations become known.

10.2.2 On the day fixed for budget presentation, theFinance Minister introduces the budgetconventionally by reading from a written budget

133

speech. This is done in both the Houses of theLegislature simultaneously. While the FinanceMinister introduces the budget and reads out thebudget speech in the Lower House, any otherCouncil Member does so in the Upper House.

10.2.3 The budget speech besides explaining salientfeatures of the estimates included in the budgetalso gives an account of the past performanceand the economic policies of the Government. Italso outlines the steps that are proposed to betaken for raising of additional resources and theexpected expenditure target, both developmentaland non-develop-mental. Statements and otherdetails as prescribed under the FiscalResponsibility and Budget Management Act andrules made there under also form part of thebudget documents. Besides, followingdocuments have also been made mandatory forbeing presented along with Budget document :

i. Supplement to Budget Documents (UrbanLocal Bodies).

ii. Supplement to Budget Documents (RuralLocal Bodies).

iii.Statement of subsidies.iv.Statement of Gender Responsive

Budgeting.v.Information in respect of own Tax, Non-

Tax revenue, transfers from Centre, Non-Plan and Plan Expenditure.

vi.Action Taken Report on announcementsmade in the previous Budget Speech andBudget-at-a-glance are also being placedas part of the Budget documents.

10.2.4 In order to enable the hon’ble members of theLegislature to appreciate the current economicbackground of the State, an Economic Survey istabled in the Legislature one or two days prior to

134

budget presentation. The Budget presentation isfollowed by general discussion on the budgetproposals of the Government in the Legislature.Every member is free to raise any issue relatingto the budget during these general discussions.Every political party and independent membersare allotted time by the Speaker according to atime schedule evolved and adopted for thepurpose after consultations with the leaders ofthe different parties in accordance with the rulesprescribed for conduct of business in the House.

10.2.5 The points raised during general discussion onbudget are replied at the end of the debate bythe Finance Minister. No motions are made orentertained during these discussions.

10.3.0 Moving of Demands for Grants

10.3.1 Demands for Grants are statements ofexpenditure to cover requirements of theGovernment on various functions undertaken byit through its various Departments and forwhich authorization of the Legislature is required.Obviously, Demands for Grants include allexpenditures in the Consolidated Fund otherthan those, which are declared as charged onthe Fund under provisions of the Constitution.The charged items of expenditure are not subjectto vote of the Legislature. There is however, nobar in discussing components of the chargedexpenditure also. One Demand for Grantsgenerally covers activities of one Department.There may, however, be more than oneDemands for Grants for a Department dependingupon magnitude of the activities undertaken.

10.3.2 A Demand for Grant has four parts as under: -

135

Part I - Indicates total funds requiredunder a Demand

Part II - Gives details of the funds includedin the Demand by Major Heads ofAccount.

Part III- Gives Minor Head-wise details ofthe requirement of funds under aDemand.

Part IV- Records details of items ofexpenditure on new servicesincluded in a Demand.

For all items of expenditure estimates in all partsof Demand figures are supplied separately for: -

01 actuals for the previous year,budget estimates of the current yearthat is in which budget is presented,revised estimates for the current yearthat is in which budget is presented;and

02 budget estimates for the year towhich budget relates

10.3.3 Demand for Grant is prepared for gross amountof expenditure that is without taking intoconsideration the recoveries for the reason thatthe Legislature has to authorize all theexpenditure from the Consolidated Fund.

10.3.4 Motion for taking a Demand for Grant intoconsideration by the House is moved by theconcerned Minister in the following form: -

136

“that a sum of not exceeding `________ begranted to the Government to defray chargeswhich will come in course of payment duringthe year ending 31st day of March _____ inrespect of _________.”

10.3.5 The words “not exceeding” may be noted. Itmeans that only maximum amount of therequirement is mentioned in the motion whichwhen passed cannot be exceeded. The motionthus moved becomes open for deliberations bythe hon’ble members. It has to be noted that theDemands for Grants can be moved only in theLegislative Assembly because it is that bodywhich has final authority to authorizeappropriation from and out of the ConsolidatedFund.

10.3.6 When a Demand is moved in the mannermentioned above, members are free to table CutMotions with the objective of making reductionsin the amount in a particular Demand. Cutmotions create a chance to enable a member toventilate his/her grievances about a specificpolicy or its implementation by a Department ofthe Government.

10.3.7 As defined in Rule 224 of Business Rules ofLegislative Assembly, there are three types ofCut Motions, namely: -

01 disapproval of policy Cut,

02 economy Cut, and

03 token Cut

10.3.8 After a Cut Motion is admitted by the Speaker, itis passed on to the Government well in advanceso as to provide ample opportunity to the Ministerconcerned to prepare himself to face the point(s)

137

that may be raised by a member. After CutMotions are discussed, the concerned Ministerreplies the debate which should be to thesatisfaction of the member moving a Motion whohas right to withdraw it after listening to theMinister or press for a vote. At the closing hour ofsuch discussion fixed under rules by the Houseor at such other hour as the Speaker may fix inadvance during the days allotted for voting ofDemands of Grants the Speaker shall forthwithput every question necessary to dispose of alloutstanding matters in connection with Demandsfor Grants. Time allotted for discussion onDemands for Grants and their ultimate disposalis not normally extended.

10.3.9 The Legislature may either accord assent to theDemands or refuse to give assent to anyDemand or give assent to a Demand subject toreduction of amount specified there in.

10.3.10 It may be noted that the Legislature has noauthority under the Constitution to increase theamount specified in a Demand for Grant. ADemand for Grant when passed by theLegislature becomes “Grant.”

10.4.0 Consideration of Appropriation Bills

10.4.1 Voting of expenditure estimates throughDemands for Grants does not by itself conferauthority to the Government for incurring ofexpenditures. Therefore, after the Demands forGrants are passed by the Legislative Assemblyan Appropriation Bill is introduced by the FinanceMinister for consideration and passing by theHouse. As pointed out earlier this process hasalso to be undertaken with the sanction of theGovernor.

138

10.4.2 The Appropriation Bill aims at authorizingappropriation from and out of the ConsolidatedFund of all moneys voted as well as those whichare treated as ‘charged’ on the ConsolidatedFund as per Sections 79(3), 108(3) and 136 ofthe Constitution. The services and the purposesfor which appropriations are thus proposed to beobtained are indicated in the schedule attachedto the Appropriation Bill.

10.4.3 The bill when introduced and taken up forconsideration, is put to a general debate by themembers of the House. This debate is restrictedto the matters of public importance. Only such ofthe points can be raised which have not beenbrought under consideration during discussionson Demands for Grants or general discussionson the budget. No amendments can be proposedto the Appropriation Bill which have the effect ofvarying the amount or altering the destination ofthe Grants made earlier by the House. Thedebate on the Appropriation Bill is concluded bythe Finance Minister who replies the pointsraised by the participants in the debate.Thereafter the Bill is put to vote of the LegislativeAssembly. After the Bill is thus passed otherprocesses as discussed here-in-after areundertaken to give it shape of an Act of theLegislature. In case the Bill is not passed forwhatsoever reason, the Government falls assuch a situation is taken as a vote of noconfidence.

10.4.4 After the Bill is passed by the LegislativeAssembly, it is referred to the Legislative Councilfor their consideration. The Legislative Councilcannot reject the Bill as the final authority forpassing such a bill vests with the LegislativeAssembly. The Legislative Council has however,power to make recommendation with regard to

139

modifications considered necessary by them foracceptance of the Legislative Assembly. Thispower is also subject to limitations as under: -

01. The Legislative Council must within aperiod of 14 days from the receipt ofthe Bill return it to the LegislativeAssembly with theirrecommendations.

02. The Legislative Assembly mayaccept or reject all or any of therecommendations of the LegislativeCouncil.

03. In case the Bill is not returned withinthis stipulated period of time it isdeemed to have been passed byboth of the Houses in the same formin which it stands passed by theLegislative Assembly.

10.4.5 The Appropriation Bill when passed by both theHouses of the Legislature is submitted to theGovernor for his assent. Once this assent isaccorded, the Appropriation Bill becomes anAppropriation Act giving legal authority to theGovernment to incur expenditure from and out ofthe Consolidated Fund in accordance with thestipulations made in the Act.

10.5.0 Money Bill and Finance Bill

10.5.1 These are two types of the Bills provided for inthe Constitution for dealing with the financialmatters of the State by the Legislature.Distinction between Money Bill and Finance Billhas to be understood clearly. A Money Bill isdeemed to be one if it contains ONLY provisionsdealing with all or any of the following matters: -

140

01. The imposition, abolition, remissionalteration or regulation of any tax;

02. The regulation of borrowing powers of theGovernment;

03. Custody of the Consolidated Fund or theContingency Fund, the payment of moneysinto or withdrawal or money from any suchFund;

04. The appropriation of moneys out of theConsolidated Fund.

05. The declaring of any expenditure ascharged on the Consolidated Fund orincreasing amount of any suchexpenditure;

06. The receipt of money on account ofConsolidated Fund or Public Account orthe custody or issue of such money or theaudit of the accounts of the State.

07. Any matter incidental to any of the mattersspecified above.

10.5.2 It has to be noted that a Bill shall not be deemedto a Money Bill by reason only that it provides forimposition of fines or other pecuniary penalties orfor demand or the payment of fee for license orfee for services rendered or by reason that itprovides for the imposition, remission, abolition,alteration or regulation of any tax by Local Bodyfor local purposes.

10.5.3 Decision of the Speaker whether a bill is aMoney Bill or not is final. This means that when aBill is certified to be a Money Bill by the saidauthority it can not be challenged by anyauthority, whosoever.

141

10.5.4 All Money Bills are introduced in the LegislativeAssembly with the sanction of the Governor. It isthis House which has final authority to deal withsuch Bills. Power of the Legislative Council inrespect of such Bills is limited. They can makeonly recommendations for consideration by theLegislative Assembly. In case such Bills arepassed by the Legislative Assembly afteraccepting the recommendations of theLegislative Council it is deemed to have beenpassed by both the Houses. In case theLegislative Council retains the Bill for more than14 days it is deemed to have been passed at theexpiry of said period in the form in which it waspassed by the Legislative Assembly. Thus, it willbe seen that the provisions of the Constitutionrelating to joint sitting in the event ofdisagreement between two Houses are notattracted in case of Money Bills.

10.5.5 Finance Bill is one, which relates to revenue orexpenditure. The Finance Bills are of two kindsas under: -

01. Those Bills which contain any of thematter, which fall within the jurisdictionof Money Bill, but does not dealexclusively with such matters. Theexample can be a Bill, which has aclause dealing with taxation but doesnot exclusively deal with the taxationas such.

02. Those ordinary Bills which involveexpenditure from the ConsolidatedFund.

10.6.0 Vote on Account

10.6.1 The Legislative Assembly has powers to makeany Grant in advance in respect of the estimatedexpenditure for a part of any financial year

142

pending completion of the procedure prescribedfor such Grants and passing of the lawauthorizing appropriation of moneys out of theConsolidated Fund to meet that expenditure.Such Grants are called “Vote on Account.”

10.6.2 Necessity for obtaining a Vote on Account mayarise every year so as to give full opportunity tothe Legislature to discuss the Annual FinancialStatement and the period of such an examinationmay extend beyond the date of commencementof the financial year to which this statementrelates. In order to enable the Government tomeet expenditure on various services during thisperiod they obtain Vote on Account. Similarly, inthe year when general election has to be held,the Government of the day may choose to obtaina Vote on Account.

10.6.3 The Vote on Account has also to be backed byan Appropriation Act which is obtained in thesame manner as is done in case of a full budget.

10.7.0 Supplementary Grants

10.7.1 If the sums authorized by the Legislature to bespent on a service prove insufficient during thecourse of a year there will arise a need forobtaining Supplementary Grants. Similarly,when a New Service has to be undertaken forwhich no provision was made in the originalAnnual Financial Statement need for obtainingSupplementary Grant will arise. All suchitems are listed in a statement termedas “Supplementary Statement of Expenditure”,which is disposed off in the same way as theAnnual Financial Statement. A motion forSupplementary Grants states the total sumrequired and the amounts needed to besupplemented under each Grant. The sums

143

required under various Grants are mentionedin a scheduled appended to the motion. A motionrelating to Supplementary Demand is made bythe Finance Minister. Debate on SupplementaryGrants is confined to the items constituting thesame and no discussion is allowed on theoriginal grants or the policy underlying them,except in so far as it may be necessary to explainor illustrate the point under discussion. TheSupplementary Statement of expenditure hasalso to be introduced in Legislature Assemblywith the sanction of the Governor.

10.8.0 Additional Grants

10.8.1 Additional grants are obtained from theLegislature through a Supplementary Statementof Expenditure so as to meet expenditure on aNew Service not contemplated in the originalbudget.

10.9.0 Excess Grants

10.9.1 If after close of a financial year it is found thatexpenditure under a Grant has been more thanthe amount of funds that was available as aresult of obtaining original Grants through AnnualFinancial Statement or Supplementary orAdditional Grants obtained throughSupplementary Statements of Expenditure orthrough both, Excess Grants have to be obtainedfrom the Legislature. For this purpose aStatement of Excess Expenditure is presented tothe Legislative Assembly by the FinanceMinister. Thus the “Excess Grants” are those,which are necessitated to cover theexpenditures, which have been found to be inexcess of the appropriations available during ayear, which has already passed. It is therefore apost budget exercise. Such excesses are

144

brought out in the Appropriation Accounts andthe Excess Grants to cover these are obtainedon the recommendations of the Public AccountsCommittee. This Committee examines each suchcase before making its recommendations.

10.10.0 Exceptional Grants

10.10.1 The Legislature has also power to makeExceptional Grants which from part of the currentservices of any financial year.

10.11.0 Token Grants

10.11.1 When during the course of a financial year it isfound that expenditure on a New Service forwhich funds should have been obtained from theLegislature can be arranged through re-appropriation for which the Government haspowers, a Token Grant is obtained for rupee oneor rupees hundred. Through this process, theGovernment obtains consent of the Legislaturefor taking up of such a New Service. No separatemotion is made for obtaining such Grants whichare obtained through Supplementary Statementof Expenditure. In this statement against such anitem it is specifically indicated that the proposedestimates of expenditure are only tokenexpenditures for which Token Grants arerequired as appropriation for such purposes canbe arranged though re-appropriation within aGrant.

10.12.0 Procedures in Financial Matters

10.12.1 The constitutional provisions on Budget andBudget related issues as enshrined in theConstitution of Jammu and Kashmir and theConstitution of India are given inAppendix - 3 and Appendix - 4 at the end ofthis Part of the Manual.

145

10.12.2 The procedures for conduct of business relatingto financial matters as contained in chapter xx ofthe Rules of Procedure and Conduct of Businessin the J&K Legislative Assembly and in the J&KLegislative Council is given in theAppendix - 5 and Appendix - 6 at the end ofthis Part of the Manual.

____________________________________________

146

Chapter 11

DISTRIBUTION OF BUDGET

11.1.0 Distribution of budget

11.1.1 Execution of the budget starts immediatelyafter the Appropriation Act becomes available.This Act gives an authority to the Governmentto incur expenditure. Such an authority is,however, conditional - the conditions being:

01. that the expenditure has to be keptwithin the Appropriation as is madeavailable from and out of theConsolidated Fund through theinstrument of Appropriation Act,

02. that the Appropriation has to beapplied for the purpose(s), service(s)for which these are granted by theLegislature. The purpose(s) andservice(s) are described together withappropriation limits in the “DetailedGrants” which form basis of anAppropriation Act.

11.1.2 It has to be noted that availability ofAppropriation is not in itself sufficient forincurring of expenditure. It has also to bebacked by adequate authority from the pre-defined functionaries of the Government atvarious levels in accordance with theapproved scheme of delegation of powerssanctioned by it from time to time.

11.1.3 With the above basic parameters, the firststep of execution of budget is distribution of

147

the Grants. The Finance Department isrequired to communicate, through theAdministrative Department concerned, to theHeads of Departments the Grants placed attheir disposal under various Heads of Accountduring the budget year. Copies of relevantDemands for Grants, which as alreadymentioned, gives all the required details andform basis of the Appropriation Act after theseare passed by the Legislative Assembly,should be enclosed to such distribution ofGrants orders. This action should be done byFinance Department soon after theAppropriation Act becomes available and inno case later than April 10th every year. Whiledoing so, the Finance Department is requiredto draw specific attention to: -

01. the amounts if limited or reduced bythe Legislative Assembly; and

02. the items of New Expenditure forwhich Appropriation has beenauthorized by the Legislature so asto facilitate issuance of administrativeorders for implementation of suchitems of new expenditure.

11.1.4 On receipt of above information the Heads ofDepartments or other budget ControllingOfficers including District DevelopmentCommissioners for district plans should makefurther distribution of funds among theDrawing and Disbursing Officers workingunder their control. While making distributionof funds at this level, the following guidelinesshould be followed: -

01. Process of distribution of fundsshould be completed as early as

148

possible and in any case it shouldbe made before close of month ofApril every year.

02. Allotment of funds for chargeditems of expenditure should beseparately indicated from theitems, which are voted.

03. While making distribution of fundscomplete classification of accountsright from Major Head of Accountdown below to the Object ofExpenditure should be clearlyindicated.

04.Funds available under an Objectof Expenditure may be distributedas a whole or a portion thereofmay be kept as reserve. Thelater course may be found morepragmatic, as this will ultimatelyhelp in exercise of a betterfinancial control over thesubordinate officers.

05. Distribution of funds may not bemade in respect of such ofschemes/ programmes for whichHead of the Department proposesto retain the entire appropriationand incur the expenditure centrallyfor the Department. Such anaction should, however, havesufficient justification and shouldbe taken for recorded reasons.

06. Any increase or reductionsubsequently made in a Grant or apart thereof by the competent

149

authority through an act ofReappropriation or by obtainingSupplementary Grants needs tobe communicated to theconcerned Drawing andDisbursing Officers immediatelyafter such decisions are taken andorders to regulate them areissued.

07.In order to exercise itemizedcontrol and for better expenditureplanning, funds available under anObject of Expenditure may be sub-divided for example, funds underOffice Expenses may be dividedbetween Postage, Contingenciesetc. Such distribution of fundswill constitute only an “Order ofAllotment” and so long as itremains within overall availabilityof funds no sanction of anyauthority is required to make suchdistribution or even to change itfrom time to time. Order ofallotment does not constitute anAppropriation which is authorizedby the Legislature and watched bythe Accountant General on itsbehalf.

08.In order to enforce economy inexpenditure, the Government maysometimes order reduction inallocations in specific or generalterms. The reductions thus madeshould be kept in view by allconcerned Departments andControlling Officers while makingallotment of funds, in case the

150

same are not already applied atsource by Finance Departmentand/or Planning & DevelopmentDepartment as the case may be,while authorizing grants.

09.Under certain heads of accountminus entries also appear whichare on account of credits such asrecoveries under suspense headsor the amounts transferred fromone Major Head of Account toanother, i.e. on account ofestablishment costs in case ofPublic Works Department orrecoveries made under a CapitalMajor Head relating to a tradingactivity and the like, becausegross amounts are included in theAppropriation Act in respect ofsuch transactions. Actualization ofenvisaged recoveries/credits hasalso to be watched and it will benecessary if target for making ofthese recoveries are also fixed forDrawing and Disbursing Officerswhile making the allotment offunds.

11.1.5 The allotments made should be recorded in aregister termed as “Register of Grants andAppropriations” to keep a note of availability ofthe Original Grants, their distribution amongsubordinate officers and modifications if any,made therein from time to time.

11.1.6 Copies of the allotment orders shouldinvariably be made available to the concernedTreasury Officers to enable them to exercisebudgetary control from the Treasury. Similarly,

151

copies of these orders should be given to theAccountant General who will need these forconduct of Appropriation Audit.

11.1.7 Once the budget allotments are received bythe Drawing and Disbursing Officers theyshould open a budget register for recordingdetails of such allotments made in their favouror as these may be modified from time to timeby the competent authority. This registershould also be used to record expendituresagainst the budget allotments in respect ofdifferent heads of accounts. The expendituredetails need to be recorded in this register onmonthly basis from basic accounting records.The idea being that the actual position withregard to net availability of funds at the end ofthe each month is easily ascertained.Separate pages should be opened fordifferent Minor and Sub Heads underoperation with a Drawing and DisbursingOfficer.

_______________________________________

152

Chapter 12

CONTROL OVER EXPENDITURE

12.1.0 Control over expenditure against sanctionedbudget allotments has to be exercised atvarious levels as under:-

01. Drawing and disbursing officer

02. Concerned Treasury

03. Controlling officer/Head of thedepartment

04. Administrative department

05. Office of the Accountant General

06. Finance Department

12.2.0 It is important that implementation of thebudget should start immediately after theallotment of funds is made so that varioustargets both physical and financial asenvisaged in the budget are accomplishedwithin the year to which it relates. Anyunexplained deviations from the approvedtarget are taken as a financial irregularity forsuch administrative action as circumstancesof each case may warrant.

12.3.0 Incurring of expenditure against budgetallotments has to be kept within the powersgiven to the functionaries at various levels. Itis also subject to certain general conditions orthose prescribed for the purpose throughspecial order(s) issued by the competentauthority. The general conditions for incurring

153

of expenditures against budget allocationsare:-

01. allotment are spent on thepurpose(s) for which thesehave been granted;

02. an allotment is not utilized forany item of expenditurewhich is not covered bysanction - general or special;

03. allotment for charged items ofexpenditure are notappropriated to votedexpenditure or vice versa, and ;

04. no expenditure is incurred onthe items for which allotment offunds has been specificallyrefused.

12.4.0 Sanction of the competent authority to theincurring of expenditure remains valid until thefunds necessary to make the sanctionoperative have not been refused. Thus,obtaining of sanction as also Appropriation isnecessary before the expenditure is incurred.The sanction may be term sanction orperpetual sanction. In case of term sanction itis necessary to get it extended at the expiry ofits original term before further expenditure isincurred. In such cases Appropriation, hasalso to be arranged. As regards perpetualsanctions, the only requirement is to obtainfunds before expenditure is incurred.

12.5.0 As a matter of principle the claims againstGovernment should be settled as and whenthese arise. Accumulation of liabilities doesnot reflect a sound financial management.Under certain circumstances, it so happens

154

that some liabilities remain unsettled atthetime of close of the financial year and arecarried forward to the following year. Theliabilities thus, carried forward become a firstcharge on the subsequent years budget. AnAppropriation made available to the Head ofthe Department or to a subordinate officer issupposed to take care of past liabilities also.

12.6.0 An Appropriation is operative upto close of afinancial year when any un-spent balancelapses and is not available for utilization in thefollowing year. After close of a financial yearon 31st of March all the transactionspertaining to that year which have remainedunsettled are treated as pertaining to thefollowing year. Bonafide transfer entriesnecessitated due to corrections etc. in theaccounts are allowed to be made even after31st of March till such time the accountsremain open and are not finally closed.Reasons for carrying forward liabilities shouldbe investigated by the Controlling Officer andreport in this behalf submitted to theAdministrative and Finance Departments fornecessary action at their end.

12.7.0 The sole aim of the procedure prescribed fordistribution of Grants and prescribing of pre-requisite of sanctioning of expenditure is toensure quick, effective and judiciousimplementation of the Programmes budgetedfor. This is particularly true for implementationof plan programmes envisaged in the budgetfor the year. Any delay in taking up of suchProgrammes disturbs the targets set for theDevelopment Planning process. The timeoverruns have to be avoided as faras possible. In order to ensure the delays arereduced, the Government functionaries at

155

various levels are given wide financialdelegations particularly in respect ofsanctioning of plan schemes. Under thepresent arrangements, the plan programmesrelating to the development of a district arespecifically identified. For speedyimplementation, district headquarters aremade focal points for sanctioning,implementating, monitoring and evaluation ofsuch Programmes. District DevelopmentCommissioners have been given wide powersto accomplish this objective. Moving a stepfurther in this direction even Cabinet meetingsare held at district headquarters forsanctioning the Plan Programmes, which arenot within the authority of a DistrictDevelopment Commissioner.

12.8.0 As mentioned earlier, execution of the budgetinvolves all levels of administrative set up ofthe State. At the apex the FinanceDepartment has to play its role and so is thecase with the grass roots level of theadministration. Role of every agency at everylevel is vital and any laxity in this behalf canhave its own repercussions, which at timescan even be serious. In this context, it is veryessential that expenditures are kept under aconstant review so that correctives as andwhen necessary are applied in good timewhile the budget is under implementation.This review is termed as control overexpenditure. The best possible control overexpenditure can be achieved if all theconcerned authorities watch the expenditureas it occurs and compare it constantly withgrants from which it is met. Requirement ofexpenditure control at different levels cannotbe the same. The system of control over the

156

expenditure at different levels ofadministrative set up is described hereunder: -

12.9.0 Control over expenditure by Drawing andDisbursing Officers

12.9.1 There are two types of Drawing andDisbursing Officers operating upon abudget, namely: -

01. Civil Officers making drawlsfrom the treasury throughdetailed bills. Different formatsare used to meet requirementsof different types ofexpenditure, and

02. Chest Holders who operate onthe budget using cheques.These include different wings ofPublic Works Department,Power DevelopmentDepartment and ForestDepartment. In case of somecivil departments who havetheir own works implementingagencies, drawls are madethrough detailed bills like otherdrawing and disbursing officersof such departments.

12.9.2 In both the dispensations the detailedaccounts in respect of expenditures upto thelowest tier of classification are maintained forthe time being by the Accountant General. Incase of Civil Drawing and Disbursing Officers,the Accountant General is given the basicaccounting details along with vouchers etc. bythe Treasury Officers with whom suchDrawing and Disbursing Officers are kept in

157

account. The cheque Drawing and DisbursingOfficers render such accounts to theAccountant General directly at the end of eachmonth in accordance with the rules andregulations prescribed for the purpose in thePublic Works Accounts Code and ForestAccount Code. The Cheque Drawing Officerswho draw the money required for variouspurposes in lump sum through cheques are,therefore, Departmental Chest Holders and tothat extent operate as Treasury Officers intheir respective offices and render detailedaccounts with supporting vouchers etc.directly to the Accountant General.

12.9.3 With the above background, it becomesnecessary for a Civil Drawing and DisbursingOfficer to give complete and correctclassification on the bills which are presentedby them at the treasury while operating on thebudgetary allocations made in their favour bytheir respective Controlling Officers.

12.9.4 It is equally necessary that upto date record ofexpenditure against a budget allocation is alsomaintained by a Civil Drawing and DisbursingOfficer so that it becomes easy to keep theexpenditure within the authorized budgetaryallocation. This budget control register formatshould correspond to the format of suchcontrol registers maintained at the treasury tofacilitate periodical reconciliation.

12.9.5 As pointed out earlier, the Cheque DrawingOfficers operate upon the budget by makinglump sum drawals from the treasury throughcheques. Such officers being chest holdersoperating as Treasury Officers in theirrespective jurisdictions also need to exercisecontrol over expenditure viz-a-viz budget

158

allocations made to them by the competentauthority from time to time. For this purpose,therefore, they should also maintain budgetcontrol register. In order to facilitate thebudgetary control over such drawing anddisbursing officers they should enclose amemo with the cheque as and whenpresented for making of drawls from thetreasury. In this manner the concernedTreasury Officer will be in a position to ensurethat the cheque Drawing Officers incurexpenditure within the budgetary allocationsmade in their favour from time to time.

12.9.6 The Drawing and Disbursing Officers shouldat the close of each month reconcile accountsof expenditure against budget with theTreasury records in accordance with apredetermined procedure.

12.9.7 A consolidated statement of expenditureagainst the budget allocation in respect ofevery head of account should be drawn at theclose of every month for submission to theControlling Officer. Such an accountstatement should invariably be supported by atreasury document (drawal verificationcertificate) authenticating the details ofexpenditure. This occasion needs alsoto be used to find out behavior of the budgetthrough the process of working out anticipatedsavings or excess for appropriate action. Nosavings should be held back as reserve forpossible future excesses not covered by theallocations for the year. Copies of theseexpenditure accounts also need to beforwarded to the Controlling Officer within amaximum period of seven days of the monthfollowing that to which these relates.

159

12.10.0 Control over expenditure by ControllingOfficers.

12.10.1 In order to watch receipt of returns prescribedfor Drawing and Disbursing Officers, theControlling Officers must maintain a broadsheet in which every Drawing and DisbursingOfficer will be allotted a serial number. Thisbroad sheet will also provide 12 columns forindividual months of a year against each serialnumber. Receipt of returns pertaining to everymonth will be registered in the relevantcolumn. In this manner, the broad sheet willbring out the defaults in receipt of return fromthe Drawing and Disbursing Officers for quickadministrative action.

12.10.2 On receipt of the returns, the ControllingOfficer will examine these carefully and satisfyhimself that the :-

01. accounts classification recorded inthe returns is correct,

02. the progressive totals of theexpenditure have been correctlynoted,

03. that the expenditure up-to-date iswithin the grant or appropriation,

04. the quantum of savings/excess if any,indicated in the return have beencorrectly worked out,

05. the return has been signed by theDrawing and Disbursing Officer.

12.10.3 When the returns of all the Drawing andDisbursing Officers have been received and

160

examined, a monthly compilation andreconciliation sheet should be prepared by theControlling Officer. Separate sheet shall beopened for every head of account. Thesesheets indicating the total expenditureincurred by every Drawing and DisbursingOfficer as also by the Controlling Officerhimself will form basis for reconciliation ofaccounts with the books of the AccountantGeneral.

12.10.4 In addition to above, a Controlling Officer issupposed to observe the following generalguidelines: -

01.The outlay under a head is utilizedproportionately as far as possibleduring a year. This is particularlynecessary in respect of fixedexpenditure. Any disproportionateexpenditure, which comes to notice,must be investigated for such actionas may be deemed necessary.

02. Anticipated savings if any, should beimmediately surrendered toGovernment without waiting till end ofthe year. No savings should be heldin reserve for meeting any possiblefuture excesses. The money shouldnot be spent in haste just becausefunds are available, which if notutilized will lapse to the Government.Rush of expenditure in the lastquarter of the financial year and moreparticularly in the last month of thefinancial year should be avoided.Ideally, there aught to be greaterevenness in the budgetedexpenditure within the financial year,

161

especially in respect of itemsentailing large sums of advancereleases and transfers to Corpusfunds, Tendency of parking of fundsshould also be minimized.

03. Need for additional funds may arisedue to some unforeseen emergency,under estimation or due to any otherfactor. Under such circumstances,immediate action should be taken toobtain additional funds. It may benoted that the simple fact that anapplication for additional funds hasbeen made is not sufficient to exceedthe original allocation. Unless theadditional funds are provided by thecompetent authority, no additionalexpenditure should be authorized orincurred.

12.11.0 Control over expenditure byAdministrative/ Finance Department

12.11.1 The function of the Administrative Departmentof the Government in respect of control overexpenditure is supervisory. It is not considereddesirable that they should assume any of thedirect responsibilities which are prescribed forControlling and Drawing and DisbursingOfficers. These Departments can, however,take such action as may be necessary tocheck extravagance or excess overallotments.

12.11.2 The Finance Department apart fromexercising control over expenditure is alsoresponsible for maintaining adequate cashbalances with the treasuries. Similarly, thisDepartment is required to perform the function

162

of controlling the financial aspects of Central-State financial relations. In order to enabledischarge of these duties, the department isrequired to maintain the accounts and developthe required data bank in accordance with theprocedure laid down for the purpose, inChapter 16 of this Manual. In this exercise theAccountant General has an obligation torender all assistance to the FinanceDepartment as per requirements from time totime.

12.12.0 Budgetary control at Treasury:

12.12.1 Treasury is the focal point for Government’sfinancial transactions and it, therefore,provides sufficient data for evolving andenforcing a sound budgetary managementsystem. Budgetary control can be exercisedvery effectively from the Treasury because allthe data required for the purpose is generatedhere while the budget is underimplementation. Efficiency of budgetarycontrol from Treasury is dependent uponpertinence and regularity of flow ofinformation. In order to reach this goal, it isnecessary to have sufficient clarity with regardto various aspects of this control like contentsof the budget, its Controlling Officers,implementing agencies, means ofcommunications etc.

12.12.2 The budget, as approved by the Legislaturehas to be the only authentic and lawfuldocument for incurring of expenditures, whichhas to incorporate in it all details quitemeticulously. Strictly, speaking, expenditureof not even a penny can be incurred by theGovernment except on the purpose(s) forwhich it is identified and granted by the

163

Legislature. Making of lump sum provisions,which has to be avoided, has unfortunately,become a routine in the process of budgetformulation particularly on the Plan side.Making of such a pre-budget exercise, whichwill eliminate need for making lump sumprovisions, has its own limitation. Yet everyattempt has to be made to bring in maximumtransparency in the budget, so that full details,with regard to envisaged Programmes andActivities together with their basic inputs undera Function becomes available to theimplementing agency as early as possibleafter commencement of a financial year towhich a budget relates. In case the budget isnot a true reflection of all the activities, controlover it is rendered difficult. Accomplishment ofthis objective should not be difficult. TheDevelopment Programmes are either, on-going or new Programmes. In case of ongoingProgrammes, financial estimation of therequired inputs is always available. It may bedifficult, to determine expenditure inputs indetail, with sufficient degree of accuracy incase of new Programmes, nevertheless therehas to be a forecast in this area also becausewithout that, determination of an outlay will beabsolutely adhoc, which is not a soundfinancial management practice. Keeping, thepresent scenario in view, it is high time thatdetermination of financial estimates in respectof various inputs for a DevelopmentalProgramme is made a pre-budget exercise,linking it at the same time to the prescribedpattern of accounts classification which in anycase, has to be uniform both for plan and nonplan financial transactions of a Governmentand that also at the national level inaccordance with Constitutionally backedguidelines prescribed by the Comptroller and

164

Auditor General of India from time to time.Separate, and divergent systems ofclassification, for plan and non-plan activitiescannot be followed for it will rendercoordination difficult. After all, patternof classification prescribed by the Comptrollerand Auditor General, common to both planand non-plan activities is a well thought outexercise having legal sanctity. It is onlythrough the use of common classifications thatthe Planning, budgeting, accounting andreporting operations can be integrated.

12.12.3 Budget Controlling Officers: - The FinanceDepartment shall declare a list of such officerswho will communicate allotment of funds infavour of various Drawing and DisbursingOfficers to the treasury, under different Headsof Account. The Administrative Departmentsincluding the Planning and DevelopmentDepartment have no authority to multiply thislist at their own will. A list of ControllingOfficers as also Drawing and DisbursingOfficers should be incorporated in the“Demands for Grants” as presented to thelegislature for obtaining approval to the budgetand passing of budget laws every year.

12.12.4 Communication of budget allocation to theTreasury: - The pattern and the format to beused for the purpose should be uniform andclassification/computer friendly. Budgetcommunication orders form the foundation forthe structure of the required budgetary control.The budget communication in this mannerthrough notified Controlling Officers aloneshould be entertained at the Treasury.

165

12.12.5 Misclassifications:- Wrong or incompleteaccount classifications distort picture ofGovernment Accounts, which can even leadto trouble in settlement of Central-Stateaccounts. Classification on the bills or otherinstruments presented at the treasury formaking of drawals or depositing revenues hasto be recorded distinctly, completely andcorrectly through classification memos andany deviation in this regard should attractdishonouring of a claim by the Treasury.

12.12.6 Chest holders: - In the Treasury accounts,every transaction of these officers aretemporarily classified under the suspensehead “Remittances” which is eventuallyrelieved in Accountant General’s office wherethe transaction is taken to the relevant head inthe Government Accounts. Although, a memoindicating budget allotment and the accountsclassification is attached to every chequepresented by a Chest Holder at the Treasury,yet this memo does not serve the requiredpurpose of allocating the expenditure to therelevant head of account.

12.12.7 The Chest Holders render accounts to theAccountant General at monthly intervals.These accounts, interalia, include a statementof budget allocations, and expendituresincurred there against. Immediately after anaccount is submitted to the AccountantGeneral by a Chest Holder, a copy of suchcomponent of that account as relates toadjustments made against ‘Remittances’ headshould be given to the Treasury as well,where it should be linked to the treasuryrecords and verified.

166

12.12.8 Once the budget allotment orders withadequate details as envisaged are received,bills and other instruments presented with allthe relevant account classification details anddetailed account statement of the ChestHolders linked to transactions recorded under“Remittance head”, it will be possible tomaintain Budget Control Register withaccuracy, to serve as an effective tool forenforcing a sound and systematic budgetarycontrol. This register in fact, will be aledgerised account of each officer in accountwith a Treasury, reflecting at any given pointof time budgetary allocations available withhim, transactions recorded there against andthe balance left to reach the targets. Apartfrom meeting the objective of watchingbudgetary performance of the individualofficers through these details, the budgetcontrol register shall also enable generation ofthe required data in a desired fashion forworking out of returns to be eventually usedfor understanding, analyzing and interpretingthe accounts of the Government as a whole.The budget control register, accordinglyserves the twin purpose of: -

01. Itemized control over variousbudgetary inputs andoutputs in respect of theofficers in account with theTreasury so as to watch theiroperations within theindicated budgetary ceiling.

02. Enable making of returns onthe basis of the dataavailable in the register to

167

create an over allmanagerial account for theGovernment activities intheir totality. It has beengiven this name because itwill not be a substitute forthe accounts complied bythe Accountant Generalwhich as already statedearlier shall have to continuefor various legal and otherconsiderations.

12.12.9 The structure of budget control register for theCivil and Cheque Drawing Officers will vary tothe extent that in the former case recording ofexpenditure against budget allocations will bedirect and in the later it will have to be done atthe close of a month. Initially, the transactionsof the Cheque Drawing Officers, will bewatched in totality through “Remittance head”as and when these take place. Composition ofthese two types of budget control registers isdescribed as under: -

1.0 BCR for Civil Departments: - It will havethree parts as under: -

Part-I Recording generalinformation relating toDrawing and DisbursingOfficer, his Department,Budget Controlling Officer,Account Heads operatedupon with code numbersneeded for any futurereference.

Part-II Recording budget allocationmade to a Drawing andDisbursing Officer forvarious activities under a

168

Function during a year withsupplements/reductions, ifany, separately for non plan(NP), state plan (SP), anddistrict plan (DP), externallyaided projects (EAP) andcentral plan (CP).

Part-III Recording day to dayexpenditure under eachObject ofExpenditure/detailedaccount head.

2.0 BCR for Cheque Drawing Officers: - It willalso be in three parts as under -:

Part I Indicating general informationabout the ChequeDrawing Officer (CDO) forfuture reference.

Part II Total budget allocation madeto a CDO and expenditurethere against with outrelating it to theProgrammes, Activities orObjects of Expenditure. Inthis part the unspent budgetallocations of previousfinancial year will also bebrought forward to watch theclearance of chequesissued but not presented forpayment at the Treasurybefore the close of previousfinancial year.

Part III Recording total expenditureduring a month whetherdrawn from the Treasury or

169

made by accountingadjustments based onmonthly account returnsubmitted by a CDO to theTreasury Officer. This part IIIwill, however, be finalizedonly after it is linked to part Iin respect of the chequesdrawn during a month.

Note: It will be seen that in part IIprovision has been made forrecording unspent budgetallocations brought forward fromprevious year because chequesissued by CDOs at the close of ayear are generally presented forpayment at the treasury in thesubsequent year at least up to endof the month of June.

12.12.10 The formats of the Budget Control Register asprescribed shall only be used.

12.12.11 Expenditure control in respect of thetransactions for which budget allocation isnot made:- These transactions fall underLoans and Advances and other accountsunder Public Account like Unfunded Debts,Reserves, Deposit and Advances, SuspenseAccounts, Remittances, and Cash Balances.Expenditure ceilings in the form of budgetaryallocations are not applicable to these kinds oftransactions. Therefore, these transactionsare not susceptible to any budgetary control.In case of transactions falling under ‘Depositsand Advances’, the ceilings are created withinthe Treasury through contra adjustmentswhich have necessarily to be watched. This isdone with the help of Deposits and Advances

170

Register, opened and maintained at theTreasury.

12.12.12 Use of Treasury data to produceGovernment’s managerial accounts:-Presently, the Government Accounts arecompiled by Accountant General. For thispurpose the Treasuries render various returnssupported by detailed vouchers to theAccountant General within a defined frame oftime. By and large, this prescribed timetable isfollowed by the Treasury and all the details,returns etc. for a month become available tothe Accountant General by 10th of thefollowing month. In view of this, it should bepossible to bring out Monthly Civil Accountsand other Annual Accounts, which aresupposed to be compiled, promptly. This doesnot, however, happen for various reasons andthese accounts become available much afterthe event. One of the important factors, forsuch a delay is that reconciliation ofexpenditure and receipts is not made by thedepartmental officers with the AccountantGeneral’s Office as per prescribed schedule oftime. Compilation also falls in arrears,because of tremendous increase inthe volume of the transactions, difficult to behandled centrally by one agency. In order tomeet constitutional obligation thedepartmental accounts received by theAccountant General through Treasury areincorporated in most of the cases withoutreconciliation. This fact, coupled withinadequate (some time even wrong)accounting classification recorded onvouchers leads to misclassification oftransactions and the present belief is that thismenace has assumed alarming proportion.Thus, the accounts returns produced by the

171

Accountant General do not serve themanagerial requirements of the Governmentand have assumed only a historical purpose.Whereas, the present system, of renderingaccounts to the Accountant General may haveto continue as its discontinuation and takeover of accounting function by theGovernment has its own ramifications, legal,financial and administrative which need adetailed study. It is however, necessary nowthat some via media is found to evolve andmonitor Government Account with managerialorientation involving least additional effort andcost. This can be done by making theoptimum use of the data available from theTreasury in its Budget Control Register,Madwars, and Lists of Payment and CashAccounts.

12.12.13 Since Drawing and Disbursing Officers haveconstant dealings with the Treasury, it will befeasible to develop a scheme, for theircodification on scientific basis.

12.12.14 It should not be difficult to monitor receipt andexpenditure of the various departmentsfrom the returns of the Treasuries and theirconsolidation to cover the financial operationsof the Government as a whole. The followingreturns should be submitted by the treasurywithin five days after the last date fixed forsubmission of accounts, to the AccountantGeneral.

01. Abstract of Revenue Receipts inthe treasury drawn from themonthly cash account.

172

02 Abstract of Expenditure on thebasis of the Budget ControlRegister

03. Abstract of Receipts andDisbursements in respect ofindividual Functional Heads ofAccount falling under Public Debt,Loans and Advances, UnfundedDebts and other heads underPublic Account.

12.12.15 These returns received from the Treasuries inthe given set of proformae shall beconsolidated at the apex level in the FinanceDepartment through a nucleus expendituremonitoring and analysing wing who shallcirculate the consolidated managerialaccounts at pre-determined periodicalintervals. The consolidation of the accounts atthe apex level will undergo the followingprocesses: -

01.Returns received from Mufassil(Sub) Treasuries shall beconsolidated into an account forthe District.

02. The account of the Districtscompiled as above shall beconsolidated separately forJammu & Kashmir divisions.Kashmir will include Leh andKargil Districts.

03. The Divisional Accounts, thus,worked out shall be consolidatedto make the account for theGovernment as a whole.

173

12.12.16 In this way, the accounting data based ontransactions originating at the Treasury andthus authentic and dependable, reflecting acomparison between budget and actuals, shallbe readily available at the apex for theGovernment, broken into Districts as also nonplan, state plan, district plan, externally aidedprojects and central plan in respect of everymonth during a year and can be used forvarious requirements as may be identified orwhich may arise as a result of administrativeexigencies.

12.13.0 Adjusting Accounts

12.13.1 These accounts are maintained for financialsettlements in respect of payments made toand on behalf of the Central Government, otherState Governments and other agencies likeRailways, Defence etc. Such transactionoriginates at treasuries and is classified undervarious settlement accounts as prescribed bythe Comptroller & Auditor General of India. It isthe responsibility of the State AccountantGeneral to ensure that these settlements areprompt.

12.13.2 As a process of budgetary control, the treasuryofficers should report monthly, the aggregatedebits and credits raised under these adjustingheads. Similarly, the State Accountant Generalshould also report the adjustments/cashtransactions that originate in that office underthese heads of account to the FinanceDepartment on monthly basis. With the help ofsuch details the Finance Department will beable to find out how far these settlements

174

remain pending and need to be pursued withthe help of a properly designed return of suchaccounts and its analysis at the periodicalintervals.

_________________________________________

175

Chapter 13

REVISED ESTIMATES

13.1.0 As a result of control over expenditure whichaims at constant review of the expenditure vis-à-vis the appropriations available under ahead of account probable savings and excesscome to light which will obviously, necessitaterevision in the original estimates and theestimates thus revised are termed as “revisedestimates”.

13.2.0 The “revised estimates” are, therefore,estimates of the probable revenue orexpenditure of a financial year under variousheads of account worked out in course of timewhile the budget is under implementationduring a year.

13.3.0 These estimates have to be drawn inproforma which has the columns like head ofaccount, original budget, actuals for the lastsix months of the previous year, actuals forthe first six months of the budget or upto endof the month in which the exercise is madeand the anticipated expenditure for the year.

13.4.0 Actuals for the first six months of the year andthe actual for the last six months of theprevious year can be very helpful indicators ofthe revised estimates. This information shouldnot however be accepted without acheck/analysis as the base for suchestimation of revised estimates for which allother known factors should also be taken intoconsideration.

176

13.5.0 By the time revised estimates of expenditureare drawn all sanctions for implementation ofthe programmes in respect of which lump sumprovisions are made in the original budget dueto one reason or another are expected to havebeen issued by the competent authority(s).Inthe revised estimates of the year there istherefore need to incorporate full details of theestimates upto the lowest tier of accountsclassification. The revised estimates drawn inthis manner will present a fair picture of theexpenditure plans and how these arebehaving during the process ofimplementation.

13.6.0 Modified Grants

13.6.1 Original estimates when these are modified byvalid orders of re-appropriation, acceptance ofsurrenders or supplementary grants etc. aretermed as Modified Grants. Final ModifiedGrants for a budget year are prepared afterclose of that year and it is with reference tothese Grants that final excesses andsurrenders are worked out in theAppropriation Accounts which are examinedby the Public Accounts Committee of theLegislature. It is necessary that reasons formodifications in the original estimates arerecorded in brief but with clarity. According tothe recommendations of the Public AccountsCommittee, reasons for re-appropriation offunds/acceptance of surrenders have to berecorded in the orders sanctioning suchreappropriations or accepting surrenders.Similarly, reasons for obtaining supplementaryappropriations from the Legislature have alsoto be recorded in the SupplementaryStatements of Expenditure when presented tothe Legislature.

177

13.7.0 Re-appropriations

13.7.1 Appropriation Act indicates the limit uptowhich appropriations are available in a Grant.The purpose(s) for which, theseappropriations have to be utilized are alsodefined.

13.7.2 During the course of implementation of thebudget, it may happen that there are excessesunder certain heads and similarly there mayalso be savings under other heads under aGrant. Subject to certain general conditions,the Government has an authority to adjustexpected savings towards anticipatedexcesses within a Grant. It is such an act ofmaking adjustments of savings towardsexcesses which is termed as re-appropriation.The general restrictions for sanctioning of re-appropriation are indicated here under: -

01. Re-appropriation cannot be sanctionedfrom one Grant to another. Within aGrant also such orders which will aim atre-appropriation of funds from RevenueAccount to Capital Account and vice-versa cannot be made.

02. Re-appropriation cannot be made fromcharged items to Voted items and vice-versa.

03. Re-appropriation cannot be made tocreate an appropriation for meetingexpenditure on a new service notcontemplated in the original budget.

178

04. Re-appropriation cannot be made afterclose of the financial year.

05. Re-appropriation cannot be made inorder to create provision of funds forsuch items which have been specificallyomitted or reduced by the Legislature.

13.7.3 Over all control of the appropriation rests withthe Finance Department. They have,therefore, full powers to sanction re-appropriation with the above restrictions. Thepowers to sanction re-appropriation aredelegated also to the AdministrativeDepartments and the Controlling Officers. There-appropriation at these levels can besanctioned between the heads of accountsubordinate to one Major Head of accountwithin a Grant only. Sanctions for transfer offunds within a Grant from one Major Head ofaccount to another Major Head by means ofre-appropriation are issued only by theFinance Department. The general restrictionsfor sanction of re-appropriations by theAdministrative Departments are as under:-

01. Re-appropriation to meet suchexpenditures which do not standsanctioned by a competent authoritycannot be made.

02. No re-appropriation can be made formsalaries to meet expenditures on anyother object of expenditure.

03. No re-appropriation may be made fromsavings to supplement a contract grant.

179

04. No re-appropriation is permissible fromnon-recurring items of expenditure tomeet additional expenditure on recurringitems.

05. No part of the provision of new service,which is not required for the purpose forwhich it was included in the estimatesshall be utilized for any other purpose.

06. No re-appropriation is made from a lumpsum provision provided in the budgetpending sanction to its details.

07. No re-appropriation should be madewhich will result in increase in theprovision meant for temporary staff.

08. Re-appropriation from or to fundsprovided for secret services cannot alsobe made.

09. Grants provided for one industrialconcern cannot be diverted to othersuch concern.

10. No re-appropriation should be madewhich will involve expenditure duringfuture year also.

11. Monetary limit for sanction ofreappropriation by the AdministrativeDepartments shall be fixed by theFinance Department from time to time.

13.7.4 In addition of the above restrictions thegeneral restrictions for sanction of re-

180

appropriation by the Government are equallyapplicable.

13.7.5 The Heads of Departments and ControllingOfficers are competent to sanction re-appropriation subject to the followingFURTHER restrictions:-

01. Re-appropriation can be made inrespect of the grants placed attheir disposal only.

02. No re-appropriation can be madeto supplement funds under travelexpenses or temporaryestablishments unless suchestablishments stand sanctionedby the competent authority fromtime to time.

03. No re-appropriation is made fromthe estimates provided in thebudget for special purposes.

04. No re-appropriation is made fromthe provision meant for grants-in-aid to the outside institutions.

05. In case of Head of Departmentsreappropriations should notexceed the limit prescribed for thepurpose by the FinanceDepartment from time to time.

13.7.6 In case of public works departments, the ChiefEngineers have full powers to sanctionreappropriation of works Grants subject ofcourse to the above general and specialrestrictions. In other words, no monetaryceilings are prescribed for such re-

181

appropriations which are, however, subject tothe following conditions: -

01. No expenditure on a new works isincurred unless it is administrativelyapproved and orders of thecompetent authority to the taking upof such works have been obtained.

02. No expropriations should be madefrom plan to non plan worksordinarily. The Chief Engineer mayhowever do so for recorded reasons.

03. Re-appropriations involving works ofvarious departments should not bemade without their prior consent.

04. Re-appropriation from original worksto repairs should be made by theFinance Department only.

13.7.7 For works including the budget of the ForestDepartment, re-appropriations may besanctioned by the Principal Chief Conservatorof Forests subject to the above conditions.

13.8.0 Appropriation Accounts

13.8.1 Once final re-appropriation process iscomplete, implementation of a budget during ayear gets concluded. The over all position ofthe behavior of the budget thus gets knownand is reflected in the Appropriation Accountprepared by the Comptroller & AuditorGeneral of India through Accountant Generalof the State. This account indicates, theoriginal estimates as approved by theLegislature and how these stand modified bythe Acts of Re-appropriation, Supplementary

182

Grants and acceptance of Surrenders. Suchaccounts are prepared in respect of everyindividual Grant and presented to theLegislature by the Comptroller & AuditorGeneral with comments. The AppropriationAccounts thus placed before the Legislatureare referred to the Public Accounts Committeeby it for their examination and making of finalrecommendations which become a binding forimplementation. The excesses, whereverthese may have occurred due to validreasons, get regularized by obtaining “ExcessGrants” from the Legislature, obviously afterclose of the year to which these relate. Thesame procedure is followed for obtainingthese Excess Grants as is done in case of aNormal appropriation act or for gettingSupplementary Grants.

___________________________________________________

183

APPENDICES TO PART-III

APPENDIX-1(referred in Para 9.4.2)

JAMMU AND KASHMIR FISCALRESPONSIBILITY & BUDGET

MANAGEMENT ACT, 2006[Act No. XII of 2006, dated 9.8.2006]

An Act to provide for the responsibility of theGovernment to ensure prudence in fiscalmanagement and fiscal stability by progressivestrengthening of revenue surplus, reduction infiscal deficit, prudent debt managementconsistent with fiscal sustainability, greatertransparency in fiscal operations of theGovernment and conduct of fiscal policy in amedium term framework and for mattersconnected therewith or incidental thereto.

Be it enacted by the Jammu and Kashmir StateLegislature in the Fifty-seventh Year of theRepublic of India as follows:-

1. Short title and commencement(1) This Act may be called the Jammu and

Kashmir Fiscal Responsibility and BudgetManagement Act, 2006.

(2) It shall come into force on such date asthe Government may, by notification in theGovernment Gazette, appoint in thisbehalf.

2. Definitions In this Act, unless the context otherwise

requires,-

184

(a) ‘Act’ means the Jammu and Kashmir FiscalResponsibility and Budget management Act,2006;

(b)‘Budget’ Means the “Annual FinancialStatement” laid before the State Legislatureunder section 79 of the Constitution of Jammuand Kashmir;

(c)‘current year’ means the financial yearpreceding the ensuing year;

(d)‘ensuing year’ means the financial year forwhich the budget is presented;

(e) ‘financial year’ means the year beginning onthe 1st day of April of a year and ending on 31st

March of the year next following;

(f)‘fiscal deficit’ is the excess of aggregatedisbursements (net of debt repayments) overrevenue receipts, recovery of loans and non-debt capital receipts;

(g)‘fiscal indicators’ are such indicators as maybe prescribed for evaluation of the fiscal positionof the Government;

(h)‘fiscal targets’ are the numerical ceilings andproportions to total revenue receipts (TRR) orGSDP for the fiscal indicators;

(i)‘GSDP’ means Gross State Domestic Productat current market prices;

(j)‘Government’ means the Government ofJammu and Kashmir;

(k)‘Prescribed’ means prescribed by the rulesmade under this Act;

185

(l) ‘previous year’ means the year preceding thecurrent year;

(m)‘revenue deficit’ is the excess of the revenueexpenditure over total revenue receipts (TRR);Explanation: ‘Total Revenue Receipts(TRR)’includes state’s own receipts (both tax & non-tax) and current transfers from the Centre(comprising grants & State’s share of centraltaxes).

(n)‘revenue surplus’ is the excess of the totalrevenue receipts over revenue expenditure;

(o) ‘total liabilities’ means the liabilities under theConsolidated Fund of the State and the PublicAccount of the State and includes borrowings bythe public sector undertakings and the specialpurpose vehicles and other equivalentinstruments including guarantees where theprincipal and / or interest are to be serviced outof the budget.

3. Fiscal management objectives

The Government Shall-a) take appropriate measures to strengthen the

revenue surplus and thereafter build upadequate revenue surplus at a sustainable level,and utilize such surplus for discharging theliabilities in excess of the assets or for fundingcapital expenditure;

b) pursue policies to raise non-tax revenue withdue regard to cost recovery and equity;

c) lay down norms for prioritization of capitalexpenditure; and

186

d) expenditure policies that would provide impetusfor economic growth, poverty reduction andimprovement in human welfare/ standard of life.

4. Fiscal management principlesThe Government shall be guided by thefollowing fiscal management principles, namely:-

(a)transparency in setting the fiscal policyobjectives, the implementation of public policyand the publication of fiscal information so as toenable the public to scrutinize the conduct offiscal policy and the state of public finances;

(b)stability and predictability in fiscal policymaking process and in the manner in whichfiscal policy impacts the economy;

(c)responsibility in the management of publicfinances, including integrity in budgetformulation;

(d)fairness to ensure that policy decisions of theGovernment are taken having due regard totheir financial implications on future generations;and

(e)efficiency in the design and implementation ofthe fiscal policy and in managing the assets andliabilities of the public sector balance sheet.

5. Fiscal Policy Statements to be laid before theLegislature:-

The Government shall in each financial year laybefore each House of the State Legislature, thefollowing statements of fiscal policy alongwiththe budget, namely:-

187

(a) the macro-economic Framework Statement;(b)the Medium Term Fiscal Policy Statement;and(c) the Fiscal Policy Strategy Statement

6. Macro-economic Framework Statement

The Macro-economic Framework Statement, insuch form as may be prescribed, shall containan overview of the State economy, an analysisof growth and sectoral composition of GSDP, anassessment related to State Governmentfinances and future prospects.

7. Medium Term Fiscal Policy Statement

(1) The Medium Term Fiscal Policy Statement shallset forth in such form as may be prescribed thefiscal management objectives of theGovernment and three year rolling targets forthe prescribed fiscal indicators with clearenunciation of the underlying assumptions.

(2) In particular and without prejudice to theprovisions contained in sub-section (1), theMedium Term Fiscal policy Statement shallinclude the various assumptions behind thefiscal indicators an assessment of sustainabilityrelating to-(i) the balance between revenue receipts andrevenue expenditure;

(ii) the use of capital receipts includingborrowings for generating productive assets;

(iii) the estimated yearly pension liabilitiesworked out on actuarial basis for the next tenyears; Provided that in case it is not possible tocalculate the pension liabilities on actuarial basisduring the period of first three years after the

188

enforcement of the Act, the Government may,during that period, estimate the pensionliabilities by making forecasts on the basis oftrend growth rates.

8. Fiscal Policy Strategy Statement:-

The Fiscal Policy Strategy Statement shall be insuch form as may be prescribed and shallcontain, interalia-(i) the fiscal policies of the government for theensuing year relating to taxation, expenditure,borrowings and other liabilities (includingborrowings by Public Sector Undertakings andSpecial Purpose Vehicle and other equivalentinstruments where liability for repayment is onthe Government), lending, investments, othercontingent liabilities, user charges on ;publicgoods/utilities and description of other activities,such as guarantees and activities of PublicSector Undertakings which have potentialbudgetary implications;

(ii) the strategic priorities of the Government inthe fiscal area for the ensuing year;

(iii) the key fiscal measures and the rationale forany major deviation in fiscal measurespertaining to taxation, subsidy, expenditure,borrowings and user charges on publicgoods/utilities; and

(iv) an evaluation of the current policies of theGovernment viz-a-viz the fiscal managementprinciples set out in section 4, the fiscalobjectives set out in the Medium Term FiscalPolicy Statement in sub-section (1) of section 7and fiscal targets set out in section 9.

189

9. Fiscal Targets

(1) The Government may prescribe such targets asmay be deemed necessary forgiving effect tothe fiscal management objectives.

(2) In particular, and without prejudice to thegenerally of the foregoing provisions, theGovernment shall-

(a) maintain revenue surplus and initiate stepsfor progressive strengthening of the surplus;

(b) reduce pre-devolution non-plan deficit by anamount of equivalent to one percentage point ascompared to the pervious financial yearbeginning from 1st April, 2010 and to maintainthe level thereafter;

(c) reduce fiscal deficit by an amount equivalentto at least half percentage point of GSDP ineach financial year beginning from the 1st day ofApril, 2006 so as to bring it down to not morethan 3 percent (substituted by 4 percent on21.04.2010) by the year ending March, 2010;

(d) beginning from the initial financial year onthe1st day of April, 2006 and ending on the 31st

day of March, 2010, the outstanding totalliabilities do not exceed 55 percent of theestimated GSDP for that year by an annualreduction of 500 basis points every year;

(e) limit the amount of annual incremental riskweighted guarantees to 75 percent of the TRR inthe year preceding the current year or at 7.5percent of GSDP of the year preceding thecurrent year, whichever is lower;

190

Provided that revenue deficit and fiscal deficitmay exceed the limits specified under thissection due to ground or grounds of unforeseendemands on the finances of the Governmentarising out of the internal disturbance or naturalcalamity or such other exceptional grounds asthe Government may specify:

Provided, however, that a statement in respectof the ground or grounds specified in the firstproviso shall be placed before each House ofthe State Legislature, as soon as may be, aftersuch deficit amount exceeds the aforesaidtargets.

10. Measures for Fiscal Transparency

(1) The Government shall take suitable measures toensure greater transparency in its fiscaloperations in the public interest and minimize asfar as practicable, secrecy in the preparation ofthe budget.

(2) In particular and without prejudice to thegenerality of the foregoing provisions, theGovernment shall, at the time of presentation ofthe budget, make disclosures on the following,along with detailed information in such forms asmay be prescribed :-

(a) the significant changes in the accountingstandards, policies and practices affecting orlikely to affect the computation of fiscalindicators;

(b) details of borrowings by way of ways andMeans Advances/ Overdraft availed of from theReserve Bank of India.

191

(3) Whenever the Government undertakes tounconditionally and substantially repay theprincipal amount and/ or pay the interest of anyseparate legal entity, it has to reflect suchliability as the borrowings of the State.

11 Measures of Enforce Compliance

(1) The Minister- in – charge of the Department ofFinance (here in after referred to as Minister ofFinance), shall review every quarter, the trendsin receipts and expenditure in relation to thebudget estimates and place before each Housesof the State Legislature, the outcome of suchreviews

(2) Whenever there is either shortfall in revenue orexcess of expenditure over the intra-year targetsmentioned in the Fiscal Policy StrategyStatement or the rules made under the Act, theGovernment shall take appropriate measures forincreasing revenue and / or for reducing theexpenditure, including curtailment of the sumsauthorized to be paid and applied from out of theConsolidated Fund of the State;

Provided that nothing in this sub-sectionshall apply to the expenditure charged on theConsolidated Fund of the State under sub-section (3) of section 79 of the Constitution ofJammu and Kashmir or any other expenditure,which is; required to be incurred under anyagreement or contract, which cannot bepostponed or curtailed.

(3) (a) Except as provided under the Act, nodeviation in meeting the obligations cast on theGovernment under the Act, shall be permissiblewithout approval of Legislature.

192

(b) Where owing to unforeseen circumstances,any deviation is made in meeting the obligationscast on the Government under the Act, theMinister of Finance shall make a statement ineach House of the State Legislature explaining:-

(i) any deviation in meeting the obligations caston the Government under the Act;

(ii) whether such deviation is substantial andrelates to actual or the potential budgetaryoutcomes; and

(iii) the remedial measures the Governmentproposes to take.

(4) Any measures proposed in the course of thefinancial year, which may lead to an increase inrevenue deficit, either through increasedexpenditure or loss of revenue, shall beaccompanied by a statement of remedialmeasures, proposed to neutralize such increaseor loss and such statement shall be placedbefore each House of the State Legislature

(5) The Government may set up an agencyindependent of the Government to reviewperiodically the compliance of the provisions ofthe Act and table such reviews in each House ofthe State Legislature.

12 Power to make rules

(1) The Government may by notification in theGovernment Gazette, make rules for carryingout the provisions of the Act.

(2) In particular, and without prejudice to thegenerality of the foregoing power, such rules

193

may provide for all or any or the followingmatters, namely:-

(a) the form of the Macro – economicFramework Statement under section 6;

(b) the form of Medium Term Fiscal PolicyStatement, including the targets for the fiscalindicators, under section 7;

(c) the form of Fiscal Policy Strategy Statementunder section 8;

(d) the forms for disclosure under sub-section(2) of section 10;

(e) measures to enforce compliance;

(f) the manner of review of compliance of theprovisions of the Act by the independent agencyunder section 11; and

(g) any other matter which is required to be, ormay be, prescribed.

13 Rules to be laid before Legislature

Every rule made under the Act shall be laid, assoon as may be after it is made, before eachHouse of the State Legislature, while it is insession, for a total period of thirty days whichmay be comprised in one session or in two ormore successive sessions, and if, before theexpiry of the session immediately following thesession or the successive sessions aforesaid,the Houses agree in making any modification inthe rule or the Houses agree that the rule shouldnot be made, the rule shall thereafter have effectonly in such modified form or be of no effect, asthe case may be, so, however, that any such

194

modification or annulment shall be withoutprejudice to the validity of anything previouslydone under that rule.

14 Protection of action taken in good faith

No suit, prosecution or other legal proceedingsshall lie against the Government or any Officerof the Government for anything which is in goodfaith done or intended to be done under this Actor the rules made there under.

15 Application of other laws not barred

The provisions of this Act shall be in addition to,and not in derogation of, the provisions of anyother law for the time being in force

16 Power to remove difficulties

(1) If any difficulty arises in giving effect to theprovisions of the Act, the Government may, byorder published in the Government Gazette,make such provisions, not inconsistent with theprovisions of the Act, as may appear to benecessary for removing the difficulty; Providedthat no order shall be made under this sectionafter the expiry of two years from thecommencement of the Act

(2) Every order made under this section shall belaid, as soon as may be after it is made, beforeeach House of the State Legislature.

_________________________________________________

195

APPENDIX-2(referred in Para 9.4.2)

JAMMU AND KASHMIR FISCALRESPEONSIBILITY AND BUDGET

MANAGEMENT RULES, 2008-----.----

SRO 23, dated 18.1.2008----

In exercise of the powers conferred by sub-section (1) of section 12 of the Jammu andKashmir Fiscal Responsibility and BudgetManagement Act, 2006 (Act No. XII of 2006), TheGovernment of Jammu and Kashmir makes thefollowing rules, namely:-

1. Short title and commencement -

(1) These rules may be called the Jammu andKashmir Fiscal Responsibility and BudgetManagement Rules, 2008.

(2) They shall come into force from the date of theirpublication in the Government Gazette.

2. Definitions - (1) In these rules, unless the context otherwise

provides:-

(a) “Act” means the Jammu and Kashmir FiscalResponsibility and Budget Management Act,2006 (Act No. XII of 2006);

(b) “Budget” means Annual Financial Statementlaid before the State Legislature undersection 79 of the Constitution of the State;

196

(c) “Contingent liabilities” means the liabilities toGovernment that may arise out of theborrowings by Public Sector Undertakingsand other Institutions;

(d) “Current year” means financial yearpreceding ensuing year;

(e) “Ensuing year” means the financial year forwhich Budget is presented;

(f) “Fiscal deficit” means the excess ofaggregate disbursements (net of debtrepayments) over revenue receipts, recoveryof loans and non debt capital receipts.

(g) “Fiscal indicators” are such indicators as havebeen prescribed for evaluation of fiscalposition of the government in detail in Form 1appended to these rules;

(h) “Fiscal targets” are numerical ceilings andproportions to total revenue receipts (TRR) orGSDP for the fiscal indicators;

(i) “Form” means a form appended to theserules;

(j) “Financial year” means the year beginning on1st of April of a calendar year and ending on31st mach, the following year;

(k) “GSDP” means Gross State DomesticProduct at current market prices;

(l) “Revenue deficit” means excess of therevenue expenditure over revenue receipts;

(m) “Revenue surplus” means the excess of totalrevenue receipts over revenue expenditure.

197

(n) “State Government” means Government ofJammu and Kashmir;

(o) “TRR” means Total Revenue Receipts;

(2) Words and expressions used herein but notdefined in these rules shall have the meaningsrespectively assigned to them in the Act.

3. Macro-economic Framework Statement --

The Macroeconomic Framework Statement asrequired under section 6 of the Act be inForm F-1.

4. Medium Term Fiscal Policy Statement --

(1) The Medium Term Fiscal Policy Statement, asunder sub section (1) of section 7 of the Act shallbe in Form F-2 with three year rolling targets inrespect of the following fiscal indicators :-

(a) Revenue deficit as a percentage of TRR;

(b) Fiscal deficit as a percentage GSDP;

(c) Outstanding total liabilities as a percentage ofGSDP.

(2) The Medium Term Fiscal Policy Statement shallalso explain the assumptions underlying theabove mentioned targets for fiscal indicators andan assessment of sustainability relating to theitems indicated in sub section (2) of section 7 ofthe Act.

5. The Fiscal Policy Strategy as required undersection 8 of the Act shall be in Form F-3.

198

6. Disclosures --

(1) The State Government shall at the timeof presenting the budget, make disclosures as

required under section 10 together with thefollowing statements:-

(a) a statement of select indicators of fiscalsituation in Form D-1;

(b) a statement on components of StateGovernment liabilities and interest, cost ofborrowings/ mobilization of deposits inForm D-2;

(c) a statement of Consolidated Sinking Fundin Form D-3;

(d) a statement on guarantees given by theGovernment in Form D-4;

(e) a statement on outstanding risk-weightedguarantees in Form D-5;

(f) a statement on the Guarantee RedemptionFund in Form D-6;

(g) a statement of Assets in Form D-7;

(h) a statement on claims and commitmentsmade by the State Government onrevenue demands raised, but not realizedin Form D-8;

(i) a statement on liability in respect of majorworks and contractors, committed liabilitiesin respect land acquisition charges andclaims on the State Government in respect

199

of unpaid bills on works and supplies inForm D-9; and

(j) a statement giving details of number ofemployees in Government, Public Sectorand Aided Institutions and the relatedsalary expenditure, in Form D-10.

(2) The provisions of sub rule (1) shall be completedwith not later than three years after the cominginto force of Fiscal Responsibility and BudgetManagement (FRBM) Act.

7. Measures to enforce compliance --

In case the outcome of the quarterly review oftrend in receipts and expenditure, at the end ofsecond quarter of any financial year shows that:

(I) the total non-debt receipts are less than 35percent of Budget Estimates for that year, or

(II) the Fiscal deficit is higher than 50 percent ofthe Budget Estimates for that year; or

(III) the revenue surplus is less than 35 percent ofthe Budget Estimates for that year, the StateGovernment shall take appropriate measures;and the Minister Incharge shall make astatement in the Legislature during thesessions immediately following the end of thesecond quarter detailing the correctivemeasures taken and the prospects for thefiscal deficit of that financial year.

______________________________________

200

FORM F-1(See Rule 3 and 4)

MACRO ECONOMIC FRAME WORK STATEMENT

1. Overview of the State Economy: {Thisparagraph shall contain a synoptic analysis oftrend in the rate of growth of output. Informationon key macroeconomic indicators shall bepresented in the table at the end of this form}.

2. GSDP Growth: {This paragraph shall containan analysis of trend in overall GSDP growth andits sectoral composition}.

3. Overview of State Government Finances:{This paragraph shall detail the developments inState Finances including an analysis of trends inreview collections and expenditure, and theimportant fiscal deficit and debt indicators andthe measures taken to improve the financialposition of the State Government. Trends inState Government finances shall be presentedin the format appended. This will, interalia,indicate the developments related to theConsolidated Sinking Funds, GuaranteeRedemption Fund, and issuances of riskweighted guarantees and Ways and MeansAdvances availed from the RBI. This paragraphmay also cover analysis of finances of localbodies and State level public sectorundertakings including the progress made bythem for compilation/finalization of annualstatements of accounts and central transfers}.

4. Prospect: {Based on the trends in majorsectors presented in the previous section, anassessment shall be made regarding the growthprospects, along with the underlying

201

assumptions. An assessment of fiscal prospectsshall also be made}.D: Rationale for Policy changes:-

{(1) The rationale for policy changes consistentwith the Medium Term Fiscal Policy Statement,in respect of taxes proposed in the ensuingBudget shall be spelt out.

(2) The rationale for major policy changes inrespect of budgeted expenditure includingexpenditure. Rationale for changes, if any,proposed, in the management of the public inrespect of the charges for public debit shall beindicated.

(3) The need for changes, if any, proposed inrespect of the charges for public utilities shall bespelt out}.

E: Policy Evaluation:-

{This paragraph shall contain an evaluation ofthe changes proposed in the fiscal policy for theensuing year with reference to fiscal deficitreduction and objectives set out in the MediumTerm Fiscal Policy Statement}.

______________________________________

202

F- 1 (Contd.) ECONOMIC PERFORMANCE AT A GLANCE

Table 1: Trends in Select Macroeconomic and Fiscal Indicators

Absolute Value(` in Crore)

Percentage Changes

April-ReportingPeriod*

April- ReportingPeriod*

PreviousYear

CurrentYear

PreviousYear

CurrentYear

Real Sector:

1 GSDP at factor cost(a) at current price(b) at 1993-94 price

2. Agriculture Production3. Industrial Production4. Tertiary sector

ProductionGovernment Finances:

1. Revenue Receipts(2+3)

2. Tax Revenue(2.1+2.2)

2.1 Own Tax Revenue2.2 State’s share in

Central Taxes3. Non-Tax Revenue

(3.1+3.2)3.1 State’s Own Non-Tax

Revenue3.2 Central Transfers4. Capital Receipts

(5+6+7)5. Recovery of loans6. Other Receipts7. Borrowings & other

Liabilities

203

8. Total Receipts(1+4)

9. Non PlanExpenditure (10+12)

10 Revenue Accountof which

11 (a) Interest payment(b) Subsides(c )Wages & Salaries(d) Pension Payments

12 Capital Account13 Plan Expenditure

(14+15)14 Revenue Account15 Capital Account16 Total Expenditure

(9+13)17 Revenue

Expenditure(10+14)18 Capital

Expenditure(12+15)19 Revenue Deficit (17-1)20 Fiscal Deficit

{16-(1+5+6)}21 Primary Deficit

(20-11)

Memo:Average amount of WMA from RBI

Average amount of OD from RBI

Number of days of OD

Number of occasions of OD

* Date will relate to the period up to which information for thecurrent year is available. To facilitate comparison, date ofprevious year corresponds to the same period of current year.Accordingly, reporting period may vary for different items.

* The average amount of WMA/OD is calculated by summingup the outstanding amount of WMA as on each day (includingholidays) and dividing by the total number of days during April-Reporting period.

204

FORM F-2(See Rule 3 & 4)

MEDIUM TERM FISCAL POLICY STATEMENTA: FISCAL INDICATORS-ROLLING TARGET

PreviousYear (Y-2)Actuals

CurrentYear (Y-1) BudgetEstimates(BE)

CurrentYear(Y-1)RevisedEstimates(RE)

CurrentYear (Y-1)Budget Estimates(BE)

EnsuringYear (Y)BudgetEstimates(BE)

TargetsFor NextTwo Years

1. Revenue Deficit aspercentage of TotalReceipts (TRR)2. Fiscal Deficit aspercentage of GSDP3. Total outstandingLiabilities as percentageof GSDP

B: ASSUMPTIONS UNDERLYING THEFISCAL INDICATORS

1. Revenue Receipts

(a) Tax Revenue-Sectoral and GSDP Growth Rates.(b) Non Tax Revenue-Policy Stance.

(c) Devolution to Local Bodies.

(d) Share of Own Tax Revenue to Total Revenue.

(e) Share of Own Non-Tax Revenue to TotalNon-Tax Revenue

2. Capital Receipts-Debt Stock, Repayment,Fresh Loans and Policy Stance

(a) Loans and advances from the Centre.

(b) Special Securities issued to the NSSF.

(c) Recovery of Loans and Advances.

(d) Borrowings from Financial Institutions.

(e) Other Receipts (net) - Small Savings,Provident Funds, etc.

(f) Outstanding Liabilities- Internal Debt andOther Liabilities.

205

3. Total expenditure-Policy Stance

(A) Revenue account(i) Interest payments-(a) on borrowings duringthe year (aggregate and category-wise);

(b) on outstanding liabilities-(aggregate andcategory-wise).

(ii) Major subsidies.(iii) Salaries.(iv) Pensions.(v) Others.

(B) Capital Account(i) Loans and Advances(ii) Capital Outlays

4. GSDP Growth

(c) Assessment of sustainability relating to --

(i) The balance between receipts andexpenditure in general and revenue receipts andrevenue expenditure in particular. The MediumTerm Fiscal Policy Statement may specify thetax-GSDP ratio, own Tax - GSDP ratio andState’s Share in Central Taxes-GSDP ratio, fromthe current year and subsequent two years withan assessment of the changes required forachieving it. It may discuss the non-tax revenuesand the policies concerning the same.Expenditure on revenue account, both plan andnon plan, may also be discussed with particularemphases on the measures proposed to meetthe overall objectives. It may discuss policies tocurtail expenditure on salaries, pension,subsidies and interest payments. An assessmentof the capital receipts shall be made, including

206

the borrowings and other liabilities, as per thepolicies spelt out. The statement shall also giveprojections for GSDP and discuss it on the basisof assumptions underlying the indicators inachieving the sustainability objective.

(ii) The use of capital receipts including marketborrowings for generating productive assets. TheMedium Term Fiscal Policy Statement mayspecify the proposed use of capital receipts forgenerating productive assets in differentcategories. It may also spell out proposedchanges among these categories and, discussthem in terms of the overall policy of theGovernment.

(iii) The estimated yearly pension liabilitiesworked out on actuarial basis for the next tenyears. In case it is not possible to calculate thepension liabilities on actuarial basis during theperiod of first three years after the coming intoforce of this Act, the State Government may,during that period, estimate the pension liabilitiesby making forecasts on the basis of trendgrowths rates i.e. average rate of growth ofactual pension payments during the last threeyears for which data are available.

207

FORM F-3(See Rule 3 & 5)

FISCAL POLICY STRATEGY STATEMENT

A: Fiscal Policy Overview: [This paragraph willpresent an overview of the fiscal policy currentlyin vogue].

B: Fiscal Policy for the ensuing year: [Thisparagraph shall have, interalia, sixsubparagraphs dealing with-

(1) Tax Policy: In the sub-paragraph on taxpolicy, major changes proposed to be introducedin direct and indirect taxes in the ensuingfinancial year will be presented. It shall containan assessment of exemption in various taxesand how far it relates to principles regarding taxexemptions.

(2) Expenditure Policy: Under expenditurepolicy, major changes proposed in the allocationfor expenditure shall be indicated. It shall alsocontain an assessment of principles regardingthe benefits and target group of beneficiaries.

(3) Borrowing and other Liabilities, Lendingand Investments: In this sub-paragraph onborrowings, the policy relating to internal debt,including the access to WMA/OD facility fromthe Reserve Bank of India. GovernmentLending, Investment and other activities;including principles regarding average maturitystructure, bunching of repayments, etc., shall beindicated. The borrowings by Public SectorUndertakings and Special Purpose Vehicle,lending, investments, pricing of user charges onpublic goods and utilities and description of

208

other activities and activities of public sectorundertakings which have potential budgetaryimplications and the key fiscal measures andtargets pertaining to each of these shall beindicated.

(4) Consolidated Sinking Fund: In this sub-paragraph, the policy related to the ConsolidatedSinking Fund (CSF) shall be indicated.

(5) Contingent and other liabilities: Anychange in the policy on contingent and otherliabilities, in particular guarantees, which havepotential budgetary implications shall beindicated. Any change in the policy related toborrowings by Special Purpose Vehicle (SPV)and other equivalent instruments where liabilitiesfor repayment is on the State Government shallbe indicated. The policy on building up theGuarantee Redemption Fund (GRF) andcommission charged/collected for guaranteesissued shall also be indicated.

(6) Levy of User Charges: Any changeproposed in the levy of user charges of publicservices shall be spelt out.

C: Strategic priorities for the ensuing year(1) Resource mobilization for the ensuingfinancial year through tax, non-tax and otherreceipts shall be spelt out.

(2) The broad principles underlying theexpenditure management during the ensuingyear shall be spelt out.

(3) Priorities relating to management of publicdebt proposed during the ensuing year shall beindicated.____________________________________

209

FORM D-1(See Rule 7)

SELECT FISCAL INDCATORS

S.No. Item Previous Year Current Year(Revised Estimates)

01 Gross Fiscal Deficit aspercentage of GSDP

02 Revenue Surplus aspercentage ofGross Fiscal Deficit

03 Revenue surplus aspercentage of GSDP

04 Revenue Surplus aspercentage of TRR

05 Total Liabilities –GSDP ratio %

06 Total Liabilities-Total RevenueReceipts (%)

07 Total Liabilities –State’s own RevenueReceipts (%)

08 State’s own RevenueReceipts to RevenueExpenditure (%)

09 Capital outlay aspercentage of GrossFiscal Deficit

10 Interest payment aspercentage ofRevenue Receipts

11 Salary Expenditure aspercentage ofRevenue Receipts

12 Pension Expenditureas percentage ofRevenue Receipts

13 Non DevelopmentExpenditure aspercentage ofaggregatedisbursements

14 Gross transfers fromthe centre aspercentage ofaggregatedisbursements

15 Non- Tax Revenueas percentage of TRR

210

FORM D-2(See Rule 7)

A. COMP0NENTS OF STATE GOVERNMENT LIABILITIES

S. No Category Revised during thefiscal year

Re-payment /Redemption

During the FiscalYear

OutstandingAmount

End-March

PreviousYear

(Actuals)

Currentyear

Revised(Estimates)

PreviousYear

(Actuals)

CurrentYear

Revised(Estimates)

PreviousYear

(Actuals)

CurrentYear

Revised(Estimates)

01 MarketBorrowings

02 Loansfrom thecentre

03 SpecialSecuritiesissued toNSSF

04 Borrowingsfrom theFinancialInstitutions/Banks

05 WMA/ODfrom RBI

06 Smallsavings,Providentfunds, etc.

07 Reversefunds/Deposits

08 Otherliabilities

09 Total

211

FORM D-2(See Rule 7)

B. WEIGHTED AVERAGE INTEREST RATES ON STATEGOVERNMENT LIABILITIES

(percent)Raised during the Fiscal Year Outstanding Amount

(End- March)Category Previous year

(Actuals)Current Year

(RE)Previous Year

(Actuals)Current Year

(RE)MarketBorrowingLoans fromCentreSpecialSecuritiesissued to theNSSFBorrowings fromFinancialInstitutions/BanksWMA/OD fromRBISmall Savings,Provident Fundsetc.Reserve Funds /DepositsOther LiabilitiesTotal*

^ Weighted average interest rate where the respective weight is theamount borrowed. This is calculated on contractual basis and thenannualized.

* Weighted average interest rate where the weights are the amount ofthe respective components of the State Government Liabilities.

Example 1Suppose the State Government raised resources from the

market on three occasions during a fiscal year for an aggregateamount of ` 600 crore. The annual rates of interest were 10 per cent,12 percent and 14 percent, for ` 100 crore, ` 200 crore and ` 300

212

crore, respectively. The weighted average interest rate in respect ofthe resources raised during the year would therefore be:

` 100x (10/100) +` 200 (12/100) + ` 300x (14/100)/ (100 + 200 + 300)x 100 = [10 +24 +42] /600 x 100

= (76 / 600) x 100 = 12.67%

Example 2

Suppose the previous and current year pertain to 2004-05and 2005-06. Suppose the total outstanding amount of specialsecurities issued by the State government to the NSSF was` 100 crore as at end – March 2004 and ` 150 crore as at end- March2005. Suppose the total interest cost incurred by the StateGovernment on this account during 2005-06 and 2006-07 amount to` 10 crore and ` 12 crore, respectively. Then the weighted averagecost on the outstanding amount of special securities issued to theNSSF during the previous year (ie. 2004-05) is equal to 10/100= 10percent. Similarly, the weighted average interest cost on theoutstanding amount of special securities issued to the NSSF duringthe current year (ie. 2005 -06) is equal to 12/ 150=8 percent.

________________________________________

213

FORM D-3 (See Rule 7)

CONSOLIDATED SINKING FUND

(Amount in ` Crore)Outstandingat thebeginningof theprevious year

Additionsduringthepreviousyear

Withdrawalsduring thepreviousyear

Outstandingat the endof previousyear/beginningof thecurrentyear

(4)/ Stockof SLRborrowings(%)

AdditionsDuringthecurrentyear

Withdra-walsduringthecurrentyear

Outstandingat theend of thepreviousyear/beginningof annualyear

(8)/ stockof SLRBorrow-ings (%)

(1) (2) (3) (4) (5) (6) (7) (8) (9)

214

FORM D - 4(See Rule)

GURANTANTEE GIVEN BY THE GOVERNMENT

Invoked during theyear (` crore)

GuaranteeCommission

or Fee

(` crore)

Category(No. ofGuarant-eeswithinbrackets)

MaximumAmountGuarant-eed duringthe year

(` crore)

Outstan-dingat thebegin-ning oftheyear

(` crore)

Addi-tionsduringtheyear

(` crore)

Reduct-ionsduringthe year(other thaninvokedduring theyear)

(` crore)

Dis-charged

Notdis-charged

Out-standingat theend oftheyear

(` crore)

Recei-vable

Recei-ved

Remarks

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)

Note: Reporting Year refers to the second year proceeding theyear for which the Budget is presented.

215

FORM D-5(See Rule 7)

OUTSTANDING RISK WEIGHTED GUARANTEES

(Amount in ` crore)

DefaultProbability

RiskWeights(percent)

AmountOutstandingas in thePrevious yearand the currentYear

Risk weightedoutstandingguarantee in theprevious yearand the currentyear

Direct Previousyear

Currentyear

Previousyear

CurrentYear

Direct Liabilities 100

High Risk 75

Medium Risk 50

Low Risk 25

Very Low Risk 5

Total Outstanding

Note: The risk-weights have been pre-specified for thevarious risk categories.

216

FORM D-6(See Rule 7)

GURANTEE REDEMPTION FUND (GRF)

(in ` crore)Outstandinginvokedguaranteesat the endof thePreviousyear

Outstandingamount inGRF at theendof thepreviousyear

Amount ofGuaranteeslikely to beinvokedduring thecurrent year

Additionto GRFduringthecurrentyear

Withdrawalfrom theGRF duringthe currentyear

Outstandingamount inGRF at theend ofcurrent year

(1) (2) (3) (4) (5) (6)

Note:(i) As per the terms of the GRF, during each year, theGovernment is required to contribute an amountequivalent at least 1/5th of the outstanding invokedguarantees plus an amount likely to be invoked as aresult of the incremental guarantees issued duringthe year.

(ii) Previous year refers to the year preceding thecurrent year.

217

FORM D-7(See Rule 7)

STATEMENT OF ASSETSAssets at thebeginning of theReporting year

Assets acquiredduring thereporting year

Comulativetotal assets at the endof the reporting year

Book value(` in cr.)

Book value(` in cr.)

Book value(` in cr.)

Financial Assets :

Loans and AdvancesLoans to Local BodiesLoans to companiesLoans to others

Equity investment sharesBonus Shares

Investments in GoI datedsecurities / Treasury bills

Investments in 14-dayintermediate Treasury Bills

Other financial investments(pleases specify)

TotalPhysical Assets :

LandBuilding- Office/ ResidentialRoadsBridgesIrrigation ProjectsPower ProjectsOther capital projectsMachinery and equipmentOffice equipmentVehicles

TotalNote:-

1. Assets above the threshold value of ` two lakh onlyto be recorded.

2. Reporting year refers to the second year precedingthe year for which the annual financial statement anddemands for grants are prescribed.

218

3. The Statement in respect of physical assets is to beprepared based on assets register maintained by theGovernment the value to be indicated would be bookvalue i.e. acquisition cost netted fordepreciation/impairment.

4. States that are not in a position to provideinformation in respect of physical assets may, tobegin with, provide information only in respect offinancial assets. They may disclose their physicalassets within- years from the date of publication ofthe Notification of the Rules in the State Gazette

_____________________________________

219

FORM D- 8See Rule 7

TAX REVENUE RAISED BUT NOT REALIZED (PRINCIPAL TAXES)

(As at the end of the reporting year) Amount under disputes (` in crore) Amount not under dispute (` crore) Grad

TotalMajorHead

Description Over1Yearbutlessthantwoyears

Over2Yearsbutlessthan5years

Over5Yearsbutlessthan10years

Over10years Total

Over1Yearbutlessthantwoyears

Over2Yearbutlessthan5years

Over5Yearsbutlessthan10years

Over10Years

Total

Taxes on Income &Expenditures

Agriculture IncomeTaxTaxes onprofessions, traders,callings andemploymentTaxes on propertyand CapitalServicesLand Revenue

Stamps &Registration fees

Urban immovableproperty tax

Taxes onCommodities andservices

Sales tax

Central Sales tax

Sales tax on MotorSprit and Lubricants

Surcharges on SalesTax

State Excise

Taxes on vehicles

Other taxes

Total

Note: Reporting year refers to the second year preceding the year for which theannual financial statement and demands for grants are presented.

220

FORM D-9(See Rule7)

STATEMENT OF MISCELLANEOUS LIABILITIES :OUTSTANDINGS

(in ` Crore)Outstanding Amounts$

Major Works and contracts

Committed liabilities in respect ofland acquisition charges

Claims in respect of unpaid billson works and supplies.

$: The outstanding amount pertains to the endMarch position or the year before the currentyear.

221

FORM D -10(See Rule 7)

STATEMENT OF NUMBER OF EMPLOYEES AND RELATED SALARY EXPENDITURE

PART-1EMPLOYEES IN GOVERNMENT DEPARTMENT

DemandNo. andDescription

Number ofemployeesIn the currentyear

Salary Expenditure(In ` lakhs)

NP SP CSS To-tal

Actual(Previous Year)

BE(Current Year)

RE(Current Year)

BE(Next Year)

NP SP CSS To-tal

NP SP CSS To-tal

NP SP CSS To-tal

NP SP To-tal

NP: Non Plan, SP: State Plan, CSS: Centrally SponsoredSchemes (including NEC)Previous Year: 2years preceding the year for which Budgetis presented, Current Year: 1 Year Preceding the year forwhich Budget is presented, Next Year: Year for whichBudget is presented.

PART-II EMPLOYEES IN PUBLIC SECTOR

Salary Expenditure ( in ` Lakhs)Name ofthe PSU

Name of theControlling

AdministrativeDepartment

Number ofemployees inthe current

Year

Actuals(Previous Year)

BE(Current Year)

RE(Current Year)

BE(Next Year)

Previous Year : 2 years preceding the year for which Budgetis presented, Current Year: 1 year preceding the year forwhich Budget is presented, Next year : Year for which Budgetis presented.

222

PART- III EMPLOYEES IN AIDED INSTITUTIONS

Salary Expenditure ( in ` lakhs)Name oftheAidedInstitution

Name of theControllingAdministrativeDepartment

Number ofemployeesinthe currentYear

Actuals(Previous Year)

BE(Current Year)

RE(current Year)

BE(Next Year)

Previous Year: 2 years preceding the year for whichBudget is presented, Current Year : 1 year preceding theyear for which Budget is presented, Next year : Year forwhich Budget is presented.

OUTCOME INDICATORS OF THE STATES OWN FISCAL CORRECTION PATH (in ` Crore)

S.No.

ParticularsBaseYear(2004-05 RE)

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

1 2 3 4 5 6 7 8 9A STATE REVENUE

ACCUNT1 Own Tax Revenue

2 Own Non-Tax Revenue

3 Own Tax & Non TaxRevenue (1+2)

4 Share in Central Taxes &Duties

5 Plan Grants6 Non-Plan Grants7 Total Central Transfers

(4 to 6)8 Total Revenue Receipts

(3+7)9 Plan Expenditure10 Non-Plan Expenditure11 Salary Expenditure12 Pension13 Interest Payment14 Subsidies-General15 Subsidies-Power16 Total Revenue Expenditure

(9+10)17 Salary + Interest + Pension

(11+12+13)18 As% of Revenue Receipts

(17/08)19 Revenue Surplus/ Defiit

(8-16)

223

B CONSOLIDATEDREVENUE ACCOUNT

1 Power sector loss/profit netof actual subsidy transfer

2 Increase in debtors duringthe year in power utilityaccounts [increase (-)]

3 Interest payment on offbudget borrowings andSPV borrowings made byPSU/SPUs outside budget

4 Total (1 to 3)5 Consolidated Revenue

Deficit(A19+B4)

C CONSOLIDATED DEBT

1 Outstanding Debt andUtility

2 Total OutstandingGuarantee of whichGuarantee on account offbudget borrowing and SPVBorrowing

D CAPITAL ACCOUNT1 Capital Outlay2 Disbursement of Loans

and Advances3 Recovery of Loans and

Advances4 Other Capital Receipts5 Gross Fiscal Deficit

(GFD)*GSDP (` in crores) atCurrent PricesActual/ Assumed NominalGrowth Rate (%)

* GFD as per para 19 of theGuidelines

* Included in PlanExpenditure

___________________________________________________

224

APPENDIX-3(referred in Para 10.12.1)

Extracts from the Constitution of Jammu &Kashmir relating to Budget

76. Special Procedure in respect of MoneyBills: (1) A Money Bill shall not be introducedin the Legislative Council. (2) After a MoneyBill has been passed by the LegislativeAssembly, it shall be transmitted to theLegislative Council for its recommendationsand the Legislative Council shall within aperiod of fourteen days from the date of itsreceipt of the Bill return the Bill to theLegislative Assembly with itsrecommendations, and the LegislativeAssembly may thereupon either accept orreject all or any of the recommendations of theLegislative Council. (3) If the LegislativeAssembly accepts any of therecommendations of the Legislative Council,the Money Bill shall be deemed to have beenpassed by both Houses with the amendmentsrecommended by the Legislative Council andaccepted by the Legislative Assembly. (4) Ifthe Legislative Assembly does not accept anyof the recommendations of the LegislativeCouncil, the Money Bill shall be deemed tohave been passed by both Houses in the formin which it was passed by the LegislativeAssembly without any of the amendmentsrecommended by the Legislative Council. (5)If a Money Bill passed by the LegislativeAssembly and transmitted to the LegislativeCouncil for its recommendations is notreturned to the Legislative Assembly withinthe said period of fourteen days, it shall bedeemed to have been passed by both Housesat the expiration of the said period in the form

225

in which it was passed by the LegislativeAssembly.

77. Definition of “Money Bills”:(1) For the purposes of this part, a Bill shall bedeemed to be a Money Bill if it contains onlyprovisions dealing with all or any of thefollowing matters, namely:-

a) the imposition, abolition, remission,alteration or regulation of any tax;

b) the regulation of the borrowing of moneyor the giving of any guarantee by theState, or the amendment of the law withrespect to any Financial obligationsundertaken or to be undertaken by theState;

c) the custody of the Consolidated Fund orthe Contingency Fund of the State,payment of Moneys into or withdrawal ofmoneys from any such Fund;

d) the appropriation of moneys out of theConsolidated Fund of the State;

e) the declaring of any expenditure to beexpenditure charged on theConsolidated Fund of the State, or theincreasing of the amount of any suchexpenditure;

f) the receipt of money on account of theConsolidated Fund of the State or thepublic account of the State or thecustody or issue of such money; or

g) Any matter incidental to any of thematter specified in clauses (a) to (f).

226

(2) A Bill shall not be deemed to be a MoneyBill by reason only that it provides for theimposition of fines or other pecuniarypenalties, or for the demand or payment offees for licenses or fees for services rendered,or by reason that it provided for the imposition,abolition, remission, alteration or regulation ofany tax by any local authority or body for localpurposes.

(3) If any question arises whether a Billintroduced in the Legislature is a Money Bill ornot, the decision of the Speaker of theLegislative Assembly thereon shall be final.

(4) There shall be endorsed on every MoneyBill when it is transmitted to the LegislativeCouncil under section 76 and when it ispresented to the Governor for assent undersection 78, the certificate of the Speaker ofthe Legislative Assembly signed by him that itis a Money Bill.

78. Assent to Bills: When a Bill had beenpassed by both Houses of the Legislature, itshall be presented to the Governor and theGovernor shall declare either that he assentsto the Bill or that he withholds assenttherefrom:

Provided that the Governor may, assoon as possible after the presentation to himof the Bill for assent, return the Bill if it is not amoney bill together with a messagerequesting that the Houses will reconsider thebill or any specified provisions thereof and, inparticular, will consider the desirability ofintroducing any such amendments as he mayrecommend in his message and, when a bill isso returned, the Houses shall reconsider the

227

Bill accordingly and if the Bill is passed againby the Houses with or withoutamendment and presented to theGovernor for assent, the Governor shall notwithhold assent therefrom.

Procedure in Financial Matters:

79. Annual Financial Statement: (1) TheGovernor shall in respect of every financialyear cause to be laid before both Houses ofthe Legislature a Statement of the estimatedreceipts and expenditure of the State for thatyear, in this part referred to as the “annualfinancial statement.” (2) The estimates ofexpenditure embodied in the annual financialstatement shall show separately:-

a) The sums required to meet expendituredescribed by this Constitution asexpenditure charged upon theConsolidated Fund of the State; and

b) The sums required to meet otherexpenditure proposed to be made fromthe Consolidated Fund of the State;

and shall distinguish expenditure on revenuefrom other expenditure.

(3) The following expenditure shall beexpenditure charged on the ConsolidatedFund of the State:-

a) The emoluments and allowances of theGovernor and other expenditure relatingto his office;

b) The salaries and allowances of theSpeaker and the Deputy Speaker of theLegislative Assembly and of the

228

Chairman and the Dy. Chairman of theLegislative Council;

c) Debt charges for which the State isliable including interest, sinking fundcharges and redemption charges, andother expenditure relating to the raisingof the loans and the service andredemption of debt;

d) Expenditure in respect of the salariesand allowances of the Judges of theHigh Court;

e) Any sums required to satisfy anyJudgment, decree or award of any courtor arbitral tribunal;

f) Any other expenditure declared by thisConstitution or by Legislature by law, tobe so charge.

80. Procedure in Legislature with respectto estimates: (1) So much of the estimates asrelates to expenditure charged upon theConsolidated Fund of the State shall not besubmitted to the vote of the LegislativeAssembly, but nothing in this sub section shallbe construed as preventing the discussion inthe Legislature of any of those estimates. (2)So much of the said estimates as relates toother expenditure shall be submitted in theform of demands for grants to the LegislativeAssembly and the Legislative Assembly shallhave power to assent, or to refuse to assent,to any demand, or to assent to any demandsubject to a reduction of the amount specifiedtherein. (3) No demand for a grant shall bemade except on the recommendation of theGovernor.

81. Appropriation Bills: (1) As soon as maybe after the grants under section 80 havebeen made by the Assembly, there shall be

229

introduced a bill to provide for theappropriation out of the Consolidated Fund ofthe State of all money required to meet:-

a) the grants so made by the Assembly;and

b) the expenditure charged on theConsolidated Fund of the state but notexceeding in any case the amountshown in the Statement previously laidbefore the Houses.

(2) No amendment shall be proposed to anysuch bill in either House of the Legislaturewhich will have the effect of varying theamount or altering the destination of any grantso made or of varying the amount of anyexpenditure charged on the ConsolidatedFund of the State, and the decision of theperson presiding as to whether anamendment is inadmissible under this subsection shall be final.

(3) Subject to the provisions of sections 82and 83, no money shall be withdrawn from theConsolidated Fund of the State except underappropriation made by Law passed inaccordance with the provisions of this section.

82. Supplementary, additional or excessgrants: (1) The Governor shall:-

a) if the amount authorized by any lawmade in accordance with the provisionsof section 81 to be expended for aparticular service for the currentfinancial year is found to be insufficientfor the purposes of that year or when aneed has arisen during the currentfinancial year for supplementary or

230

additional expenditure upon some newservice not contemplated in the annualfinancial statement for that year, or

b) if any money has been spent on anyservice during a financial year in excessof the amount granted for that serviceand for that year, cause to be laid beforethe Houses of the Legislature anotherstatement showing the estimatedamount of that expenditure or cause tobe presented to the LegislativeAssembly a demand for such excess, asthe case may be.

(2) The provisions of sections 79, 80 and 81shall have effect in relation to any suchstatement and expenditure or demand andalso to any law to be made authorizing theappropriation of moneys out of theConsolidated Fund of the State to meet suchexpenditure or the grant in respect of suchdemand as they have effect in relation to theannual financial statement and theexpenditure mentioned therein or to a demandfor a grant and the law to be made for theauthorization of appropriation of moneys outof the Consolidated Fund of the State to meetsuch expenditure or grant.

83. Votes on account, votes of credit andexceptional grants: (1) Notwithstandinganything in the foregoing provisions of thispart, the Legislative Assembly shall havepower:-

a) to make any grant in advance in respectof the estimated expenditure for a partof any financial year pending thecompletion of the procedure prescribed

231

in section 80 for the voting of such grantand the passing of the law inaccordance with the provisions ofsection 81 in relation to thatexpenditure;

b) to make a grant for meeting anunexpected demand upon the resourcesof the State when on account of themagnitude or the indefinite character ofthe services the demand cannot bestated with the details ordinarily given inan annual financial statement;

c) to make an exceptional grant whichforms no part of the current service ofany financial year;

and the Legislature shall have power toauthorize by law the withdrawal of moneysfrom the Consolidated Fund of the State forthe purposes for which the said grants aremade.

(2)The provisions of sections 80 and 81 shallhave effect in relation to the making of anygrant under sub section (1) and to any law tobe made under that sub section as they haveeffect in relation to the making of a grant withregard to any expenditure mentioned in theannual financial statement and the law to bemade for the authorization of appropriation ofmoneys out of the Consolidated Fund of theState to meet such expenditure.

84. Special provisions as to financial bills:(1) A bill or amendments making provision forany of the matters specified in clauses (a) to(f) of sub section (1) of section 77 shall not beintroduced or moved except on therecommendation of the Governor, and a bill

232

making such provision shall not be introducedin the Legislative Council:

Provided that no recommendation shallbe required under this sub section for themoving of an amendment making provision forthe reduction or abolition of any tax.

(2) A bill or amendment shall not be deemedto make provision for any of the mattersaforesaid by reason only that it provides forthe imposition of fines or other pecuniarypenalties or for the demand or payment offees for licences or fees for services rendered,or by reason that it provides for the imposition,abolition, remission, alteration or regulation ofany tax by any local authority or body for localpurposes.

(3) A bill which, if enacted and brought intooperation, would involve expenditure from theConsolidated Fund of the State shall not bepassed by a House of the Legislature unlessthe Governor has recommended to thatHouse the consideration of the Bill.

108. Administrative expenses of the HighCourt: …(3) The administrative expenses ofthe High Court including all salaries,allowances and pensions payable to or inrespect of the officers and servants of theCourt, shall be charged upon theConsolidated Fund of the State, and any feesor other moneys taken by the Court shall formpart of that fund.

114. Taxes not be imposed save byauthority of law: No tax shall be levied orcollected except by authority of law.

233

115. Consolidated Fund and PublicAccount: (1) Subject to the provisions ofsection 116, all revenues received by theGovernment, all loans raised by theGovernment by the issue of treasury bills,loans or ways and means advances and allmoneys received by the Government inrepayment of loans shall form oneconsolidated fund to be entitled ‘theConsolidated Fund of the State.” (2) All otherpublic moneys received by or on behalf of theGovernment shall be credited to the publicaccount of the State. (3) No moneys out of theConsolidated Fund of the State shall beappropriated except in accordance with thelaw and for the purposes and in the mannerprovided in this Constitution.

116. Contingency Fund: The Legislaturemay by law establish a Contingency Fund inthe nature of an imprest to be entitled ‘theContingency Fund of the State’ into whichshall be paid from time to time such sums asmay be determined by such law, and the suchFund shall be placed at the disposal of theGovernor to enable advances to be made byhim out of such Fund for the purposes ofmeeting unforeseen expenditure pendingauthorization of such expenditure byLegislature by law under section 82 or 83.

117. Expenditure defrayable by the stateout of its revenues: The State may makeany grants for any public purpose,notwithstanding that the purpose is not onewith respect to which the Legislature maymake laws.

118. Custody etc. of Consolidated Funds,Contingency Funds and moneys credited

234

to the public account: The custody of theConsolidated Fund of the State and theContingency Fund of the state, the payment ofmoneys into such Funds, the withdrawal ofmoneys therefrom, the custody of publicmoneys other than those credited to suchFund received by or on behalf of theGovernment, their payment into the publicaccount of the state and withdrawal of moneysfrom such account and all other mattersconnected with or ancillary to mattersaforesaid shall be regulated by law made bythe Legislature and, until provision in thatbehalf is so made, shall be regulated by rulesmade by the Governor.

Custody, of suitor’s deposits and othermoneys received by public servants andcourts: All moneys received by or depositedwith:-

a) any officer employed in connection withthe affairs of the state in his capacity assuch, other than revenues or publicmoneys raised or received by theGovernment, or

b) any court within the state to the credit ofany cause, matter, account or persons,shall be paid into the public account ofthe state.

136. Expenses of the (Public Service)Commission: The expenses of theCommission including any salaries,allowances and pensions payable to or inrespect of the members or the staff of theCommission, shall be charged on theConsolidated Fund of the State.__________________________________

235

APPENDIX-4(referred in Para 10.12.1)

Extracts from Constitution of India relatingto Budget

Distribution of Revenues between theUnion and the States

268. Duties levied by the Union butcollected and appropriated by the States:(1) Such stamp duties and such duties ofexcise on medicinal and toilet preparations asare mentioned in the Union List shall be leviedby the Government of India but shall becollected—

(a) in the case where such duties areleviable within any Union territory, by theGovernment of India, and

(b) in other cases, by the States withinwhich such duties are respectivelyleviable.

(2) The proceeds in any financial year of anysuch duty leviable within any State shall notform part of the Consolidated Fund of India,but shall be assigned to that State.

269. Taxes levied and collected by theUnion but assigned to the States: (1) Taxeson the sale or purchase of goods and taxes onthe consignment of goods shall be levied andcollected by the Government of India but shallbe assigned and shall be deemed to havebeen assigned to the States on or after the 1st

236

day of April, 1996 in the manner provided inclause (2).

Explanation.—For the purposes of thisclause,-

(a) the expression “taxes on the sale orpurchase of goods” shall mean taxes onsale or purchase of goods other thannewspapers, where such sale orpurchase takes place in the course ofinter-State trade or commerce;

(b) the expression “taxes on theconsignment of goods” shall mean taxeson the consignment of goods (whetherthe consignment is to the person makingit or to any other person), where suchconsignment takes place in the courseof inter-State trade or commerce.

(2) The net proceeds in any financial year ofany such tax, except in so far as thoseproceeds represent proceeds attributable toUnion territories, shall not form part of theConsolidated Fund of India, but shall beassigned to the States within which that tax isleviable in that year, and shall be distributedamong those States in accordance with suchprinciples of distribution as may be formulatedby Parliament by law.

(3) Parliament may by law formulate principlesfor determining when a sale or purchase of, orconsignment of, goods takes place in thecourse of inter-State trade or commerce.

270. Taxes levied and distributed betweenthe Union and the States: (1) All taxes andduties referred to in the Union List, except the

237

duties and taxes referred to in articles 268 and269, respectively, surcharge on taxes andduties referred to in article 271 and any cesslevied for specific purposes under any lawmade by Parliament shall be levied andcollected by the Government of India and shallbe distributed between the Union and theStates in the manner provided in clause (2).

(2) Such percentage, as may be prescribed, ofthe net proceeds of any such tax or duty inany financial year shall not form part of theConsolidated Fund of India, but shall beassigned to the States within which that tax orduty is leviable in that year, and shall bedistributed among those States in suchmanner and from such time as may beprescribed in the manner provided in clause(3).

(3) In this article, “prescribed” means, —

(i) until a Finance Commission has beenconstituted, prescribed by the Presidentby order, and

(ii) after a Finance Commission has beenconstituted, prescribed by the Presidentby order after considering therecommendations of the FinanceCommission.

271. Surcharge on certain duties and taxesfor purposes of the Union: Notwithstandinganything in articles 269 and 270, Parliamentmay at any time increase any of the duties ortaxes referred to in those articles by asurcharge for purposes of the Union and thewhole proceeds of any such surcharge shallform part of the Consolidated Fund of India.

238

272. [Taxes which are levied and collected bythe Union and may be distributed between theUnion and the States.]—Rep. by theConstitution (Eightieth Amendment) Act, 2000.

273. Grants in lieu of export duty on juteand jute products: (1) There shall becharged on the Consolidated Fund of India ineach year as grants-in-aid of the revenues ofthe States of Assam, Bihar, Orissa and WestBengal, in lieu of assignment of any share ofthe net proceeds in each year of export dutyon jute and jute products to those States, suchsums as may be prescribed.

(2) The sums so prescribed shall continue tobe charged on the Consolidated Fund of Indiaso long as any export duty on jute or juteproducts continues to be levied by theGovernment of India or until the expiration often years from the commencement of thisConstitution, whichever is earlier.

(3) In this article, the expression “prescribed”has the same meaning as in article 270.

275. Grants from the Union to certainStates: (1) Such sums as Parliament may bylaw provide shall be charged on theConsolidated Fund of India in each year asgrants-in-aid of the revenues of such Statesas Parliament may determine to be in need ofassistance, and different sums may be fixedfor different States:

Provided that there shall be paid out ofthe Consolidated Fund of India as grants-in-aid of the revenues of a State such capital andrecurring sums as may be necessary toenable that State to meet the costs of suchschemes of development as may be

239

undertaken by the State with the approval ofthe Government of India for the purpose ofpromoting the welfare of the Scheduled Tribesin that State or raising the level ofadministration of the Scheduled Areas thereinto that of the administration of the rest of theareas of that State:

Provided further that there shall be paidout of the Consolidated Fund of India asgrants-in-aid of the revenues of the State ofAssam sums, capital and recurring, equivalentto—

(a) the average excess of expenditure overthe revenues during the two yearsimmediately preceding thecommencement of this Constitution inrespect of the administration of the tribalareas specified in Part I of the tableappended to paragraph 20 of the SixthSchedule; and

(b) the costs of such schemes ofdevelopment as may be undertaken bythat State with the approval of theGovernment of India for the purpose ofraising the level of administration of thesaid areas to that of the administrationof the rest of the areas of that State.

(1A) On and from the formation of theautonomous State under article 244 A,—

(i) any sums payable under clause (a) ofthe second proviso to clause (1) shall, ifthe autonomous State comprises all thetribal areas referred to therein, be paidto the autonomous State, and, if theautonomous State comprises only someof those tribal areas, be apportionedbetween the State of Assam and the

240

autonomous State as the Presidentmay, by order, specify;

(ii) there shall be paid out of theConsolidated Fund of India as grants-in-aid of the revenues of the autonomousState sums, capital and recurring,equivalent to the costs of such schemesof development as may beundertaken by the autonomous Statewith the approval of the Government ofIndia for the purpose of raising the levelof administration of that State to that ofthe administration of the rest of theState of Assam.

(2) Until provision is made by Parliamentunder clause (1), the powers conferred onParliament under that clause shall beexercisable by the President by order and anyorder made by the President under this clauseshall have effect subject to any provision somade by Parliament:

Provided that after a FinanceCommission has been constituted no ordershall be made under this clause by thePresident except after considering therecommendations of the FinanceCommission.

280. Finance Commission: (1) The Presidentshall, within two years from thecommencement of this Constitution andthereafter at the expiration of every fifth yearor at such earlier time as the Presidentconsiders necessary, by order constitute aFinance Commission which shall consist of aChairman and four other members to beappointed by the President.

241

(2) Parliament may by law determine thequalifications which shall be requisite forappointment as members of the Commissionand the manner in which they shall beselected.

(3) It shall be the duty of the Commission tomake recommendations to the President asto—

(a) the distribution between the Union andthe States of the net proceeds of taxeswhich are to be, or may be, dividedbetween them under this Chapter andthe allocation between the States ofthe respective shares of such proceeds;

(b) the principles which should govern thegrants-in-aid of the revenues of theStates out of the Consolidated Fund ofIndia;

(bb) the measures needed to augment theConsolidated Fund of a State tosupplement the resources of thePanchayats in the State on the basis ofthe recommendations made by theFinance Commission of the State;

(c) the measures needed to augment theConsolidated Fund of a State tosupplement the resources of theMunicipalities in the State on the basisof the recommendations made by theFinance Commission of the State;

(d) any other matter referred to theCommission by the President in theinterests of sound finance.

242

(4) The Commission shall determine theirprocedure and shall have such powers in theperformance of their functions as Parliamentmay by law confer on them.

281. Recommendations of the FinanceCommission.—The President shall causeevery recommendation made by the FinanceCommission under the provisions of thisConstitution together with an explanatorymemorandum as to the action taken thereonto be laid before each House of Parliament.

282. Expenditure defrayable by the Unionor a State out of its revenues.—The Unionor a State may make any grants for any publicpurpose, notwithstanding that the purpose isnot one with respect to which Parliament orthe Legislature of the State, as the case maybe, may make laws.

293. Borrowing by States: (1) Subject to theprovisions of this article, the executive powerof a State extends to borrowing within theterritory of India upon the security of theConsolidated Fund of the State within suchlimits, if any, as may from time to time be fixedby the Legislature of such State by law and tothe giving of guarantees within such limits, ifany, as may be so fixed.(2) The Government of India may, subject tosuch conditions as may be laid down by orunder any law made by Parliament, makeloans to any State or, so long as any limitsfixed under article 292 are not exceeded, giveguarantees in respect of loans raised by anyState, and any sums required for the purposeof making such loans shall be charged on theConsolidated Fund of India.

243

(3) A State may not without the consent of theGovernment of India raise any loan if there isstill outstanding any part of a loan which hasbeen made to the State by the Government ofIndia or by its predecessor Government, or inrespect of which a guarantee has been givenby the Government of India or by itspredecessor Government.

(4) A consent under clause (3) may begranted subject to such conditions, if any, asthe Government of India may think fit toimpose.

____________________________________________

244

APPENDIX-5(referred in Para 10.12.2)

Procedure for conduct of business relatingto financial matters as contained in “Rulesof Procedure and Conduct of Business inJ&K Legislative Assembly”

a) The Budget.

219. The Budget: (1) The Annual FinancialStatement or the Statement of the EstimatedReceipts and Expenditure of the Governmentin respect of each financial year (hereinafterreferred to as the ‘Budget’) shall be presentedto the House on such day as the Governormay direct. (2) The Budget shall be presentedto the House in such form as the FinanceMinister may settle.

220. Budget not to be discussed onpresentation. There shall be no discussion ofthe Budget on the day on which it is presentedto the House.

b) Demands for Grants.

221. Demands for Grants:- A separateDemand shall ordinarily be made in respect ofthe Grant proposed for each Ministry;provided that the Finance Minister mayinclude in one demand grants proposed fortwo or more Ministries or Departments ormake a demand in respect of expenditurewhich cannot readily be classified underparticular Ministries or Departments. (2) EachDemand shall contain first a statement of thetotal Grant proposed and then a statement ofthe detailed estimate under each Grantdivided into items.

245

222. General discussion on the Budget: (1)On a day to be appointed by the Speakersubsequent to the day on which the Budget ispresented and for such time as the Speakermay allot for this purpose, the House shall beat liberty to discuss matters raised in theBudget or concerning, or connected with theBudget or any question of principle involvedtherein, but no motion shall be moved norshall Budget be submitted to the vote of theHouse. (2) The Finance Minister shall have ageneral right of reply at the end of discussion.(3) The Speaker may, if he thinks fit, prescribea time limit for speeches.

223. Voting of demands for grants: (1) TheSpeaker shall, in consultation with the Leaderof the House, allot so many days as may becompatible with the public interest for thediscussion and voting of demands for grants.(2) On the last day for the allotted days at theclosing hour fixed, under these rules or, by theHouse, or at such other hour as the Speakermay fix in advance, the Speaker shallforthwith put every question necessary todispose of all the outstanding matters inconnection with the Demands for Grants. (3)Motions may be moved to reduce anyDemand for Grant. (4) No amendments tomotions to reduce any demand for grant shallbe permissible. (5) When several motionsrelating to the same Demand for Grant areoffered, they shall be discussed in the order inwhich the heads to which they relate appear inthe Budget.

224. Cut motions. A motion may be moved toreduce the amount of a demand in any of thefollowing ways:-

246

(a) “that the amount of the demand be reducedby ` 1/-“, representing disapproval of the policyunderlying the demand. Such a motion shall beknown as ‘Disapproval of Policy Cut’. A membergiving notice of such a motion shall indicate inprecise terms the particulars of the policy whichhe proposes to discuss. The discussion shall beconfined to the specific point or pointsmentioned in the notice and it shall be open tomembers to advocate an alternative policy;

(b) “that the amount of the demand be reducedby a specified amount” representing theeconomy that can be effected. Such specifiedamount may be either a lump sum reduction inthe demand or omission or reduction in thedemand or omission or reduction of an item inthe demand. The motion shall be known as“Economy Cut”. The notice shall indicate brieflyand precisely the particular matter on whichdiscussion is sought to be raised and speechesshall be confined to the discussion as to howeconomy can be effected;

(c) “that the amount of the demand be reducedby ` 100/-“in order to ventilate a specificgrievance which is within the sphere of theresponsibility of the Government. Such a motionshall be known as “Token Cut”, and thediscussion thereon shall be confined to theparticular grievance specified in the motion.

225. Conditions of admissibility of cutmotions. In order that a notice of motion forreduction of the amount of demand may beadmissible, it shall satisfy the followingconditions, namely:-

(i) it shall relate to one demand only ;

247

(ii) it shall be clearly expressed and shallnot contain arguments, inferences,ironical expression, imputations,epithets or defamatory statements ;

(iii) it shall be confined to one specificmatter which shall be stated in preciseterms ;

(iv) it shall not reflect, on the character orconduct of any person whose conductcan only be challenged on a substantivemotion;

(v) it shall not make suggestions for theamendment or repeal of existing laws ;

(vi) it shall not refer to a matter which is notprimarily concern of the Government ;

(vii) it shall not relate to expenditure chargedon the Consolidated Fund of State;

(viii) it shall not relate to a matter which isunder adjudication by a court of lawhaving jurisdiction in any part of India ;

(ix) it shall not raise a question of privilege ;

(x) it shall not revive discussion on a matterwhich has been discussed in the samesession and on which a decision hasbeen taken ;

(xi) it shall not anticipate a matter which hasbeen previously appointed forconsideration in the same session.

(xii) It shall not ordinarily seek to raise adiscussion on a matter pending before

248

any statutory tribunal or statutoryauthority performing any judicial orquasi-judicial functions or anycommission or, court of enquiryappointed to enquire into, or investigate,any Matter.

Provided that the Speaker may in hisdiscretion allow such matter being raised in theHouse as is concerned with the procedure orstage of enquiry, if the Speaker is satisfied that itis not likely to prejudice the consideration of suchmatter by the statutory tribunal, statutoryauthority, commission or court of enquiry; and

(xiii) it shall not relate on a trifling matter.

226. Speaker to decide admissibility of cutmotions. The Speaker shall decide whether acut motion is or is not admissible under theserules and may disallow any cut motion when inhis opinion it is an abuse of the right of movingcut motions or is calculated to obstruct orprejudicially affect the procedure of the House oris in contravention of these rules.

227. Notice of cut motions. If notice of a motionto reduce any demand for grant has been giventhree clear days previous to the day, on whichthe demand is under consideration, any membermay object to the moving of the motion, and suchobjection shall prevail, unless the Speaker allowsthe motion to be made.

228. Presentation of Budget in parts. Nothinghereinbefore contained shall be deemed toprevent the presentation of the Budget to theHouse in two or more parts and when suchpresentation takes place, each part shall be dealt

249

with in accordance with these rules as if it werethe Budget.

229. Vote on account. (1) A motion for vote onaccount shall state the total sum required and thevarious amounts needed for each Ministry,Department or item of expenditure whichcompose that sum shall be stated in a scheduleappended to the motion. (2) Amendments maybe moved for the reduction of the whole grant forthe reduction or omission of the items whereofthe grant is composed. (3) Discussion of ageneral character may be allowed on the motionor any amendments moved thereto, but thedetails of the grant shall not be discussed furtherthan is necessary to develop the general points.(4) In other respect, a motion for vote on accountshall be dealt with in the same way as if it were ademand for grant.

230. Supplementary, additional, excess andexceptional grants and votes of credit.Supplementary, additional, excess andexceptional grants and votes of credit shall beregulated by the same procedure as is applicablein the case of demands for grants subject to suchadaptations, whether by way of modification,addition or omission, as the Speaker may deemto be necessary or expedient.

231. Scope of discussion on supplementarygrants. The debate on the supplementary grantsshall be confined to the items constituting thesame and no discussion may be raised on theoriginal grants nor policy underlying them save inso far as it may be necessary to explain orillustrate the particular items under discussion.

250

232. Token grant. When funds to meetproposed expenditure on a new service can bemade available by re-appropriation, a demand forthe grant of a token sum may be submitted to thevote of the House and, if the House assents tothe demand, funds may be so made available.

(c) Appropriation Bill.233. Appropriation Bill: (1) Subject to theprovisions of the Constitution, the procedure inregard to an Appropriation Bill shall be same asfor Bill generally with such modifications as theSpeaker may consider necessary. (2) At any timeafter the introduction in the House of anAppropriation Bill, the Speaker may allot a day ordays, jointly or severally, for the completion of allor any of the stages involved in the passage ofthe Bill by the House, and when such allotmenthas been made, the Speaker shall, at the closinghour fixed, under these rules or by the House, onthe allotted day or the last of the allotted days, asthe case may, forthwith put every questionnecessary to dispose of all the outstandingmatters in connection with the stage or stages forwhich the day or days have been allotted. (3)The Speaker may, if he thinks fit, prescribe atime limit for speeches at all or any of the stagesfor which a day or days have been allotted undersub-rule (2). (4) The debate on an AppropriationBill shall be restricted to matters of publicimportance or administrative policy implied in thegrants covered by the Bill which have not alreadybeen raised while the relevant demands for grantwere under consideration. (5) The Speaker may,in order to avoid repetition of debate, requiremembers desiring to take part in discussion onan Appropriation Bill to give advance intimationof the specific points they intend to raise, and hemay withhold permission for raising such of thepoints as in his opinion appear to be repetitions

251

of the matters discussed on a demand for grantor as may not be of sufficient public importance.(6) If an Appropriation Bill is in pursuance of asupplementary grant in respect of an existingservice, the discussions shall be confined to theitems constituting the same, and no discussionshall be raised on the original grant nor the policyunderlying it save in so far as it may benecessary to explain or illustrate a particular itemunder discussion.

(d) Finance Bill:234. Finance Bill: (1) In this rule “Finance Bill”means the Bill ordinary introduced in each yearto give effect to the financial proposals of theGovernment for the next following financial yearand includes a Bill to give effect tosupplementary financial proposals for any period.(2) At any time after the introduction in the Houseof a Finance Bill, the Speaker may allot a day ordays, jointly or severally, for the completion of allor any of the stages involved in the passage ofthe Bill by the House, and when such allotmenthas been made, the Speaker shall at the closinghour fixed, under these rules or by the House onthe allotted day or the last of the allotted days, asthe case may be, forthwith put every questionnecessary to dispose of all the outstandingmatters in connection with the stage or stages forwhich the day or days have been allotted:

Provided that if a Minister has a right of replyto the debate on the motion which is underdiscussion at such time, not being later than onehour prior to the closing hour so fixed, on thatday and has not commenced his reply at suchtime, the Speaker shall inquire how much timenot exceeding one hour he requires for his reply,and shall call upon any member for the timebeing addressing the House to resume his seatat such point of time as will leave available,

252

before the closing hour so fixed, the amount oftime which the Minister has stated that herequires for his reply. (3) Where the question orone of the questions required by the sub-rule (2)to be put at the closing hour as aforesaid on theallotted day or the last day of the allotted days isthat the Bill be passed, sub-rule (2) shall haveeffect notwithstanding that amendments to theBill have been made. (4) Subject to the proviso tosub-rule (2), the Speaker may, if he thinks fit,prescribe a time limit for speeches at all or any ofthe stages for which a day or days have beenallotted under that sub-rule. (5) On a motion thatthe Finance Bill be taken into consideration, amember may discuss matters relating to generaladministration, local grievances within the sphereof the responsibility of Government or monetaryor financial policy of Government. (6) In otherrespects the rules applicable to Bills in Chapter Xof these rules shall apply.

235. Business that can be taken up on a dayallotted for financial business. Notwithstandingthat a day has been allotted for other businessunder rule 222, 223, 233, or 234, a motion ormotions for leave to introduce a Bill or Bills maybe made and a Bill or Bills may be introduced onsuch day before the House enters on thebusiness for which the day has been allotted.

236. Time limit for disposal of financialbusiness. In addition to the powers exercisableunder these rules, the Speaker may exercise allsuch powers as are necessary for the purpose ofthe timely completion of all financial businessincluding allotment of time for the disposal ofvarious kinds of such business; and where timeis so allotted, he shall, at the appointed hour, putevery question necessary to dispose of all the

253

outstanding matters in connection with the stageor stages for which time has been allotted.

Explanation. ----Financial business includes anybusiness, which the Speaker holds as comingwithin this category under the Constitution.

237. Intimation to Finance Department. Whenthe House has refused its assent to any demandor has assented to any demand subject to areduction of an amount specified therein, theSecretary of Legislative Assembly shall send anintimation of the same to the FinanceDepartment.

_________________________________

254

APPENDIX-6(referred in Para 10.12.2)

Procedure for conduct of business relatingto financial matters as contained in “Rulesof Procedure and Conduct of Business inJ&K Legislative Council”

181. The Budget: There shall be nodiscussion on the Annual Financial Statementor the Statement of the Estimate Receipts andExpenditure of the Government of Jammu andKashmir (hereinafter referred to as the“Budget”) on the day on which it is presentedto the Council.

182. General discussion on the Budget: (1)On a day to be appointed by the Chairmansubsequent to the day on which the Budget ispresented and for such time as the Chairmanmay allot for this purpose, the Council, shallbe at liberty to discuss the Budget as a wholeor any question of principle involved thereinbut not motion shall be moved nor shall theBudget be submitted to the vote of theCouncil. (2) The Finance Minister shall have ageneral right of reply at the end of thediscussion. (3) The Chairman may, if he thinksfit, prescribe a time-limit for speeches.

183. Presentation of the budget in parts:Nothing here-in-before contained shall bedeemed to prevent the presentation of theBudget to the Council in two or more partsand when such presentation take place, eachpart shall be dealt with in accordance withthese rules as if it were the budget.

255

184. Vote on account:i. Papers relating to the vote on account in

respect of which a motion has beenmade in the Assembly shall be laid onthe Table;

ii. Discussion of a general character inrespect of such papers shall be allowedbut the details shall not be discussedfurther than is necessary todevelop the general points.

185. Supplementary, Additional, Excessand Exceptional Grants and Votes ofCredit: Supplementary, additional, excessand exceptional grants and votes credit shallbe regulated by the same procedure as isapplicable in the case of Budget subject tosuch adaptations, whether by way ofmodification, edition or omission, as theChairman may deem to be necessaryexpedient.

186. Scope of discussion onSupplementary Grants: The debate on theSupplementary Grants shall be confined to theitems constituting the same and discussionmay be raised on the original grants nor policyunderlying no ave in so far as it may benecessary to explain or illustrate the particularitems under discussion.

187. Business that can be taken upon aday allotted for any kind of financialbusiness: Notwithstanding that a day hasbeen allotted for financial business, a motionor motions for leave to introduce a Bill or Billsmay be made and a Bill or Bills may beintroduced on such day before the Councilenters on the business for which the day hasbeen allotted.

256

Financial and Money Bills:188. Provision as regards financial billsreferred to in Sec 64 (1) of theConstitution:(1) If notice of motion for leave to introduce aBill making provision for any of the mattersspecified in sub-section (1) of Sec. 84 of theConstitution, is received, the Chairman maydirect that it should not be included in the listof business.

(2) On a bill being put down for introduction, amember may at that stage or at anysubsequent stage take objection that the Bill isa Financial Bill within the meaning of Sec84(1) of the Constitution and should not beintroduced in the Council.(3) If the Chairman holds that the Bill is aFinancial Bill within the meaning of Sec. 84(1)of the Constitution, he shall terminatediscussion on the Bill forthwith and direct thatit be struck off from the list of business and beremoved from the Register of Bills pending inthe Council.(4) If the Chairman has any doubt in regard tovalidity of the objection, he shall refer thematter to the Speaker and if there is noagreement between the Speaker and theChairman, the Chairman shall report thematter to the Council and take the sense ofthe Council as to whether they wish toproceed further with the bills.

189. Money Bills: (1) A Money Bill passed bythe Assembly and transmitted to the Councilshall, as soon as may be, be laid on theTable. (2) The Chairman in consultation withthe Leader of the Council shall within two days

257

of the Bill being so laid on the Table allot aday or days or part of a day for the completionof all or any of the stages involved in theconsideration and return of the Bill by theCouncil including the consideration andpassing of amendments, if any, to the Bill. (3)When such an allotment has been made, theChairman shall at the appointed hour on theallotted day or the last of the allotted days, asthe case may be, forthwith put all the questionnecessary to dispose of the outstandingmatters in connection with the stage or stagesfor which a day or days or part of a day hasbeen allotted. (4) After the motion that the Billbe taken into consideration has been carried,the Bill shall be taken up clause by clause. Atthis stage amendments to be recommendedto the Assembly may be moved to the Bill andthe provisions of the Rules of the Councilregarding consideration of amendments toBills shall apply. (5) After the Bill has beenconsidered clause by clause and theamendments, if any, have been disposed of,the member incharge of the Bill shall movethat the Bill be returned. (6) When the motionthat the Bill be returned has been carried, theBill shall be returned to the Assembly in thecase where the Council does not make anyrecommendations, with a message that theCouncil has not recommendation to make tothe Assembly in regard to the bill, and in thecase where any amendments have beenrecommended by the Council, with a messageintimating to the Assembly the amendmentsso recommended.(7) On a Bill beingintroduced in the Council or at anysubsequent stage, if an objection is taken thatBill is a Money Bill within the meaning ofSections 77 of the Constitution and shouldnot be proceeded with within the Council, the

258

Chairman shall if he holds the objection validdirect that further proceedings in connectionwith the Bill be terminated. (8) If the Chairmanhas any doubt in regard to the validity of theobjection, he shall refer the matter to theSpeaker whose decision on the question shallbe final in accordance with Section 77(3) ofthe Constitution.

___________________________________

259

APPENDICES NO. F.1 TO F.20(referred in Para 10.1.4)

Formats of statutory communications and sanctions,appropriation bills and schedules

used in a

FULL BUDGETsituation

260

MEMORANDUM

The State Cabinet vide its Decision No. ____________ dated ____________ hasapproved Revised Estimates for the FY __________ and the Annual Financial Statement forthe FY __________.

Under Sections 79, 80, 81, 82 and 84 of the Constitution of Jammu & Kashmir,approval of the Governor is required to enable the Government to take further actionaccordingly.

His Excellency the Governor may feel pleased to:

1. Direct that the Annual Financial Statement of the estimated receipts andexpenditure for the FY _________ be laid before both the Houses of Legislature inpursuance of Section 79 read with Sub-Section (3) of Section 80 of Constitution ofJammu and Kashmir.

2. Recommend making in Legislative Assembly, the Demands for Grants in respectof Annual Financial Statement for the FY _________ in pursuance of Sub-section(3) of Section 80 of the Constitution of Jammu & Kashmir.

3. Direct that the Statement of Supplementary Expenditure for the FY __________ belaid before both the Houses of Legislature in pursuance of Section 82 read withSub-Section (3) of Section 80 of the Constitution of Jammu & Kashmir.

4. Recommend making in Legislative Assembly, the Demand for Grants in respectof Statement of Supplementary Expenditure for the FY __________ in pursuance ofSub-Section (2) of Section 82 read with Sub-Section (3) of Section 80 of theConstitution of Jammu & Kashmir.

5. Recommend introduction in and consideration by Legislative Assembly of the Billstyled as J&K Appropriation (No.1) Bill, _______ in pursuance of Section 81 readwith Sub-Sections (1) & (3) of Section 84 of the Constitution of Jammu & Kashmirafter the Annual Financial Statement for Grants for FY __________ andSupplementary Demand for Grants for FY __________ have been considered.

6. Recommend consideration by Legislative Council of the Bill styled as J&KAppropriation (No.1) Bill, _______ in pursuance of Sub-Sections (1) & (3) of Section84 of the Constitution of Jammu & Kashmir after the Annual Financial Statementfor Grants for FY __________ and Supplementary Demand for Grants for FY__________ have been considered.

7. Recommend introduction in and consideration by Legislative Assembly of the Billstyled as J&K Appropriation (No.2) Bill, ______ in pursuance of Section 81 read

Appendix - F.1

261

with Sub-Sections (1) & (3) of Section 84 of the Constitution of Jammu & Kashmirafter Annual Financial Statement for Grants for FY __________ and SupplementaryDemand for Grants for FY __________ have been considered.

8. Recommend consideration by Legislative Council of the Bill styled as J&KAppropriation (No.2) Bill, _______ in pursuance of Sub-Sections (1) & (3) of Section84 of the Constitution of Jammu & Kashmir after Annual Financial Statement forGrants for FY __________ and Supplementary Demand for Grants for FY __________have been considered.

Draft sanctions (10 in number) are enclosed.

Chief MinisterGovernor,Jammu & Kashmir.

262

Draft of sanctions from the Governor

In pursuance of Section 79 read with Sub-Section (3)

of Section 80 of the Constitution of Jammu and Kashmir, I,

__________, Governor of Jammu and Kashmir, do hereby

direct that the Annual Financial Statement for the FY

_________ shall be laid before the Legislative Council on

___________.

(___________)

In pursuance of Section 79 read with Sub-Section (3)

of Section 80 of the Constitution of Jammu and Kashmir, I,

_____________, Governor of Jammu and Kashmir, do

hereby direct that the Annual Financial Statement for the

FY ___________ shall be laid before the Legislative

Assembly on _____________.

(____________)

263

In pursuance of Section 82 read with Sub-Section (3)

of Section 80 of the Constitution of Jammu and Kashmir, I,

___________, Governor of Jammu and Kashmir, do hereby

direct that the Statement of Supplementary Expenditure

for the FY _________ shall be laid before the Legislative

Council on ____________.

(____________)

In pursuance of Section 82 read with Sub-Section (3)

of Section 80 of the Constitution of Jammu and Kashmir, I,

___________, Governor of Jammu and Kashmir, do hereby

direct that the Statement of Supplementary Expenditure

for the FY __________ shall be laid before the Legislative

Assembly on __________.

(___________)

264

In pursuance of Sub-Section (3) of Section 80 of the

Constitution of Jammu and Kashmir, I, ___________, Governor of

Jammu and Kashmir, do hereby recommend, the making in

Legislative Assembly of Demands for Grants in respect of

Annual Financial Statement for the FY ____________ as detailed

in the said statement.

(___________)

In pursuance of Sub-Section (2) of Section 82 read with

Sub-Section (3) of Section 80 of the Constitution of Jammu and

Kashmir, I, ____________, Governor of Jammu and Kashmir, do

hereby recommend the making in of Demands for Grants in

Legislative Assembly in respect of Statement of Supplementary

Expenditure for the FY __________ as detailed in the said

statement.

(___________)

265

In pursuance of Section 81 read with Sub-Sections (1)

and (3) of Section 84 of the Constitution of Jammu and

Kashmir, I, ____________, Governor of Jammu and Kashmir,

do hereby recommend the introduction in and

consideration by the Legislative Assembly of the Bill styled

as “The Jammu & Kashmir Appropriation (No.1) Bill,

_________”.

(___________)

In pursuance of Section 81 read with Sub-Sections

(1) and (3) of Section 84 of the Constitution of Jammu and

Kashmir, I, ____________, Governor of Jammu and Kashmir,

do hereby recommend the introduction in and

consideration by the Legislative Assembly of the Bill styled

as “The Jammu & Kashmir Appropriation (No.2) Bill,

________”.

(____________)

266

In pursuance of Sub-Sections (1) and (3) of Section

84 of the Constitution of Jammu and Kashmir, I,

____________, Governor of Jammu and Kashmir, do hereby

recommend the consideration of the Bill styled as “The

Jammu & Kashmir Appropriation (No.1) Bill, __________” by

the Legislative Council.

(____________)

In pursuance of Sub-Sections (1) and (3) of Section

84 of the Constitution of Jammu and Kashmir, I,

____________, Governor of Jammu and Kashmir, do hereby

recommend the consideration of the Bill styled as “The

Jammu & Kashmir Appropriation (No.2) Bill, __________” by

the Legislative Council.

(___________)

267

Appendix - F.2

No: FD-VII-Gen. (102)-Dated: ____________

The Chairman,J&K Legislative Council,Jammu/Srinagar.

Sir,

Please take notice that Annual Financial Statement for

the FY _________ shall be laid before the Legislative Council on

___________.

Sanction of His Excellency the Governor is enclosed.

Yours faithfully,

Minister for Finance

268

Appendix - F.3

No: FD-VII-Gen. (102)-Dated: ____________

The Speaker,J&K Legislative Assembly,Jammu/Srinagar.

Sir,

Please take notice that Annual Financial Statement for

the FY __________ shall be laid before the Legislative Assembly

on ____________.

2. Sanction of His Excellency the Governor is enclosed.

Yours faithfully,

Minister for Finance

269

Appendix - F.4

No: FD-VII-Gen. (102)-Dated: ____________

The Chairman,J&K Legislative Council,Jammu/Srinagar.

Sir,

Please take notice that Statement of Supplementary

Expenditure for the FY _________ shall be laid before the

Legislative Council on __________.

2. Sanction of His Excellency the Governor is enclosed.

Yours faithfully,

Minister for Finance

270

Appendix - F.5

No: FD-VII-Gen. (102)-Dated: ____________

The Speaker,J&K Legislative Assembly,Jammu/Srinagar.

Sir,

Please take notice that Statement of Supplementary

Expenditure for the FY _________ shall be laid before the

Legislative Assembly on _________.

2. Sanction of His Excellency the Governor is enclosed.

Yours faithfully,

Minister for Finance

271

Appendix - F.6

No: FD-VII-Gen. (102)-Dated: ____________

The Speaker,J&K Legislative Assembly,Jammu.

Sir,

Please take notice that Demands for Grants in respect of

Annual Financial Statement for the FY __________ will be moved

in J&K Legislative Assembly from __________ onwards.

Sanction of His Excellency the Governor is enclosed.

Yours faithfully,

Minister for Finance

272

Appendix - F.7

No: FD-VII-Gen. (102)-Dated: ____________

The Speaker,J&K Legislative Assembly,Jammu/Srinagar.

Sir,

Please take notice that Supplementary Demands for

Grants for the FY ___________ will be moved in J&K Legislative

Assembly from ___________ onwards.

Sanction of His Excellency the Governor is enclosed.

Yours faithfully,

Minister for Finance

273

Appendix - F.8

No: FD-VII-Gen. (102)-Dated: ____________

The Speaker,J&K Legislative Assembly,Jammu/Srinagar.

Sir,Please take notice that undersigned will introduce Jammu and

Kashmir Appropriation (No.1) Bill, ________, in the current session of

Legislative Assembly and move that:

“a. The Bill be taken into consideration; andb. The Bill be passed.”

Sanction of His Excellency the Governor is enclosed.

Yours faithfully,

Minister of Finance

274

Appendix - F.9

No: FD-VII-Gen. (102)-Dated: ____________

The Speaker,J&K Legislative Assembly,Jammu/Srinagar.

Sir,Please take notice that undersigned will introduce Jammu and

Kashmir Appropriation (No. 2) Bill, _________, in the current session of

Legislative Assembly and move that:

“a. The Bill be taken into consideration; andb. The Bill be passed.”

Sanction of His Excellency the Governor is enclosed.

Yours faithfully,

Minister for Finance

275

Appendix - F.10

No: FD-VII-Gen. (102)-Dated: ____________

The Chairman,J&K Legislative Council,Jammu/Srinagar.

Sir,Please take notice that undersigned will commend Jammu

and Kashmir Appropriation (No. 1) Bill, ________, in the current session

of Legislative Council and move that:

“a. The Bill be taken into consideration; andb. The Bill be returned to J&K Legislative Assembly.”

Sanction of His Excellency the Governor is enclosed.

Yours faithfully,

Minister for Finance

276

Appendix - F.11

No: FD-VII-Gen. (102)-Dated: ____________

The Chairman,J&K Legislative Council,Jammu/Srinagar.

Sir,Please take notice that undersigned will commend Jammu

and Kashmir Appropriation (No. 2) Bill, ________ in the current session

of Legislative Council and move that:

“a. The Bill be taken into consideration; andb. The Bill be returned to J&K Legislative Assembly.”

Sanction of His Excellency the Governor is enclosed.

Yours faithfully,

Minister for Finance

277

Appendix - F.12

Government of Jammu and KashmirCivil Secretariat, Finance Department

…

The Secretary,J&K Legislative Assembly,Jammu/Srinagar

No: FD-VII-Gen. (102)- Dated:Subject: Presentation of Budget _________ in the State Legislature.

Sir,

In connection with the subject cited above, kindly findenclosed the Demand List (Service & Purpose) for the financial year_________ for further necessary action at your end please.

Yours faithfully,

Dy. Director (Bgt.)Finance Department

Encl. ______

278

Service and Purpose

Demand No. 01 - General AdministrationDepartment

2012 President, Vice President / Governor/ Administrator ofUnion Territories

2013 Council of Ministers2015 Elections2051 Public Service Commission2052 Secretariat General Services2055 Police2070 Other Administrative Services2251 Secretariat Social Services2501 Special Programmes for Rural Development3435 Ecology and Environment3451 Secretariat Economic Services3452 Tourism3454 Census Surveys and Statistics4059 Capital Outlay on Public Works4070 Capital Outlay on Other Administrative Services4075 Capital Outlay on Miscellaneous General Services4515 Capital Outlay on Other Rural Development

Programmes5425 Capital Outlay on Other Scientific & Environmental

Research5452 Capital Outlay on Tourism

Demand No. 02 - Home Department

2055 Police2056 Jails2070 Other Administrative Services2235 Social Security and Welfare4059 Capital Outlay on Public Works4070 Capital Outlay on Other Administrative Services

279

Demand No. 03 – Planning & Dev. Department

3451 Secretariat Economic Services3454 Census Surveys and Statistics3475 Other General Economic Services4059 Capital Outlay on Public Works5475 Capital Outlay on Other General Economic Services

Demand No. 04 - Information Department

2220 Information and Publicity4220 Capital Outlay on Information and Publicity

Demand No. 05 - Ladakh Affairs Department

2575 Other Special Areas Programmes4575 Capital Outlay on Other Special Areas Programmes

Demand No.06 – Power Development Department

2801 Power4801 Capital Outlay on Power Projects

Demand No. 07 – Education Department

2055 Police2202 General Education2204 Sports and Youth Services3454 Census Surveys and Statistics4202 Capital Outlay on Education, Sports, Art and Culture

Demand No. 08 – Finance Department

2030 Stamps and Registration2035 Collection of Other Taxes on Property and Capital

Transactions

280

2039 State Excise2040 Taxes on Sales, Trade etc.2045 Other Taxes and Duties on Commodities & Services2047 Other Fiscal Services2049 Interest Payments2054 Treasury and Accounts Administration2071 Pensions and Other Retirement Benefits2075 Miscellaneous General Services2235 Social Security and Welfare4059 Capital Outlay on Public Works4851 Capital Outlay on Village and Small Industries5475 Capital Outlay on Other General Economic Services6003 Internal Debt of the State Government6004 Loans and Advances from the Central Government6235 Loans for Social Security and Welfare

Demand No. 09 – Parliamentary AffairsDepartment

2011 State Legislatures7610 Loans to Government Servants etc.

Demand No. 10 – Law Department

2014 Administration of Justice2015 Elections2030 Stamps and Registration2041 Taxes on Vehicles2070 Other Administrative Services2230 Labour and Employment4059 Capital Outlay on Public Works

Demand No. 11 – Industries & CommerceDepartment

2851 Village and Small Industries2853 Non Ferrous Mining and Metallurgical Industries4851 Capital Outlay on Village and Small Industries4852 Capital Outlay on Iron and Steel Industries

281

4853 Capital Outlay on Non Ferrous Mining and MetallurgicalIndustries

6885 Other Loans to Industries and Minerals

Demand No. 12 – Agriculture Department

2029 Land Revenue2236 Nutrition2250 Other Social Services2401 Crop Husbandry2402 Soil and Water Conservation2403 Animal Husbandry2406 Forestry and Wildlife2415 Agricultural Research and Education2425 Cooperation2435 Other Agricultural Programmes2705 Command Area Development2851 Village and Small Industries4401 Capital Outlay on Crop Husbandry4402 Capital Outlay on Soil and Water Conservation4406 Capital Outlay on Forestry and Wildlife4415 Capital Outlay on Agricultural Research and Education4425 Capital Outlay on Cooperation4705 Capital Outlay on Command Area Development4851 Capital Outlay on Village and Small Industries

Demand No. 13 – Animal / Sheep HusbandryDepartment

2403 Animal Husbandry4403 Capital Outlay on Animal Husbandry

Demand No. 14 – Revenue, Relief & RehabilitationDepartment

2029 Land Revenue2053 District Administration2055 Police2070 Other Administrative Services2235 Social Security and Welfare

282

2245 Relief on Account of Natural Calamities2250 Other Social Services2401 Crop Husbandry2506 Land Reforms4059 Capital Outlay on Public Works4235 Capital Outlay on Social Security and Welfare4401 Capital Outlay on Crop Husbandry

Demand No. 15 – Consumer Affairs & PublicDistribution Department

2408 Food Storage and Warehousing3475 Other General Economic Services4235 Capital Outlay on Social Security and Welfare4408 Capital Outlay on Food Storage and Warehousing5475 Capital Outlay on Other General Economic Services

Demand No. 16 – Public Works Department

2059 Public Works2216 Housing3054 Roads and Bridges4059 Capital Outlay on Public Works5054 Capital Outlay on Roads and Bridges

Demand No. 17 – Health & Medical EducationDepartment

2210 Medical and Public Health2211 Family Welfare4210 Capital Outlay on Medical and Public Health

Demand No. 18 – Social Welfare Department

2070 Other Administrative Services2225 Welfare of Scheduled Castes, Scheduled Tribes and

Other Backward Classes2235 Social Security and Welfare2236 Nutrition

283

4225 Capital Outlay on Welfare of Scheduled Castes,Scheduled Tribes and Other Backward Classes

4235 Capital Outlay on Social Security and Welfare4236 Capital Outlay on Nutrition

Demand No. 19 – Housing & Urban DevelopmentDepartment

2217 Urban Development4216 Capital Outlay on Housing4217 Capital Outlay on Urban Development6216 Loans for Housing7610 Loans to Government Servants etc.

Demand No. 20 – Tourism Department

2202 General Education2205 Art and Culture3452 Tourism4202 Capital Outlay on Education, Sports, Art and Culture5452 Capital Outlay on Tourism

Demand No. 21 – Forest Department

2402 Soil and Water Conservation2406 Forestry and Wildlife3435 Ecology and Environment4402 Capital Outlay on Soil and Water Conservation4406 Capital Outlay on Forestry and Wildlife5425 Capital Outlay on Other Scientific and Environmental

Research

Demand No. 22 – Irrigation & Flood ControlDepartment

2700 Major Irrigation2701 Medium Irrigation2702 Minor Irrigation2711 Flood Control and Drainage

284

4701 Capital Outlay on Medium Irrigation4702 Capital Outlay on Minor Irrigation4711 Capital Outlay on Flood Control Projects

Demand No. 23 – Public Health EngineeringDepartment

2055 Police2215 Water Supply and Sanitation4215 Capital Outlay on Water Supply and Sanitation

Demand No. 24 – Hospitality & ProtocolDepartment

2055 Police2059 Public Works2070 Other Administrative Services2216 Housing4059 Capital Outlay on Public Works

Demand No. 25 – Labour, Stationery & PrintingDepartment

2058 Stationery and Printing2230 Labour and Employment4058 Capital Outlay on Stationery and Printing4250 Capital Outlay on Other Social Services

Demand No. 26 – Fisheries Department

2405 Fisheries4405 Capital Outlay on Fisheries

Demand No. 27 – Higher Education Department

2202 General Education2203 Technical Education2230 Labour and Employment4202 Capital Outlay on Education, Sports, Art and Culture

285

4250 Capital Outlay on Other Social Services

Demand No. 28 – Rural Development Department

2236 Nutrition2501 Special Programmes for Rural Development2515 Other Rural Development Programmes4515 Capital Outlay on Other Rural Development

Programmes

Demand No. 29 – Transport Department

2041 Taxes on Vehicles2070 Other Administrative Services4059 Capital Outlay on Public Works5055 Capital Outlay on Road Transport7055 Loans for Road Transport

Note: The Major Heads included in a particular Demand forGrants may vary from time to time as per requirement ofthe Government.

286

Appendix - F.13

Government of Jammu and Kashmir,Civil Secretariat, Finance Department

…

The Secretary,J&K Legislative Assembly,Jammu/Srinagar

No: FD-VII-Gen. (102)- Dated:Subject: Moving of Demands for Grants in the Legislative Assembly.

Sir,

Kindly find enclosed the schedule for moving of Demands forGrants in the Legislative Assembly by various Ministers. While thereply to General Discussion on Budget will be made on ____________by the Hon’ble Minister for Finance, the 1st Demand will be movedon ____________ by the Hon’ble Minister for ______________ and last ofthe Demands will be moved by Hon’ble Minister for ____________ on___________.

Yours faithfully,

Encl: (Model)ScheduleDirector General (Bgt.)Finance Department

Copy to the:1. Special Assistant to Minister for Finance for information of

Hon’ble Minister.2. Pvt. Secretary to Commr. Secretary to Government,

Finance Department.

287

Schedule for moving of Demands for Grants in the Legislative Assembly(February-March, 20… Session)

Date/Sitting Presenting dignitary Demand for GrantHon’ble Minister forFinance & Ladakh Affairs

Reply to General Discussion on Budget.

1stHon’ble Minister forFinance & Ladakh Affairs

08. Finance (includes also Public Enterprises)05. Ladakh Affairs

2ndHon’ble Minister for Health,Horticulture and Floriculture

17. Health & Medical Education

1stHon’ble Minister for RuralDevelopment and Panchayats,Law & Parliamentary Affairs

09. Parliamentary Affairs10. Law (includes also Elections)28. Rural Development

2ndHon’ble Minister forIndustries & Commerce

11. Industries & Commerce

1stHon’ble Minister forPHE, Irrigation & FC

22. Irrigation & Flood Control23. PHE

2ndHon’ble Minister forCA&PD and Transport

15. Consumer Affairs & Public Distribution29. Transport

1stHon’ble Minister forRevenue, Relief & Rehabilitation

14. Revenue, Relief & Rehabilitation

2nd

Hon’ble Minister forSchool Education and PublicEnterprises

07. Education(includes also Youth Services & Sports, SportsCouncil)

1st

Hon’ble Minister for AgricultureProduction

12. Agriculture Production(includes also Floriculture, Horticulture)

26. Fisheries

2nd

Hon’ble Minister for HigherEducation, Labour &Employment

25. Labour & Employment(includes also Stationery & Printing, Govt. Presses)

27. Higher Education(includes also Technical Education)

2nd

Hon’ble Minister forSocial Welfare, ARI, Trainings &Public Grievances

18. Social Welfare

1stHon’ble Minister for Forests,Environment and Ecology.

21. Forests

2nd

Hon’ble Minister for AnimalHusbandry, Sheep Husbandry,Science & Technology andInformation Technology

13. Animal/Sheep Husbandry

1st Hon’ble Dy. Chief Minister 19. Housing & Urban Development, Municipalities.

2ndHon’ble Minister forTourism and Culture

20. Tourism(includes also Libraries, Archives)

Hon’ble Chief Minister 01. General Administration(includes also Science & Technology, InformationTechnology)

02. Home03. Planning & Development04. Information06. Power Development16. Public Works (R&B)24. Hospitality & Protocol

Hon’ble Chief Minister Reply on his Demands for Grants.

288

Appendix - F.14

Government of Jammu and KashmirCivil Secretariat, Finance Department

…

The SecretaryLegislative Assembly Sectt.Srinagar/Jammu

No: FD-VII-Gen. (102)- Dated:Subject: Reply of HFM on general discussion on Budget.

Sir,

Kindly take note that Hon’ble Finance Minister will reply ongeneral discussion on Budget ________ in the Legislative Assembly on__________ in the ______ sitting.

Yours faithfully,

Director General (Bgt.)Finance Department

289

Appendix - F.15

Government of Jammu and KashmirCivil Secretariat, Finance Department

…

The Secretary,J&K Legislative Council Secretariat,Srinagar/Jammu

No: FD-VII-Gen. (102)- Dated:

Subject: Reply on general discussion on Budget ________.

Sir,

It is hereby intimated that Hon’ble Finance Minister will bereplying to general discussion on Budget ______ in the LegislativeCouncil on ________ in the _____ sitting.

Yours faithfully,

Director General (Bgt.)

Copy to the:1. Special Assistant to Minister for Finance for

information of Hon’ble Minister2. Pvt. Secretary to Commr. Secretary to Govt. Finance

Department.

290

Appendix - F.16

No: FD-VII-Gen. (102)-Dated:

The Speaker,J&K Legislative Assembly,Jammu/Srinagar

Sir,

Please take notice that the undersigned will move Demandsfor Grants in the enclosed statements in J&K Legislative Assembly on___________ ( ____ sitting).

Yours faithfully,

Minister for __________

291

Demand No. 01

That a sum not exceeding ` _________ lakh may be granted toGovernment to defray the charges which will come in course ofpayment during the year ending 31st March, _______ in respect of:

2012 President, Vice President / Governor / Administrator ofUnion Territories

2013 Council of Ministers2015 Elections2051 Public Service Commission2052 Secretariat - General Services2055 Police2070 Other Administrative Services2251 Secretariat - Social Services2501 Special Programmes for Rural Development3435 Ecology and Environment3451 Secretariat Economic Services3452 Tourism3454 Census Surveys and Statistics4059 Capital Outlay on Public Works4070 Capital Outlay on Other Administrative Services4075 Capital Outlay on Miscellaneous General Services4515 Capital Outlay on Other Rural Development

Programmes5425 Capital Outlay on Other Scientific & Environmental

Research5452 Capital Outlay on Tourism

292

Demand No. 02

That a sum not exceeding ` _______ lakh may be grantedto Government to defray the charges which will come in course ofpayment during the year ending 31st March, ______ in respect of:

2055 Police2056 Jails2070 Other Administrative Services2235 Social Security and Welfare4059 Capital Outlay on Public Works4070 Capital Outlay on Other Administrative Service

293

Demand No. 03

That a sum not exceeding ` _________ lakh may begranted to Government to defray the charges which will come incourse of payment during the year ending 31st March, ______ inrespect of:

3451 Secretariat - Economic Services3454 Census Surveys and Statistics3475 Other General Economic Services4059 Capital Outlay on Public Works5475 Capital Outlay on Other General Economic Services

294

Demand No. 04

That a sum not exceeding ` ________ lakh may be grantedto Government to defray the charges which will come in course ofpayment during the year ending 31st March, _______ in respect of:

2220 Information and Publicity4220 Capital Outlay on Information and Publicity

295

Demand No. 05

That a sum not exceeding ` _________ lakh may begranted to Government to defray the charges which will come incourse of payment during the year ending 31st March, _______ inrespect of:

2575 Other Special Areas Programmes4575 Capital Outlay on Other Special Areas Programmes

296

Demand No. 06

That a sum not exceeding ` ___________ lakh may begranted to Government to defray the charges which will come incourse of payment during the year ending 31st March, _______ inrespect of:

2801 Power4801 Capital Outlay on Power Projects

297

Demand No. 07

That a sum not exceeding ` _________ lakh may be grantedto Government to defray the charges which will come in course ofpayment during the year ending 31st March, ________ in respect of:

2055 Police2202 General Education2204 Sports and Youth Services3454 Census Surveys and Statistics4202 Capital Outlay on Education, Sports, Art and Culture

298

Demand No. 08

That a sum not exceeding ` ___________ lakh may begranted to Government to defray the charges which will come incourse of payment during the year ending 31st March, ________ inrespect of:

2030 Stamps and Registration2035 Collection of Other Taxes on Property and Capital

Transactions2039 State Excise2040 Taxes on Sales, Trade etc.2045 Other Taxes and Duties on Commodities & Services2047 Other Fiscal Services2049 Interest Payments2054 Treasury and Accounts Administration2071 Pensions and Other Retirement Benefits2075 Miscellaneous General Services2235 Social Security and Welfare4059 Capital Outlay on Public Works4851 Capital Outlay on Village and Small Industries5475 Capital Outlay on Other General Economic Services6003 Internal Debt of the State Government6004 Loans and Advances from the Central Government6235 Loans for Social Security and Welfare

299

Demand No. 09

That a sum not exceeding ` __________ lakh may begranted to Government to defray the charges which will come incourse of payment during the year ending 31st March, _______ inrespect of:

2011 State Legislatures7610 Loans to Government Servants etc.

300

Demand No. 10

That a sum not exceeding ` ________ lakh may be grantedto Government to defray the charges which will come in course ofpayment during the year ending 31st March, ________ in respect of:

2014 Administration of Justice2015 Elections2030 Stamps and Registration2041 Taxes on Vehicles2070 Other Administrative Services2230 Labour and Employment4059 Capital Outlay on Public Works

301

Demand No. 11

That a sum not exceeding ` __________ lakh may begranted to Government to defray the charges which will come incourse of payment during the year ending 31st March, _________ inrespect of:

2851 Village and Small Industries2853 Non Ferrous Mining and Metallurgical Industries4851 Capital Outlay on Village and Small Industries4852 Capital Outlay on Iron and Steel Industries4853 Capital Outlay on Non-Ferrous Mining and

Metallurgical Industries6885 Other Loans to Industries and Minerals

302

Demand No. 12

That a sum not exceeding ` _________ lakh may be grantedto Government to defray the charges which will come in course ofpayment during the year ending 31st March, _______ in respect of:

2029 Land Revenue2236 Nutrition2250 Other Social Services2401 Crop Husbandry2402 Soil and Water Conservation2403 Animal Husbandry2406 Forestry and Wildlife2415 Agricultural Research and Education2425 Cooperation2435 Other Agricultural Programmes2705 Command Area Development2851 Village and Small Industries4401 Capital Outlay on Crop Husbandry4402 Capital Outlay on Soil and Water Conservation4406 Capital Outlay on Forestry and Wildlife4415 Capital Outlay on Agricultural Research and Education4425 Capital Outlay on Cooperation4705 Capital Outlay on Command Area Development4851 Capital Outlay on Village and Small Industries

303

Demand No. 13

That a sum not exceeding ` ________ lakh may be grantedto Government to defray the charges which will come in course ofpayment during the year ending 31st March, ________ in respect of:

2403 Animal Husbandry4403 Capital Outlay on Animal Husbandry

304

Demand No. 14

That a sum not exceeding ` ________ lakh may be grantedto Government to defray the charges which will come in course ofpayment during the year ending 31st March, ________ in respect of:

2029 Land Revenue2053 District Administration2055 Police2070 Other Administrative Services2235 Social Security and Welfare2245 Relief on Account of Natural Calamities2250 Other Social Services2401 Crop Husbandry2506 Land Reforms4059 Capital Outlay on Public Works4235 Capital Outlay on Social Security and Welfare4401 Capital Outlay on Crop Husbandry

305

Demand No. 15

That a sum not exceeding ` _________ lakh may be grantedto Government to defray the charges which will come in course ofpayment during the year ending 31st March, _______ in respect of:

2408 Food Storage and Warehousing3475 Other General Economic Services4235 Capital Outlay on Social Security and Welfare4408 Capital Outlay on Food Storage and Warehousing5475 Capital Outlay on Other General Economic Services

306

Demand No. 16

That a sum not exceeding ` ________ lakh may be grantedto Government to defray the charges which will come in course ofpayment during the year ending 31st March, ________ in respect of:

2059 Public Works2216 Housing3054 Roads and Bridges4059 Capital Outlay on Public Works5054 Capital Outlay on Roads and Bridges

307

Demand No. 17

That a sum not exceeding ` _________ lakh may begranted to Government to defray the charges which will come incourse of payment during the year ending 31st March, _______ inrespect of:

2210 Medical and Public Health2211 Family Welfare4210 Capital Outlay on Medical and Public Health

308

Demand No. 18

That a sum not exceeding ` ________ lakh may be grantedto Government to defray the charges which will come in course ofpayment during the year ending 31st March, _________ in respect of:

2070 Other Administrative Services2225 Welfare of Scheduled Castes, Scheduled Tribes and

Other Backward Classes2235 Social Security and Welfare2236 Nutrition4225 Capital Outlay on Welfare of Scheduled Castes,

Scheduled Tribes and Other Backward Classes4235 Capital Outlay on Social Security and Welfare4236 Capital Outlay on Nutrition

309

Demand No. 19

That a sum not exceeding ` __________ lakh may begranted to Government to defray the charges which will come incourse of payment during the year ending 31st March, ________ inrespect of:

2217 Urban Development4216 Capital Outlay on Housing4217 Capital Outlay on Urban Development6216 Loans for Housing7610 Loans to Government Servants etc.

310

Demand No. 20

That a sum not exceeding ` ___________ lakh may begranted to Government to defray the charges which will come incourse of payment during the year ending 31st March, _________ inrespect of:

2202 General Education2205 Art and Culture3452 Tourism4202 Capital Outlay on Education, Sports, Art and Culture5452 Capital Outlay on Tourism

311

Demand No. 21

That a sum not exceeding ` ________ lakh may be grantedto Government to defray the charges which will come in course ofpayment during the year ending 31st March, _______ in respect of:

2402 Soil and Water Conservation2406 Forestry and Wildlife3435 Ecology and Environment4402 Capital Outlay on Soil and Water Conservation4406 Capital Outlay on Forestry and Wildlife5425 Capital Outlay on Other Scientific and Environmental

Research

312

Demand No. 22

That a sum not exceeding ` ________ lakh may be grantedto Government to defray the charges which will come in course ofpayment during the year ending 31st March, ________ in respect of:

2700 Major Irrigation2701 Medium Irrigation2702 Minor Irrigation2711 Flood Control and Drainage4701 Capital Outlay on Medium Irrigation4702 Capital Outlay on Minor Irrigation4711 Capital Outlay on Flood Control Projects

313

Demand No. 23

That a sum not exceeding ` ________ lakh may be grantedto Government to defray the charges which will come in course ofpayment during the year ending 31st March, _______ in respect of:

2055 Police2215 Water Supply and Sanitation4215 Capital Outlay on Water Supply and Sanitation

314

Demand No. 24

That a sum not exceeding ` _______ lakh may be granted toGovernment to defray the charges which will come in course ofpayment during the year ending 31st March, ________ in respect of:

2055 Police2059 Public Works2070 Other Administrative Services2216 Housing4059 Capital Outlay on Public Works

315

Demand No. 25

That a sum not exceeding ` _________ lakh may be grantedto Government to defray the charges which will come in course ofpayment during the year ending 31st March, ________ in respect of:

2058 Stationery and Printing2230 Labour and Employment4058 Capital Outlay on Stationery and Printing4250 Capital Outlay on Other Social Services

316

Demand No. 26

That a sum not exceeding ` _________ lakh may begranted to Government to defray the charges which will come incourse of payment during the year ending 31st March, _________ inrespect of:

2405 Fisheries4405 Capital Outlay on Fisheries

317

Demand No. 27

That a sum not exceeding ` _________ lakh may begranted to Government to defray the charges which will come incourse of payment during the year ending 31st March, ________ inrespect of:

2202 General Education2203 Technical Education2230 Labour and Employment4202 Capital Outlay on Education, Sports, Art and Culture4250 Capital Outlay on Other Social Services

318

Demand No. 28

That a sum not exceeding ` ________ lakh may be grantedto Government to defray the charges which will come in course ofpayment during the year ending 31st March, ________ in respect of:

2236 Nutrition2501 Special Programmes for Rural Development2515 Other Rural Development Programmes4515 Capital Outlay on Other Rural Development

Programmes

319

Demand No. 29

That a sum not exceeding ` _________ lakh may be grantedto Government to defray the charges which will come in course ofpayment during the year ending 31st March, _________ in respect of:

2041 Taxes on Vehicles2070 Other Administrative Services4059 Capital Outlay on Public Works5055 Capital Outlay on Road Transport7055 Loans for Road Transport

320

Appendix - F.17

No: FD-VII-Gen. (102)-Dated:

The Speaker,J&K Legislative Assembly,Jammu/Srinagar

Sir,

Please take notice that the undersigned will move theSupplementary Demands for Grants ________ in the enclosedstatements in J&K Legislative Assembly on ________ (_____ sitting).

Yours faithfully,

Minister for Finance

321

Demand No. 01

That a sum not exceeding ` _________ lakh may be grantedto Government to defray the charges which will come in course ofpayment during the year ending 31st March, _______ in respect of:

2012 President, Vice President / Governor / Administrator ofUnion Territories

2013 Council of Ministers2015 Elections2051 Public Service Commission2052 Secretariat - General Services2055 Police2070 Other Administrative Services2251 Secretariat - Social Services2501 Special Programmes for Rural Development3435 Ecology and Environment3451 Secretariat Economic Services3452 Tourism3454 Census Surveys and Statistics4059 Capital Outlay on Public Works4070 Capital Outlay on Other Administrative Services4075 Capital Outlay on Miscellaneous General Services4515 Capital Outlay on Other Rural Development

Programmes5425 Capital Outlay on Other Scientific & Environmental

Research5452 Capital Outlay on Tourism

Note:To be restricted only to relevant Major Heads for which‘Supplementary Vote’ is required.

322

Demand No. 02

That a sum not exceeding ` _______ lakh may be grantedto Government to defray the charges which will come in course ofpayment during the year ending 31st March, ______ in respect of:

2055 Police2056 Jails2070 Other Administrative Services2235 Social Security and Welfare4059 Capital Outlay on Public Works4070 Capital Outlay on Other Administrative Service

Note:To be restricted only to relevant Major Heads for which‘Supplementary Vote’ is required.

323

Demand No. 03

That a sum not exceeding ` _________ lakh may begranted to Government to defray the charges which will come incourse of payment during the year ending 31st March, ______ inrespect of:

3451 Secretariat - Economic Services3454 Census Surveys and Statistics3475 Other General Economic Services4059 Capital Outlay on Public Works5475 Capital Outlay on Other General Economic Services

Note:To be restricted only to relevant Major Heads for which‘Supplementary Vote’ is required.

324

Demand No. 04

That a sum not exceeding ` ________ lakh may be grantedto Government to defray the charges which will come in course ofpayment during the year ending 31st March, _______ in respect of:

2220 Information and Publicity4220 Capital Outlay on Information and Publicity

Note:To be restricted only to relevant Major Heads for which‘Supplementary Vote’ is required.

325

Demand No. 05

That a sum not exceeding ` _________ lakh may begranted to Government to defray the charges which will come incourse of payment during the year ending 31st March, _______ inrespect of:

2575 Other Special Areas Programmes4575 Capital Outlay on Other Special Areas Programmes

Note:To be restricted only to relevant Major Heads for which‘Supplementary Vote’ is required.

326

Demand No. 06

That a sum not exceeding ` ___________ lakh may begranted to Government to defray the charges which will come incourse of payment during the year ending 31st March, _______ inrespect of:

2801 Power4801 Capital Outlay on Power Projects

Note:To be restricted only to relevant Major Heads for which‘Supplementary Vote’ is required.

327

Demand No. 07

That a sum not exceeding ` _________ lakh may be grantedto Government to defray the charges which will come in course ofpayment during the year ending 31st March, ________ in respect of:

2055 Police2202 General Education2204 Sports and Youth Services3454 Census Surveys and Statistics4202 Capital Outlay on Education, Sports, Art and Culture

Note:To be restricted only to relevant Major Heads for which‘Supplementary Vote’ is required.

328

Demand No. 08

That a sum not exceeding ` ___________ lakh may begranted to Government to defray the charges which will come incourse of payment during the year ending 31st March, ________ inrespect of:

2030 Stamps and Registration2035 Collection of Other Taxes on Property and Capital

Transactions2039 State Excise2040 Taxes on Sales, Trade etc.2045 Other Taxes and Duties on Commodities & Services2047 Other Fiscal Services2049 Interest Payments2054 Treasury and Accounts Administration2071 Pensions and Other Retirement Benefits2075 Miscellaneous General Services2235 Social Security and Welfare4059 Capital Outlay on Public Works4851 Capital Outlay on Village and Small Industries5475 Capital Outlay on Other General Economic Services6003 Internal Debt of the State Government6004 Loans and Advances from the Central Government6235 Loans for Social Security and Welfare

Note:To be restricted only to relevant Major Heads for which‘Supplementary Vote’ is required.

329

Demand No. 09

That a sum not exceeding ` __________ lakh may begranted to Government to defray the charges which will come incourse of payment during the year ending 31st March, _______ inrespect of:

2011 State Legislatures7610 Loans to Government Servants etc.

Note:To be restricted only to relevant Major Heads for which‘Supplementary Vote’ is required.

330

Demand No. 10

That a sum not exceeding ` ________ lakh may be grantedto Government to defray the charges which will come in course ofpayment during the year ending 31st March, ________ in respect of:

2014 Administration of Justice2015 Elections2030 Stamps and Registration2041 Taxes on Vehicles2070 Other Administrative Services2230 Labour and Employment4059 Capital Outlay on Public Works

Note:To be restricted only to relevant Major Heads for which‘Supplementary Vote’ is required.

331

Demand No. 11

That a sum not exceeding ` __________ lakh may begranted to Government to defray the charges which will come incourse of payment during the year ending 31st March, _________ inrespect of:

2851 Village and Small Industries2853 Non Ferrous Mining and Metallurgical Industries4851 Capital Outlay on Village and Small Industries4852 Capital Outlay on Iron and Steel Industries4853 Capital Outlay on Non-Ferrous Mining and

Metallurgical Industries6885 Other Loans to Industries and Minerals

Note:To be restricted only to relevant Major Heads for which‘Supplementary Vote’ is required.

332

Demand No. 12

That a sum not exceeding ` __________ lakh may begranted to Government to defray the charges which will come incourse of payment during the year ending 31st March, ________ inrespect of:

2029 Land Revenue2236 Nutrition2250 Other Social Services2401 Crop Husbandry2402 Soil and Water Conservation2403 Animal Husbandry2406 Forestry and Wildlife2415 Agricultural Research and Education2425 Cooperation2435 Other Agricultural Programmes2705 Command Area Development2851 Village and Small Industries4401 Capital Outlay on Crop Husbandry4402 Capital Outlay on Soil and Water Conservation4406 Capital Outlay on Forestry and Wildlife4415 Capital Outlay on Agricultural Research and Education4425 Capital Outlay on Cooperation4705 Capital Outlay on Command Area Development4851 Capital Outlay on Village and Small Industries

Note:To be restricted only to relevant Major Heads for which‘Supplementary Vote’ is required.

333

Demand No. 13

That a sum not exceeding ` __________ lakh may begranted to Government to defray the charges which will come incourse of payment during the year ending 31st March, _________ inrespect of:

2403 Animal Husbandry4403 Capital Outlay on Animal Husbandry

Note:To be restricted only to relevant Major Heads for which‘Supplementary Vote’ is required.

334

Demand No. 14

That a sum not exceeding ` _________ lakh may be grantedto Government to defray the charges which will come in course ofpayment during the year ending 31st March, _________ in respect of:

2029 Land Revenue2053 District Administration2055 Police2070 Other Administrative Services2235 Social Security and Welfare2245 Relief on Account of Natural Calamities2250 Other Social Services2401 Crop Husbandry2506 Land Reforms4059 Capital Outlay on Public Works4235 Capital Outlay on Social Security and Welfare4401 Capital Outlay on Crop Husbandry

Note:To be restricted only to relevant Major Heads for which‘Supplementary Vote’ is required.

335

Demand No. 15

That a sum not exceeding ` _________ lakh may be grantedto Government to defray the charges which will come in course ofpayment during the year ending 31st March, _________ in respect of:

2408 Food Storage and Warehousing3475 Other General Economic Services4235 Capital Outlay on Social Security and Welfare4408 Capital Outlay on Food Storage and Warehousing5475 Capital Outlay on Other General Economic Services

Note:To be restricted only to relevant Major Heads for which‘Supplementary Vote’ is required.

336

Demand No. 16

That a sum not exceeding ` ________ lakh may be grantedto Government to defray the charges which will come in course ofpayment during the year ending 31st March, __________ in respectof:

2059 Public Works2216 Housing3054 Roads and Bridges4059 Capital Outlay on Public Works5054 Capital Outlay on Roads and Bridges

Note:To be restricted only to relevant Major Heads for which‘Supplementary Vote’ is required.

337

Demand No. 17

That a sum not exceeding ` _________ lakh may begranted to Government to defray the charges which will come incourse of payment during the year ending 31st March, _________ inrespect of:

2210 Medical and Public Health2211 Family Welfare4210 Capital Outlay on Medical and Public Health

Note:To be restricted only to relevant Major Heads for which‘Supplementary Vote’ is required.

338

Demand No. 18

That a sum not exceeding ` _________ lakh may begranted to Government to defray the charges which will come incourse of payment during the year ending 31st March, _______ inrespect of:

2070 Other Administrative Services2225 Welfare of Scheduled Castes, Scheduled Tribes and

Other Backward Classes2235 Social Security and Welfare2236 Nutrition4225 Capital Outlay on Welfare of Scheduled Castes,

Scheduled Tribes and Other Backward Classes4235 Capital Outlay on Social Security and Welfare4236 Capital Outlay on Nutrition

Note:To be restricted only to relevant Major Heads for which‘Supplementary Vote’ is required.

339

Demand No. 19

That a sum not exceeding `________ lakh may be grantedto Government to defray the charges which will come in course ofpayment during the year ending 31st March, ________ in respect of:

2217 Urban Development4216 Capital Outlay on Housing4217 Capital Outlay on Urban Development6216 Loans for Housing7610 Loans to Government Servants etc.

Note:To be restricted only to relevant Major Heads for which‘Supplementary Vote’ is required.

340

Demand No. 20

That a sum not exceeding ` ________ lakh may be grantedto Government to defray the charges which will come in course ofpayment during the year ending 31st March, ________ in respect of:

2202 General Education2205 Art and Culture3452 Tourism4202 Capital Outlay on Education, Sports, Art and Culture5452 Capital Outlay on Tourism

Note:To be restricted only to relevant Major Heads for which‘Supplementary Vote’ is required.

341

Demand No. 21

That a sum not exceeding ` ________ lakh may be grantedto Government to defray the charges which will come in course ofpayment during the year ending 31st March, ________ in respect of:

2402 Soil and Water Conservation2406 Forestry and Wildlife3435 Ecology and Environment4402 Capital Outlay on Soil and Water Conservation4406 Capital Outlay on Forestry and Wildlife5425 Capital Outlay on Other Scientific and Environmental

Research

Note:To be restricted only to relevant Major Heads for which‘Supplementary Vote’ is required.

342

Demand No. 22

That a sum not exceeding ` ________ lakh may be grantedto Government to defray the charges which will come in course ofpayment during the year ending 31st March, ________ in respect of:

2700 Major Irrigation2701 Medium Irrigation2702 Minor Irrigation2711 Flood Control and Drainage4701 Capital Outlay on Medium Irrigation4702 Capital Outlay on Minor Irrigation4711 Capital Outlay on Flood Control Projects

Note:To be restricted only to relevant Major Heads for which‘Supplementary Vote’ is required.

343

Demand No. 23

That a sum not exceeding ` ________ lakh may be grantedto Government to defray the charges which will come in course ofpayment during the year ending 31st March, ________ in respect of:

2055 Police2215 Water Supply and Sanitation4215 Capital Outlay on Water Supply and Sanitation

Note:To be restricted only to relevant Major Heads for which‘Supplementary Vote’ is required.

344

Demand No. 24

That a sum not exceeding ` ________ lakh may be grantedto Government to defray the charges which will come in course ofpayment during the year ending 31st March, _______ in respect of:

2055 Police2059 Public Works2070 Other Administrative Services2216 Housing4059 Capital Outlay on Public Works

Note:To be restricted only to relevant Major Heads for which‘Supplementary Vote’ is required.

345

Demand No. 25

That a sum not exceeding ` _______ lakh may be granted toGovernment to defray the charges which will come in course ofpayment during the year ending 31st March, _______ in respect of:

2058 Stationery and Printing2230 Labour and Employment4058 Capital Outlay on Stationery and Printing4250 Capital Outlay on Other Social Services

Note:To be restricted only to relevant Major Heads for which‘Supplementary Vote’ is required.

346

Demand No. 26

That a sum not exceeding ` ________ lakh may be grantedto Government to defray the charges which will come in course ofpayment during the year ending 31st March, _________ in respect of:

2405 Fisheries4405 Capital Outlay on Fisheries

Note:To be restricted only to relevant Major Heads for which‘Supplementary Vote’ is required.

347

Demand No. 27

That a sum not exceeding ` _________ lakh may begranted to Government to defray the charges which will come incourse of payment during the year ending 31st March, ________ inrespect of:

2202 General Education2203 Technical Education2230 Labour and Employment4202 Capital Outlay on Education, Sports, Art and Culture4250 Capital Outlay on Other Social Services

Note:To be restricted only to relevant Major Heads for which‘Supplementary Vote’ is required.

348

Demand No. 28

That a sum not exceeding ` ________ lakh may be grantedto Government to defray the charges which will come in course ofpayment during the year ending 31st March, _________ in respect of:

2236 Nutrition2501 Special Programmes for Rural Development2515 Other Rural Development Programmes4515 Capital Outlay on Other Rural Development

Programmes

Note:To be restricted only to relevant Major Heads for which‘Supplementary Vote’ is required.

349

Demand No. 29

That a sum not exceeding ` _________ lakh may be grantedto Government to defray the charges which will come in course ofpayment during the year ending 31st March, _________ in respect of:

2041 Taxes on Vehicles2070 Other Administrative Services4059 Capital Outlay on Public Works5055 Capital Outlay on Road Transport7055 Loans for Road Transport

Note:To be restricted only to relevant Major Heads for which‘Supplementary Vote’ is required.

350

Appendix - F.18

Government of Jammu and KashmirCivil Secretariat, Finance Department

…

No: FD-VII-Gen. (102)- Dated:

Subject: Introduction of Appropriation Bill No. 1 & 2 of ______.

The Appropriation Bills No. 1 & 2 of ________ are scheduled tobe introduced in the J&K Legislative Assembly on _________. In thisconnection some points have been raised by Hon’ble Members. Thesame are enclosed for ready reference. The undersigned is directed to request the AdministrativeSecretaries concerned to kindly send a brief reply on the pointspertaining to their Department. The reply should reach FinanceDepartment latest by _________. Soft copy of the reply may also beprovided.

Deputy Director (Bgt.)Finance Department

Financial Commissioner/Principal Secretary to Government/Commr. Secretary to Government/Secretary to Government,_____________________.

Encl: _____

351

Appendix - F.19

No: FD-VII-Gen. (102)-Dated: ____________

The Secretary,J&K Legislative Assembly,Jammu/Srinagar.

Sir,

Enclosed please find 10 copies of J&K

Appropriation Bill (No. 1) of the year _______ with the

request that the approval of the Hon’ble Speaker to

its publication in the Government Gazette may kindly

be obtained and the Bill published in the usual

manner.

Yours faithfully,

Minister for Finance

352

(For Supplementary Demands)

THE JAMMU AND KASHMIR APPROPRIAITON(No. 1) BILL, ________.

(L. A. Bill No. of _______)

A Bill to authorize payment and Appropriation of certain sumsfrom and out of the Consolidated Fund of the Jammu and KashmirState for the services of the Financial Year ________.

Be it enacted by the Jammu and Kashmir State Legislature in the________ Year of the Republic of India as follows:-

1. Short title: - This Act may be called the Jammu and KashmirAppropriation (No. 1) Act, _________.

2. Issue of ` _________ lakh out of the Consolidated Fund of theJammu and Kashmir State for the Financial Year ________:- Fromand out of the Consolidated Fund of the Jammu and Kashmir Statethere may be withdrawn sums not exceeding those specified inColumn 5 of the Schedule hereto amounting in the aggregate tothe sum of ` _________ (in words) towards defraying the severalcharges which will come in course of payment during the FinancialYear _________ in respect of the services specified in Column 2 of thesaid Schedule.

3. Appropriation: - The sums authorized to be withdrawn fromand out of the Consolidated Fund of the Jammu and Kashmir Stateby the Act, shall be appropriated for the services and purposesexpressed in the Schedule in relation to the said year.

________

353

THE SCHEDULE

(See Sections 2 and 3)

Sums not exceeding(in ` lakh)

No. ofDemand

Service and purpose

Voted by theLegislature

Charged on theConsolidatedFund (in italics)

Total

1. 2. 3. 4. 5.1. General Administration Department

I- Revenue Account2012- President, Vice President / Governor /Administrator of Union Territories

… … …

2013- Council of Ministers … … …2015-Elections … … …2051-Public Service Commission … … …2052-Secretariat - General Services … … …2055-Police … … …2070-Other Administrative Services … … …2251- Secretariat -Social Services … … …2501- Special Programmes for RuralDevelopment

… … …

3435- Ecology and Environment … … …3451- Secretariat -Economic Services … … …3452- Tourism … … …3454-Census, Survey and Statistics … … …Total Revenue Account … … …II- Capital Account4059-Capital Outlay on Public Works … … …4070- Capital Outlay on Other Adm. Services … … …4075- Capital Outlay on Misc. GeneralServices

… … …

4515- Capital Outlay on Other RuralDevelopment Programmes

… … …

5425- Capital Outlay on Other Scientific &Environmental Research

… … …

5452- Capital Outlay on Tourism … … …Total Capital Account … … …Total Demand No. 01 … … …

.

.

.

354

29. Transport DepartmentI- Revenue Account2041- Taxes on Vehicles … … …2070- Other Administrative Services … … …Total Revenue Account … … …II- Capital Account4059- Capital Outlay on Public Works … … …5055- Capital Outlay on Road Transport … … …7055- Loans for Transport … … …Total Capital Account … … …Total Demand No. 29 … … …

Total Revenue Account … … …Total Capital Account … … …Grand Total (All Demands) SupplementaryAccounts

… … …

Note: Same format will be replicated for each of the 29 Demands forGrants except for the change in Demand No. and Major Headsunder each of the Demand as listed out in the ‘Service andPurpose’ statement placed as annexure to Appendix - F.12.

355

STATEMENT OF OBJECTS AND REASONS

This Bill is introduced in pursuance of section 81 of theConstitution of Jammu and Kashmir, to provide for theSupplementary Appropriation out of the Consolidated Fund of theJammu and Kashmir State, of the moneys required to meet theexpenditure charged on the Consolidated Fund and the grantsmade by the Legislative Assembly for expenditure of the Jammuand Kashmir Government for the Financial Year _________ in respectof the services and purposes specified in the Bill.

MINISTER for FINANCE

_______

356

Appendix - F. 20

No: FD-VII-Gen. (102)-Dated: ____________

The Secretary,J&K Legislative Assembly,Jammu/Srinagar.

Sir,

Enclosed please find 10 copies of J&K

Appropriation Bill (No. 2) of the year _______ with the

request that the approval of the Hon’ble Speaker to

its publication in the Government Gazette may kindly

be obtained and the Bill published in the usual

manner.

Yours faithfully,

Minister for Finance

357

(For Main Budget)

THE JAMMU AND KASHMIR APPROPRIATION (No. 2) BILL, _______.

(L. A. BILL No. of ______)

A Bill to provide for the withdrawal of certain sums from andout of the Consolidated Fund of the Jammu and Kashmir State forthe services of the Financial Year _________.

Be it enacted by the Jammu and Kashmir State Legislature inthe ____________ Year of the Republic of India as follows:-

1. Short title: - This Act may be called the Jammu and KashmirAppropriation (No. 2) Act, _______.

2. Issue of ` __________ lakh out of the Consolidated Fund of theJammu and Kashmir State for the Financial Year _______:- From andout of the Consolidated Fund of the Jammu and Kashmir State,there may be withdrawn sums not exceeding those specified inColumn 5 of the schedule hereto amounting in the aggregate tothe sum of ` _________(in words) towards defraying the severalcharges, which will come in course of payment during the FinancialYear __________ in respect of the services specified in column 2 ofthe said schedule.

3. Appropriation:- The sums authorized to be withdrawn from andout of the Consolidated Fund of the Jammu and Kashmir State bythe Act, shall be appropriated for the services and purposesexpressed in the schedule in relation to the said year.

__________

358

THE SCHEDULE

(See Sections 2 and 3)

Sums not exceeding(in ` lakh)

No. ofDemand

Service and purpose

Voted by theLegislature

Charged on theConsolidatedFund (in italics)

Total

1. 2. 3. 4. 5.1. General Administration Department

I- Revenue Account2012- President, Vice President / Governor /Administrator of Union Territories

… … …

2013- Council of Ministers … … …2015-Elections … … …2051-Public Service Commission … … …2052-Secretariat - General Services … … …2055-Police … … …2070-Other Administrative Services … … …2251- Secretariat -Social Services … … …2501- Special Programmes for RuralDevelopment

… … …

3435- Ecology and Environment … … …3451- Secretariat -Economic Services … … …3452- Tourism … … …3454-Census, Survey and Statistics … … …Total Revenue Account … … …II- Capital Account4059-Capital Outlay on Public Works … … …4070- Capital Outlay on Other Adm. Services … … …4075- Capital Outlay on Misc. GeneralServices

… … …

4515- Capital Outlay on Other RuralDevelopment Programmes

… … …

5425- Capital Outlay on Other Scientific &Environmental Research

… … …

5452- Capital Outlay on Tourism … … …Total Capital Account … … …Total Demand No. 01 … … …

.

.

.

.

.

.

359

29. Transport DepartmentI- Revenue Account2041- Taxes on Vehicles … … …2070- Other Administrative Services … … …Total Revenue Account … … …II- Capital Account4059- Capital Outlay on Public Works … … …5055- Capital Outlay on Road Transport … … …7055- Loans for Transport … … …Total Capital Account … … …Total Demand No. 29 … … …

Total Revenue Account … … …Total Capital Account … … …Grand Total (All Demands) … … …

Note: Same format will be replicated for each of the 29 Demands forGrants except for the change in Demand No. and Major Headsunder each of the Demand as listed out in the ‘Service andPurpose’ statement placed as annexure to Appendix - F.12.

360

STATEMENT OF OBJECTS AND REASONS

This Bill is introduced in pursuance of sub-section (1) ofsection 81 of the Constitution of Jammu and Kashmir, to provide forthe appropriation out of the Consolidated Fund of the Jammu andKashmir State, of the moneys required to meet the expenditurecharged on the Consolidated Fund and the Grants made by theLegislative Assembly for expenditure of the Jammu and KashmirGovernment for the financial year ___________ in respect of theservices and purposes specified in the Bill.

MINISTER for FINANCE

________

361

APPENDICES NO. V.1 TO V.13(referred in Para 10.1.4)

Formats of statutory communications and sanctions,appropriation bills and schedules

used in a

VOTE ON ACCOUNT

situation

362

MEMORANDUM

The State Cabinet vide its Decision No. _________ dated _________ has approvedRevised Estimates for the year __________ and the Vote-on-Account for the period_________ to _________ of FY ___________.

Under Sections 80, 81, 82 and 83 read with Section 84 of the Constitution of Jammu& Kashmir, approval of the Governor is required to enable the Government to takefurther action accordingly.

His Excellency the Governor may feel pleased to:

1. Director that the Vote-on-Account in respect of estimated expenditure for theperiod ____________ to __________ of FY _________ be laid before both the Housesof Legislature in pursuance of Section 83 read with sub section (3) of Section 80of the Constitution of Jammu and Kashmir.

2. Recommend making in Legislative Assembly, the requirement of expenditure inrespect of Vote-on-Account for the period ___________ to __________ of FY__________ in pursuance of sub-section (1) of Section 83 read with sub-section(3) of Section 80 of the Constitution of Jammu & Kashmir.

3. Direct that the Statement of Supplementary Expenditure for FY _________ be laidbefore both the Houses of Legislature in pursuance of sub-section (1) of Section82 read with sub-section (3) of Section 80 of the Constitution of Jammu &Kashmir.

4. Recommend making in Legislative Assembly, the Demand for Grants in respectof Statement of Supplementary Expenditure for FY _________ in pursuance ofsub-section (2) of Section 82 read with sub-section (3) of Section 80 of theConstitution of Jammu & Kashmir.

5. Recommend introduction in and consideration by Legislative Assembly of theBill styled as J&K Appropriation (No.1) Bill, _______ in pursuance of Section 81read with sub-sections (1) and (3) of Section 84 of the Constitution of Jammu &Kashmir after Supplementary Demands for Grants for FY _________ have beenconsidered.

6. Recommend introduction in and consideration by Legislative Assembly of theBill styled as J&K Appropriation (No.2) Bill, _________ in pursuance of Section 81read with sub-sections (1) and (3) of Section 84 of the Constitution of Jammu &Kashmir after Demands for Grants under Vote-on-Account for the period__________ to __________ of FY __________ have been considered.

Appendix- V.1

363

7. Recommend consideration by the Legislative Council of J&K Appropriation(No. 1) Bill, _________ in pursuance of sub-section (3) of Section 84 of theConstitution of Jammu & Kashmir after Supplementary Demands for Grants forFY ________ have been considered.

8. Recommend consideration by the Legislative Council of J&K Appropriation(No. 2) Bill, ________ in pursuance of Sub-Section (3) of Section 84 of theConstitution of Jammu & Kashmir after Demands for Grants under Vote-on-Account for the period _________ to ________ of FY __________ have beenconsidered.

Draft sanctions (10 in number) are enclosed.

Chief MinisterGovernor,Jammu & Kashmir.

364

Draft of sanctions from the Governor

In pursuance of Section 83 read with sub-section (3)

of Section 80 of the Constitution of Jammu and Kashmir, I,

_________, Governor of Jammu and Kashmir, hereby direct

that the Vote-on-Account in respect of estimated

expenditure for the period __________ to _________ of FY

__________ shall be laid before the Legislative Council on

__________.

(__________)

In pursuance of Section 83 read with sub-section (3)

of Section 80 of the Constitution of Jammu and Kashmir, I,

________, Governor of Jammu and Kashmir, hereby direct

that the Vote-on-Account in respect of estimated

expenditure for the period _________ to __________ of FY

_________ shall be laid before the Legislative Assembly on

_________.

(__________)

365

In pursuance of sub-section (1) of Section 82 read

with sub-section (3) of Section 80 of the Constitution of

Jammu and Kashmir, I, ___________, Governor of Jammu

and Kashmir, hereby direct that the Statement of

Supplementary Expenditure for FY _________ shall be laid

before the Legislative Council on __________.

(__________)

In pursuance of sub-section (1) of Section 82 read

with sub-section (3) of Section 80 of the Constitution of

Jammu and Kashmir, I, ________, Governor of Jammu and

Kashmir, hereby direct that the Statement of

Supplementary Expenditure for FY ________ shall be laid

before the Legislative Assembly on _________.

(_________)

366

In pursuance of sub-section (1) of Section 83 read

with sub-section (3) of Section 80 of the Constitution of

Jammu and Kashmir, I, __________, Governor of Jammu

and Kashmir hereby recommend making in Legislative

Assembly, the Demands for Grants in respect of Vote-on-

Account for the period _________ to _________ of FY

__________.

(_________)

In pursuance of sub-section (2) of Section 82 read

with sub-section (3) of Section 80 of the Constitution of

Jammu and Kashmir, I, _________, Governor of Jammu

and Kashmir hereby recommend the making in of

Demands for Grants in Legislative Assembly in respect of

Statement of Supplementary Expenditure for FY _________.

(_________)

367

In pursuance of Section 81 read with sub-sections (1)

and (3) of Section 84 of the Constitution of Jammu and

Kashmir, I, _________, Governor of Jammu and Kashmir, do

hereby recommend the introduction in and consideration

by the Legislative Assembly of the Bill styled as “The

Jammu & Kashmir Appropriation (No. 1) Bill, ________”,

after the Supplementary Demands for Grants for

__________ have been considered.

(________)

In pursuance of Section 81 read with sub-sections (1)

and (3) of Section 84 of the Constitution of Jammu and

Kashmir, I, _________, Governor of Jammu and Kashmir,

hereby recommend the introduction in and consideration

of the Bill styled as “The Jammu & Kashmir Appropriation

(No. 2) Bill, ________”, by Legislative Assembly after Vote-

on-Account for the period _________ to __________ of FY

________ and Demands for Grants for the said period have

been considered.

(_________)

368

In pursuance of sub-section (3) of Section 84 of the

Constitution of Jammu and Kashmir, I, __________,

Governor of Jammu and Kashmir, do hereby recommend

the consideration of the Bill styled as “The Jammu &

Kashmir Appropriation (No.1) Bill, _______” by the

Legislative Council after Supplementary Demands for

Grants for _________ have been considered.

(________)

In pursuance of sub-section (3) of Section 84 of the

Constitution of Jammu and Kashmir, I, __________,

Governor of Jammu and Kashmir, do hereby recommend

the consideration of the Bill styled as “The Jammu &

Kashmir Appropriation (No.2) Bill, _______” by the

Legislative Council after Vote-on-Account for the period

_________ to _________ of FY _________ and Demands for

Grants for the said period have been considered.

(________)

369

Appendix- V.2

No: FD-VII-Gen. (102)-Dated: ____________

The Chairman,J&K Legislative Council,Jammu/Srinagar.

Sir,

Please take notice that Vote-on-Account for FY __________shall be laid before the Legislative Council on ___________.

2. Sanction of His Excellency the Governor is enclosed.

Yours faithfully,

Minister for Finance

370

Appendix- V.3

No: FD-VII-Gen. (102)-Dated: ____________

The Speaker,J&K Legislative Assembly,Jammu/Srinagar.

Sir,

Please take notice that Vote-on-Account for FY ________shall be laid before the Legislative Assembly on _________.

2. Sanction of His Excellency the Governor is enclosed.

Yours faithfully,

Minister for Finance

371

Appendix- V.4

No: FD-VII-Gen. (102)-Dated: ____________

The Chairman,J&K Legislative Council,Jammu/Srinagar.

Sir,

Please take notice that Statement of SupplementaryExpenditure for FY __________ shall be laid before the LegislativeCouncil on __________.

2. Sanction of His Excellency the Governor is enclosed.

Yours faithfully,

Minister for Finance

372

Appendix- V.5

No: FD-VII-Gen. (102)-Dated: ____________

The Speaker,J&K Legislative Assembly,Jammu/Srinagar.

Sir,

Please take notice that Statement of SupplementaryExpenditure for FY _________ shall be laid before the LegislativeAssembly on _________.

2. Sanction of His Excellency the Governor is enclosed.

Yours faithfully,

Minister for Finance

373

Appendix- V.6

No: FD-VII-Gen. (102)-Dated: ____________

The Speaker,J&K Legislative Assembly,Jammu/Srinagar.

Sir,

Please take notice that Demands for Grants in respect ofVote-on-Account for a part of FY __________ will be moved inJ&K Legislative Assembly on __________.

2. Sanction of His Excellency the Governor is enclosed.

Yours faithfully,

Minister for Finance

374

Appendix- V.7

No: FD-VII-Gen. (102)-Dated: ____________

The Speaker,J&K Legislative Assembly,Jammu/Srinagar.

Sir,

Please take notice that Supplementary Demands forGrants for FY __________ will be moved in J&K LegislativeAssembly on _________.

2. Sanction of His Excellency the Governor is enclosed.

Yours faithfully,

Minister for Finance

375

Appendix- V.8

No: FD-VII-Gen. (102)-Dated: ____________

The Speaker,J&K Legislative Assembly,Jammu/Srinagar.

Sir,Please take notice that undersigned will introduce Jammu

and Kashmir Appropriation (No.1) Bill, _______, in the currentsession of Legislative Assembly and move that:-

“a. The Bill be taken into consideration; andc. The Bill be passed.”

2. Sanction of His Excellency the Governor is enclosed.

Yours faithfully,

Minister of Finance

376

Appendix- V.9

No: FD-VII-Gen. (102)-Dated: ____________

The Speaker,J&K Legislative Assembly,Jammu/Srinagar.

Sir,Please take notice that undersigned will introduce Jammu

and Kashmir Appropriation (No.2) Bill, ________, in the currentsession of Legislative Assembly and move that:-

“a. The Bill be taken into consideration; andc. The Bill be passed.”

2. Sanction of His Excellency the Governor is enclosed.

Yours faithfully,

Minister for Finance

377

Appendix- V.10

No: FD-VII-Gen. (102)-Dated: ____________

The Chairman,J&K Legislative Council,Jammu/Srinagar.

Sir,Please take notice that undersigned will commend

Jammu and Kashmir Appropriation (No. 1) Bill, ________ in thecurrent session of Legislative Council and move that:-

“a. The Bill be taken into consideration; andc. The Bill be returned to J&K Legislative Assembly.”

Sanction of His Excellency the Governor is enclosed.

Yours faithfully,

Minister for Finance

378

Appendix- V.11

No: FD-VII-Gen. (102)-Dated: ____________

The Chairman,J&K Legislative Council,Jammu/Srinagar.

Sir,Please take notice that undersigned will commend

Jammu and Kashmir Appropriation (No. 2) Bill, _______ in thecurrent session of Legislative Council and move that:

“a. The Bill be taken into consideration; andc. The Bill be returned to J&K Legislative Assembly.”

Sanction of His Excellency the Governor is enclosed.

Yours faithfully,

Minister for Finance

379

Appendix- V.12

No: FD-VII-Gen. (102)-Dated: ____________

The Secretary,J&K Legislative Assembly,Jammu/Srinagar.

Sir,

Enclosed please find 10 copies of J&K

Appropriation Bill (No. 1) of the year _______ with the

request that the approval of the Hon’ble Speaker to

its publication in the Government Gazette may kindly

be obtained and the Bill published in the usual

manner.

Yours faithfully,

Minister for Finance

380

(For Supplementary Demands)

THE JAMMU AND KASHMIR APPROPRIAITON(No. 1) BILL, ________.

(L. A. Bill No. of _______)

A Bill to authorize payment and Appropriation of certain sumsfrom and out of the Consolidated Fund of the Jammu and KashmirState for the services of the Financial Year ________.

Be it enacted by the Jammu and Kashmir State Legislature in the________ Year of the Republic of India as follows:-

1. Short title: - This Act may be called the Jammu and KashmirAppropriation (No. 1) Act, _________.

2. Issue of ` _________ lakh out of the Consolidated Fund of theJammu and Kashmir State for the Financial Year ________:- Fromand out of the Consolidated Fund of the Jammu and Kashmir Statethere may be withdrawn sums not exceeding those specified inColumn 5 of the Schedule hereto amounting in the aggregate tothe sum of ` _________ (in words) towards defraying the severalcharges which will come in course of payment during the FinancialYear _________ in respect of the services specified in Column 2 of thesaid Schedule.

3. Appropriation: - The sums authorized to be withdrawn fromand out of the Consolidated Fund of the Jammu and Kashmir Stateby the Act, shall be appropriated for the services and purposesexpressed in the Schedule in relation to the said year.

________

381

THE SCHEDULE

(See Sections 2 and 3)

Sums not exceeding(in ` lakh)

No. ofDemand

Service and purpose

Voted by theLegislature

Charged on theConsolidatedFund (in italics)

Total

1. 2. 3. 4. 5.1. General Administration Department

I- Revenue Account2012- President, Vice President / Governor /Administrator of Union Territories

… … …

2013- Council of Ministers … … …2015-Elections … … …2051-Public Service Commission … … …2052-Secretariat - General Services … … …2055-Police … … …2070-Other Administrative Services … … …2251- Secretariat -Social Services … … …2501- Special Programmes for RuralDevelopment

… … …

3435- Ecology and Environment … … …3451- Secretariat -Economic Services … … …3452- Tourism … … …3454-Census, Survey and Statistics … … …Total Revenue Account … … …II- Capital Account4059-Capital Outlay on Public Works … … …4070- Capital Outlay on Other Adm. Services … … …4075- Capital Outlay on Misc. GeneralServices

… … …

4515- Capital Outlay on Other RuralDevelopment Programmes

… … …

5425- Capital Outlay on Other Scientific &Environmental Research

… … …

5452- Capital Outlay on Tourism … … …Total Capital Account … … …Total Demand No. 01 … … …

.

.

.

382

29. Transport DepartmentI- Revenue Account2041- Taxes on Vehicles … … …2070- Other Administrative Services … … …Total Revenue Account … … …II- Capital Account4059- Capital Outlay on Public Works … … …5055- Capital Outlay on Road Transport … … …7055- Loans for Transport … … …Total Capital Account … … …Total Demand No. 29 … … …

Total Revenue Account … … …Total Capital Account … … …Grand Total (All Demands) SupplementaryAccounts

… … …

Note: Same format will be replicated for each of the 29 Demands forGrants except for the change in Demand No. and Major Headsunder each of the Demand as listed out in the ‘Service andPurpose’ statement placed as annexure to Appendix - F.12.

383

STATEMENT OF OBJECTS AND REASONS

This Bill is introduced in pursuance of section 81 of theConstitution of Jammu and Kashmir, to provide for theSupplementary Appropriation out of the Consolidated Fund of theJammu and Kashmir State, of the moneys required to meet theexpenditure charged on the Consolidated Fund and the grantsmade by the Legislative Assembly for expenditure of the Jammuand Kashmir Government for the Financial Year _________ in respectof the services and purposes specified in the Bill.

MINISTER for FINANCE

_______

384

Appendix- V.13

No: FD-VII-Gen. (102)-Dated: ____________

The Secretary,J&K Legislative Assembly,Jammu/Srinagar.

Sir,

Enclosed please find 10 copies of J&K Appropriation

Bill (No. 2) of the year _______ with the request that the

approval of the Hon’ble Speaker to its publication in the

Government Gazette may kindly be obtained and the Bill

published in the usual manner.

Yours faithfully,

Minister for Finance

385

(For Vote on Account)

THE JAMMU AND KASHMIR APPROPRIATION(No. 2) BILL, _______.

(L. A. BILL No. of ______)

A Bill to provide for the withdrawal of certain sums from andout of the Consolidated Fund of the Jammu and Kashmir State forthe services of the Financial Year _________.

Be it enacted by the Jammu and Kashmir State Legislature inthe ____________ Year of the Republic of India as follows:-

1. Short title: - This Act may be called the Jammu and KashmirAppropriation (No. 2) Act, _______.

2. Issue of ` __________ lakh out of the Consolidated Fund of theJammu and Kashmir State for the Financial Year _______:- From andout of the Consolidated Fund of the Jammu and Kashmir State,there may be withdrawn sums not exceeding those specified inColumn 5 of the schedule hereto amounting in the aggregate tothe sum of ` _________(in words) towards defraying the severalcharges, which will come in course of payment during the FinancialYear __________ in respect of the services specified in column 2 ofthe said schedule.

3. Appropriation:- The sums authorized to be withdrawn from andout of the Consolidated Fund of the Jammu and Kashmir State bythe Act, shall be appropriated for the services and purposesexpressed in the schedule in relation to the said year.

__________

386

THE SCHEDULE

(See sections 2 and 3)

Vote on Account _________(From _________ to __________ )

Demand 01- General Administration

Outlay Total Outlay

Non Plan Plan (Voted)

Charged Voted Normal CSS Charged Voted Total

Major Head of Account1 2 3 4 5 6 7 8

(in ` lakh)

Revenue Account

2012- President, Vice President/Governor/Administrator ofUnion Territories

2013- Council of Ministers

2015- Elections

2051- Public ServiceCommission

2052- Secretariat General Services

2055- Police

2070- Other Administrative Services

2251- Secretariat Social Services

387

1 2 3 4 5 6 7 8

2501- Special ProgrammesFor Rural Development

3435- Ecology and Environment3451- Secretariat Economic

Services3452- Tourism3454-Census, Survey and Statistics

Total Revenue Account

Capital Account4059- Capital Outlay on Public

Works

4070- Capital Outlay onOther AdministrativeServices

4075- Capital Outlay onMiscellaneous GeneralServices

4515- Capital Outlay onOther Rural DevelopmentProgrammes

5425- Capital Outlay onOther Scientific andEnvironmental Research

5452- Capital Outlay onTourism

Total Capital Account

Total Demand

.

.

.

388

Vote on Account _________(From _________ to __________ )

Demand 29- Transport

Outlay Total Outlay

Non Plan Plan (Voted)

Charged Voted Normal CSS Charged Voted Total

Major Head of Account

(in ` lakh)

Revenue Account

2041- Taxes on Vehicles

2070- Other Administrative Services

Total Revenue Account

Capital Account

4059- Capital Outlay on PublicWorks

5055- Capital Outlay on RoadTransport

7055- Loans for Transport

Total Capital Account

Total Demand

Note: Same format will be replicated for each of the 29 Demands forGrants except for the change in Demand No. and Major Headsunder each of the Demand as listed out in the ‘Service andPurpose’ statement placed as annexure to Appendix - F.12.

389

STATEMENT OF OBJECTS AND REASONS

This Bill is introduced in pursuance of sub-section (1)of section 81 of the Constitution of Jammu and Kashmir, toprovide for the appropriation out of the Consolidated Fund ofthe Jammu and Kashmir State, of the moneys required to meetthe expenditure charged on the Consolidated Fund and theGrants made by the Legislative Assembly for expenditure of theJammu and Kashmir Government for the financial year___________ in respect of the services and purposes specified inthe Bill.

MINISTER for FINANCE

________

390

PART-IV

391

PART- IV

Chapter 14

CASH MANAGEMENT FOR BUDGETIMPLEMENTATION

14.1.0 The cash management has two basic aspects,namely drawing of ways and means forecastsand making of resource arrangements.Broadly, the ways and means involvesdetermination of cash availability andidentifying the steps needed to manage thegaps between the cash inflow and outflowduring the forecast period or to invest thesurplus cash, if any, during such periods toyield optimum returns ensuring at the sametime their easy retrievability. Resourcearrangements on the other hand, is a systemwhereby total cash availability worked outthrough ways and means exercise isdistributed among Government treasuriesenabling these to meet their local demands.

14.2.0 Responsibility for doing this exercise is that ofthe Finance Department who have to beassisted in this behalf by the ControllingOfficers because they are in the best positionto know the period in which a particular item ofreceipt pertaining to a department will berealized or a particular payment will be made.

14.3.0 Every system of making ways and meansexercise by the Finance Department,essentially involves: -

01. determination of the forecast periodin a year,

02. identifying the authorities in theGovernments administrative setup

392

to be involved in making theforecast,

03. methodology to be followed forworking out the forecasts, and

04. interpretation of the forecasts fordetermination of the gaps andsurpluses, if any.

14.4.0 Determination of Forecast periods:-Forecast period in relation to the ways andmeans exercise is that portion of a budgetyear in respect of which estimated inflow andoutflow of the cash under various budgetedprogrammes is worked out with the objectiveof reducing the element of their uncertaintyand also making it possible to closely watchtheir actualization. Duration of this period canobviously, be decided on the basis of theprevious experience of the behaviour of thebudget estimates projected for a year, brokeninto various periods. It equally depends uponthe financial health of the State during aparticular year. Sound financial positionenables fixation of longer ways and meansforecast periods. On the other hand, financialcrunch will certainly call for going in forsmaller forecast periods. Pattern of budgetingfollowed by the Government has also a closebearing on deciding such a forecast period.Because of various constraints bothadministrative and financial, it some timesbecomes necessary to make lump sumprovisions in respect of various budgetedprogrammes. This is particularly true aboutplan developmental outlays and some non-plan expenditures like making of provision forlikely increases in the salary and wagestructure of the employees. These lumpsum provisions are broken into details under

393

various expenditure object heads at differentstages of budget implementation during ayear. All such situations can vary from time totime, and therefore, ways and means forecastperiods cannot be fixed permanently as a rule.Review of the forecasts may have to be madeeven during currency of a forecast period soas to account for unforeseen and theunpredictable elements of receipts andexpenditure. Generally speaking, a quarter ina year is taken as a reasonable forecastperiod in a developing economy whererealization of receipts is full of uncertaintiesand expenditure incurring dependant uponnumber of physical and financial constraints.

14.5.0 Authorities to be involved in Ways andMeans forecasting:- Immediate responsibilityfor successful implementation of the budgetrests with the Controlling Officers, declared assuch by the Government from time to time.The list of these officers can decrease orincrease with deletion of the completedschemes and addition of new programmes inthe budget of a financial year. In order to haveready information about these officers theFinance Department may link them to thevarious programme heads of account andincorporate their details in the Demands forGrants as presented to the Legislature fromyear to year. It will facilitate identification of aControlling Officer in respect of a head ofaccount with reference to the Demand forGrants relevant to his/ her department. TheControlling Officers may be grouped forvarious budget programmes as under: -

01. For non-plan, state plan and statelevel externally aided programmes,centrally sponsored schemes or

394

central plan schemes....Head ofrespective functional department.

02. For district plan, including districtlevel externally aided programmes,centrally sponsored schemes orcentral plan schemes.... DistrictDevelopment Commissioners.

03. For interest, pensions, internal debtof Government loans and advancesfrom the Central Government,unfunded debts and other accountsgrouped in the section PublicAccount of the budget.... FinanceDepartment in the ResourceSection.

14.6.0 It may be cumbersome to deal with all theControlling Officers individually for purposesof the cash management, which involvescollecting of data/information almostconstantly through out the year. These officersshould, therefore, be grouped under variousadministrative departments where theservices of the FA and CAOs should beutilized to collect and consolidate theforecasts received from respective ControllingOfficers. The FA and CAOs beingrepresentative of the Finance Department arecharged with this responsibility and asked tosubmit the returns of ways and meansforecasts to that department as and whencalled for. Involvement of the FA and CAOsshould, however, be restricted only to (01)above. The developmental programmes at thedistrict level taken up either as a part of districtplan or as EAP or centrally sponsoredschemes are under better control of theDistrict Development Commissioners

395

coordinated by the Area Planning Wing of thePlanning and Development Department. Waysand means forecasts prepared by the DistrictDevelopment Commissioners should beconsolidated by the said wing of the Planningand Development Department who will in turnreport to the Finance Department. In respectof the heads of account controlled by theFinance Department directly or through itsheads of departments, the forecasts should beconsolidated and processed for finaladoptions by its Resources Division. Theinformation/data from various quarters shallhave to be consolidated at the apex in theFinance Department (Resource Division) sothat ways and means forecast for the State asa whole becomes available.

14.7.0 The flow of information/data for ways andmeans forecasting as mentioned above, isdescribed as in the following chart:

Note:- COs= Controlling Officers,DDCs=District Development Commissioners,DF=Director Finance, FA & CAO=FinancialAdvisor & Chief Accounts Officer, DAP=Director Area Planning, FD= FinanceDepartment, P & D=Planning & DevelopmentDepartment.

14.8.0 Methodology for working of ways & meansforecast: The forecast has to cover everyactivity involving finances i.e., receipts as also

COs for NP, SP,EAP, CSS & CP

DDCs for DP

DF (FD) for itsPortion of Budget

FA & CAO for consolidationfor its Department

SAP (P&D) for consolidationof DPDP

DF (FD) for consolidation

FD (Resources Wing)for consolidation ofWays and Meansforecast for the state

396

disbursement as provided for in the‘Consolidated Fund’ and ‘Public Account’sections of the budget of a financial year.Since objective of the cash management isnot accounts maintenance it is not necessaryto follow budgetary classification strictly,though it can provide means to identifyexpenditure requirements under variousimportant ‘inputs’ to facilitate development of aplan to spread these over the year keeping inview the various cash resource constraintsand programme implementation requirements.It will not, thus, be necessary even to maintaindistinction between revenue and capitalexpenditures as is the requirement for budgetformulation and account maintenance whilepreparing a ways and means forecast, whichin essence is an exercise to arrive at cashinflow and outflow during a forecast periodwithin the over all budgetary ceilings for afinancial year as a whole. In view of this, it willbe expedient to categorize the variousbudgetary inputs as ‘fixed’ and ‘variables’separately for non-plan and plan programmesand activities.

14.9.0 The ‘fixed Inputs’ are in a way expendituresrelating to administrative and supervisoryaspects of the governance and can, thus, bemore or less evenly distributed over differentmonths of a financial year. ‘Variable inputs’,on the other hand are such budgetarycommitments which are not evenlydistributable, but can arise at different timesdepending upon various considerations, likeavailability of working periods, PERT andCPM charts of major works and projects,finalization of contracts, availability of requiredmaterials etc. and above all, examination andsanctioning of the programmes and the

397

activities under valid orders of the competentauthorities at various administrative levels,more so because in the system of publicfinance availability of appropriation alone isnot an authority for incurring of expenditures,which have necessarily to be backed by thecompetent sanctions also.

14.10.0 In order to make forecasts in respect of ‘fixed’and ‘variable’ inputs more realistically, it will benecessary to work out these separately for non-plan and plan budgeted programmes andactivities. Whereas “non-plan” estimates areprovided in the budget with full details, suchdetails in respect of plan estimates continue tobe in the process of settlement even after thebudget is presented and approved by theLegislature. These are generally settled in thefirst quarter of a financial year, particularly inrespect of district plans which have to beapproved by the District Development Boards.Ideally, the state budget should be an actionplan with full transparency about the variousexpenditure inputs whether plan or non-plan.Finalization of details of plan outlays should bea pre-budget exercise. Making of lump sumprovisions if at all necessary should be resortedto only in vary rare cases. The plan outlays, inessence, have, either to be in respect of‘ongoing programmes’ or for the ‘newprogrammes’. ‘Ongoing programmes’ arecommitted expenditure on the total plan, be itState, District or Central/Centrally SponsoredSectors. That being so, details of expenditurecommitments in respect of such programmesare known and can be easily anticipated for theensuing financial year in respect of which abudget is prepared. By and large, these detailsare also backed by appropriate sanctions. Itmay be under very exceptional circumstances

398

that decisions may have to be taken toabandon such programmes or curtailexpenditures thereon due to various reasons,still such decisions can easily be a pre-budgetexercise. Outlays for ‘new programmes’ shouldbe worked out at least in broader details,because financial requirements have to beworked out and provided for in the budget.Every attempt has to be made to get the newprogrammes drawn, examined and sanctionedby the competent authority beforeCommencement of a budget year. All theseprocesses of plan finalization have to becompleted within a well defined time scheduleas prescribed keeping in view that budgetpresentation and its passage for obtaining aneventual budget law from the Legislature has,in any case, to be accomplished by end ofMarch of the year preceding that to which thebudget relates. In this background blockprovisions have to be made only in rare cases.In actual practice it has been seen that thedetails of plan outlays are worked out by theControlling Officers and made available to thePlanning & Development Department while theState budget is under compilation in theFinance Department. Such details are alsodiscussed and settled at least in case of‘ongoing programmes’, `new programmes`alone being left to be decided separately. Infact such details are worked out in respect ofthe basic expenditure inputs, like salaries,travel expenses, works, land acquisition etc. ina form (GNO) prescribed for the purpose by thePlanning & Development Department. In viewof this also, making of the State budget as aperfect action plan should not be a difficultprocess. Once, this is done, it will ensure notonly, implementation of the developmentalprogrammes right from the beginning of every

399

financial year but will also go a long way indrawing a ways and means budget withreasonable degree of accuracy reducing theelement of distortions, otherwise, caused byuncertainties in respect of plan provisions.While, visualizing these short comings, in thepast (Sept. 1970) a ‘special procedure foradoption of plan provisions and inclusion ofdetails in the budget’ has been prescribed bythe State Government. The main features ofthese special instructions are briefly mentionedas under: -

01. The Planning & DevelopmentDepartment will every year by 15th ofOctober, obtain annual plan proposalsfrom the Administrative Departments onthe proforma prescribed by them fromtime to time with the objective ofbringing out achievements made underthe particular schemes and targets forthe ensuring year. These proposals willnot be budget proposals and shall besubmitted only to Planning &Development Department.

02. The Annual Plan proposals as at (01)above will be examined by thePlanning & Development Departmentwho will also get these approved by thecouncil of ministers and submit thesame to the Planning Commission, byend of October.

03. The budget proposals for committedexpenditure i.e. expenditure onsanctioned plan schemes and its inputsshall be submitted to the FinanceDepartment as part of regular budgetproposals by November 15, who will

400

examine and adopt these subject to theeventual clearance of the Planning &Development Department.

04. After discussion with the PlanningCommission, the Planning &Development Department will convey, ifpossible by December 10th to thedepartments, the amounts available forexpansion for various plan schemes,giving them sufficient time for finalizationof details of these expansion provisionswith the approval of the competentauthority(s) under the guidance andthe supervision of the Planning &Development Department. This willenable the Finance Department toincorporate the required details in theState budget. Where, however, suchdetails do not become available due tocertain reasons, block provisions will bemade to be operated upon, with theapproval of the competent authority.This procedure should be followed bythe Finance and the Planning &Development Departments as that alonecan make the State budget a meaningfulexercise providing a sound base forformulation of ways and meansforecasts so essential for successfulimplementation of various thoughtfullybudgeted programmes and activities.

14.11.0 For the sake of convenience, the ‘fixed’ and‘variable’ inputs to regulate expenditureforecasts as a part of ways and meansexercise should be adopted and utilized asunder: -

401

1.0. Fixed inputs

01. Establishment costs: There aremore or less fixed chargescomprising salary, travelexpenses, motor vehicles, officeexpenses, RRT, and other suchitems necessary to run andmanage an office. Apart frombeing fixed in nature, these also,by and large remain uniform in allthe months of a year and shouldbe distributed accordingly.

02. Maintenance and repairs: Themaintenance and repairs of theassets has to followpredetermined norms and adetailed works programme drawnfor the purpose by theControlling Officers in respect oftheir departments. Theexpenditure can therefore, bephased out depending upon theworking seasons in a region of theState.

03. Interest payments: These arealways predetermined and canbe phased out according to theterms and conditions of the debtsin respect of which suchpayments have to be made.Generally speaking, the interestpayments should be planned to bemade in the last quarter of theyear. In case of Unfunded Debtsthese can even be made in thelast month of the year. Interest onbank loans, market borrowings

402

and institutional finances ispayable according to the alreadyenvisaged date and mode ofpayment and should beaccordingly provided for.

04. Pensions and other retirementbenefits: These can be easilyspread through out the year onmonthly basis.

05. Repayment of debts: These havealso to be regulated according tothe terms and conditions attachingto every debt and can be phasedaccording.

06. Investments: The investmentsare generally to be made in PSUSand other autonomousorganizations and are by and largeregulated causing expenditure onquarterly basis.

07. Grants-in-aid and contributions:These are payable to the LocalBodies and other non-governmentorganizations like educationalinstitutions, medical assistance unisocial welfare centers and the likein accordance with the rules andregulations governing each suchgrant-in-aid. The concernedControlling Officers should draw aschedule of payment of suchassistance and arrangements formachinery and equipments, awardof contracts etc. Particular careneeds to be taken in anticipatingpayments as may be required to

403

be made for land acquisition. Itneeds to be ensured that fundsare not unnecessarily blockedwhile settling acquisition of land.

2.0. Variable Costs

01. Works: Constitute a major portionof the budget of a year. There canbe minor works or major worksexecuted departmentally orthrough construction agencies.Every work included in thebudget has its own gestationperiod and it is highly essentialthat such periods arecontrolled with adequate care asotherwise there are likely to becost over runs which adverselyaffect originally envisaged featuresof the work and benefitsaccruing there from to theeconomy of the State. It is,therefore, necessary to planimplementation of works well inadvance of the commencement ofa financial year. Determination ofdifferent stages of completion ofworks with their financial costsduring a financial year has to bethe responsibility of a ControllingOfficer. On these factors it is,therefore, possible to anticipateexpenditure requirements of theworks during different periods of ayear. Such planning will interalia,include material management,

404

02. Materials and supplies:Requirement of materials andsupplies will vary from month tomonth depending upon therequirements of the function(s)under implementation with aControlling Officer. These will not,however, relate to works, in whichcase, such requirements form partof works expenditure.Procurement of the materials hasto be a well planned arrangementinvolving determination of therequirement, identifying the supplysource and the period of supplies.All these indicators should enablethe Controlling Officer to phaseout spending of funds availableduring a year. Material for variouscontrolled trading activities shouldbe procured under a carefullydrawn plan, because thesegenerally involve heavy paymentslike those paid to FCI and othersimilar agencies. Any slightestcarelessness on this account canseriously affect the ways andmeans position of the State.

03. Machinery and equipment: Likematerials and supplies, theexpenditure on machinery andequipment has also to follow apredetermined plan ofprocurement which can help inanticipating expenditure duringdifferent months of a year.

405

04. Wages: Expenditure under wagescovers daily rated workers(DRWs) who are regular andseasonal/ casual labour is coveredunder object expenditure“Outsourcing of Upkeep” and therespective Plan schemes. Wagespayable to regular DRWs can beeasily spread over differentmonths of the year. In the othercategories of labour, theexpenditure will be during aparticular period of a year to bedetermined with reference to therequirements of a function forwhich such labour is engaged.

05. Cost of power purchased fromoutside the State and from J&KState Power DevelopmentCorporation- This constitutes abulk charge on the non-planbudget of the State and any laxityin planning this expenditure candisturb the whole ways and meansposition of the State. It has,therefore, to be carefully providedfor in the cash outflow forecaststaking into considerationagreements, MOUs etc.regulating such expenditures.

06. Others: This is a residuary headto accommodate cash outflowforecasts in respect of the itemsnot otherwise provided for.

14.12.0 On the receipts side (cash inflow), the FinanceDepartment, as already pointed out, has avital role to play as they control Centre-State

406

financial relations, raising of institutionalfinances, market borrowing, other public debt,sources of cash inflow, and operation of theaccount heads grouped under ‘PublicAccount’ besides state tax revenues, controlover the Governments bank account involvingaccountal of day to day cash transactions andregulation of over drafts etc. are alsoimportant. The heads of account controlled bythe Finance Department constitute significantcomponents of the ways and meansforecasting.

14.13.0 Devolution of resources from centre to thestate:

14.13.1 Responsibility for settlement of accounts inrespect of devolution of resources from Centreto the State is that of the Finance Department.It is, therefore, necessary that detailed andaccurate accounts in respect of suchtransactions are maintained in a manner that itis at any point of time, possible to find out theamounts that are due to and from the CentralGovernment. Broadly, these accounts can becategorized as under: -

01.Accounts relating to devolution ofresources pursuant to therecommendations of the FinanceCommissions.

02.Accounts of Central assistance forimplementation of Developmental PlansComprising state plans, externally aidedprogrammes, centrally sponsoredschemes and central plan progarammesor any other developmental programmebrought within the purview of theplanning process from time to time.

407

03.Accounts of other Central assistancegiven to the State under some regularscheme(s) or in a special situation witha limited purpose like security relatedexpenditures etc.

14.13.2 The Central assistance is in the form of bothgrants-in-aid and loan with standard or varyingterms and conditions, depending upon theprogramme(s) or the activity(s) for which suchassistance is given.

14.13.3 Indicators for forecasting receipts from andpayments to the Government of India during afinancial year are available. The Ministry ofFinance indicates to the State Government,the amounts likely to be received by them onaccount of their share in indivisible pool ofCentral Taxes as also grants-in-aid underArticle 275 of the Indian Constitution during ayear well in advance of the compilation of thebudget for that year. Revisions, if any, in suchestimates are also indicated. These forecastsare based on the recommendations of theFinance Commission as applicable.

14.13.4 In addition to the transfer of resources in thisarrangement, financial assistance is alsogiven for implementation of DevelopmentalPlans, by the Centre to the State. Estimates ofthis assistance are again fixed on the basis ofpredetermined norms for all states and alsofor special category states. On the basis ofresource exercise made by the PlanningCommission whereby entitlement of centralassistance for implementation of State’sannual plans is fixed every year. Up gradationand other infrastructure grants even if givenon the recommendations of the FinanceCommission are in effect treated as a

408

resource for plan financing and expenditureon such programmes form a part of the StatesAnnual Plan outlay. Similar treatment is givento externally aided programmes. In addition tothe State’s Annual Plans, the variousMinistries of Government of India are alsoadministering different Centrally SponsoredProgrammes. Every such Centrally SponsoredProgramme has its own pattern of financialassistance and for fixing of implementingagencies. The central assistance is routedthrough the State budget. In certain cases,however, it is given directly to theimplementing agencies.

14.13.5 Over and above, the non-plan and planassistance given by the Centre to the State,they also get a share in small savingsmobilized in the Country during a year whichalso accrues according to a set formula. Thisresource also flow to the State at pre-determined periodical intervals.

14.13.6 The objective of accounting of the financialtransactions between Centre and the State is,to watch realization of the forecasts made onthis account for a financial year and ensuringits prompt credit in the State Governmentaccount. The pattern of accounts should alsobe such which would enable working out ofthe payments that have fallen due to theCentral Government mostly on account ofdebt obligations but also in respect of certainadjusting accounts which arise from paymentmade on their behalf and, thus, recoverable orrevenues collected/recoveries made for themand thus payable to them. Such adjustingaccounts are maintained by the StateAccountant General separately for DefenceServices, Railways and others.

409

14.13.7 The present arrangement for regulating thisaccounting arrangement is confined to therecording of sanctions issued by variousMinistries of GOI from time to time in a yearand the credit received there against throughthe official bankers of the State Government.This system is obviously inadequate as it doesnot enable keeping a watch on what is duefrom the Centre or what has to be repaid tothem during a budget year. In order tostreamline the system, it is necessary to adoptthe following procedure.

01. The responsibility for maintenance ofthese accounts should be of theResources Division of the FinanceDepartment.

02. Immediately after the budget of afinancial year is approved the FinanceDepartment will open individualaccounts of every identified source offlow of funds from the Centre to theState.

03. Although the accounts shall bemaintained on yearly basis but at thesame time these should be arranged ina manner that their position is readilyand easily ascertained for the blockperiods covered by the FinanceCommission and the PlanningCommission respectively for non-planand plan transfers.

04. Every individual account shall be in twoparts - part 1st indicating the amountdue during a year and how it has beenarrived at and part 2nd, recording period

410

of release, reference to Government ofIndia sanction, date of credit to theState’s bank account and its transfer tothe Finance Secretary’s bank account.

05. Every individual account should beclosed monthly or at such intervals asmay be prescribed for the purpose withthe objective of making a quarterlyreview of the amounts received,payments due to Centre and thepayments made. The results of such areview, if considered necessarybecause of some substantial reasonsmay also be reported to the Cabinet bythe Finance Department.

06. In case of certain accounts, it isnecessary to monitor implementation ofthe programmes for which Centralassistance is received. Similarly,assistance for Centrally SponsoredScheme and Central plan programmeshas to be related to the actualexpenditure more so, in respect of suchprogrammes where Central assistanceis available on re-imbursement basislike family welfare, IWDP etc. It is,therefore, necessary to develop anaccount in every such case in a mannerwhich willdepict, assistance received andexpenditures booked by the concernedimplementing departments/agencies.Such an account, apart from helping inmonitoring the expenditures will alsoenable to arrive at settlements with theGovernment of India.

411

07. It is also necessary to find outindebtedness of the State towards theCentral Government. This will involvemaintenance of detailed individual loanaccounts, reflecting opening balance atthe beginning of a year, amountsreceived during a year, repayments thathave fallen due, repayments made andinterest accruals so that outstanding atthe close of the year in respect of thetotal debt obligation, debts due to bedischarged with interest liability is easilyworked out.

14.14.0 Control over Institutional Finances andMarket Borrowings

14.14.1 Institutional finances are raised from variousfinancial institutions operating at nationallevel. These funds generally constitute aresource for plan and are in the form of loansto be utilized for productive purposes. Theseare therefore, related to specific developmentprogrammes with satisfactory economicviability. The quantum of such assistance tobe raised from various financial institutions isdetermined in the resources exercise madeannually by the Planning Commission and theState are authorized to lift the assistanceaccordingly. The same procedure is followedfor raising of loans from the open capitalmarket. Such market borrowings, however,are treated as a non-plan source of revenue.

14.14.2 The institutional finances or the borrowingsfrom the market are predetermined andestimates in respect thereof are accordingly,incorporated in the state budget annually. Theperiod of the year during which such loans areraised is determined by the Finance

412

Department from time to time depending uponvarious considerations like favorability of thecapital market conditions, preparedness of thefinancial institutions to advance the loans,obtaining of required sanctions and the like.

14.14.3 The institutional finances, as already clarified,are tied up with implementation of variousdevelopmental programmes which have toqualify for such type of financing. Therefore, itfollows that before expenditure on suchprogrammes is incurred, it is necessary to getthese cleared for funding by the concernedfinancial institutions, so that lifting of theassistance is facilitated. This seldom happensand on the contrary, expenditures are bookedwithout the required financial tie-ups, which,obviously, disturb the whole ways and meansposition of the Government. Such a situationwhich has necessarily to be guarded againstand therefore proper accountal of the receiptson account of these loans is essential. It isequally necessary that servicing of thesedebts by way of repayment of principalamounts due during a year as also annualinterest accruals thereon are correctlyaccounted for, in the same manner in which itis to be done for loans received from CentralGovernment for various purposes.

_______________________________________

413

Chapter 15

15.1.0 Bank Account of the State Government

15.1.1 Prior to the switching over to the Ways &Means Advance (WMA) facility of RBI, thebank account was maintained with the officialbankers of the State i.e. the J&K Bank.However, some times these accounts werealso opened with other nationalized banks tomeet various administrative and financialexigencies, in accordance with theAuthorization made by the FinanceDepartment in each such account. Theaccounts with the J&K Bank were alone mainstream bank accounts and these were in twotiers. At the apex ‘Finance Secretary’s bankaccount’ was used to regulate over all cashinflow of the Government, feeding oftreasuries and overdrafts obtained from timeto time and investments, if any made in termdeposits. This account was built in respect ofsuch transactions only which originated at thebank at the instance of Finance Departmentand did not get incorporated in any treasuryaccount. Instead a separate account wasprepared by the Resource Section, based onthe transactions of the Finance Secretary’sAccount and submitted to AccountantGeneral. It was done on the accountstatements received from the official and otherbanks at periodical intervals, with the soleobjective of classifying the transactions undervarious heads of account for submission tothe Accountant General to be incorporated inthe Government accounts. This account(Finance Secretary’s A/C) obviously served aspecial purpose which made it possible toarrive at the Government’s bank balances on

414

day to day basis for regulating feeding oftreasuries as also overdrafts along withinterest accrual thereon and the investments,if any made, from time to time. In this contextthe agreement with the J&K Bank, interalia,envisaged that:-

01. Interest on overdraft has to be workedout after taking into account day to daycredit balances if any, held by the bankover and above the minimum interestfree retention balance.

02. The credits received directly in variousbank branches is transferred to the apexaccount within stipulated period of timeotherwise these shall also be liable forinterest recovery from the bank at therates applicable to the overdrafts.

15.1.2 Maintenance of detailed bank account by theFinance Department based on their ownsources of information was all the morenecessary to meet the above accountingrequirements as otherwise there were nocross checks for ascertaining the correct cashbalance available with the Government in allits bank accounts and determination of thequantum of overdraft on which interestbecame payable.

15.1.3 The second tier related to cash transactions ofthe Government originating at varioustreasuries and also in some designatedbranches of the J&K Bank. For purposes ofmaintaining a consolidated bank account ofthe Government, the Finance Department hadto be fed with the required details, from boththese sources. Keeping in view the objectiveof maintenance of the bank account, theFinance Department had to obtain aggregate

415

figures of total debits and credits raised to thevarious bank accounts operated bythe treasury officers or maintained in thedesignated branches of the J&K Bank. Thedebits, in case of designated branches of thebank, would also include payments made bythem on account of pensions and dischargingof debt obligations arising from marketborrowings and institutional finances.Government had made arrangement with theBank to make such payments as and whenthese arose at their own level.

15.1.4 The 13th Finance Commission Award includeda scheme of making a grant of ` 1000 croreand authorization of open market borrowings of` 1300 crore for liquidation of Government’sliability of ` 2300 crore along with the switchover to W&M regimen of RBI. The State wasgiven two years’ period to implement thescheme. The Finance Department proactivelyimplemented the scheme during the first year ofthe award period i.e. Financial Year 2010-11and closed the Overdraft with J&K Bank on31st March, 2011 for shifting to WMA facility ofRBI from April 1, 2011. The scheme governingWMA facility of RBI and instructions issuedfrom time to time by Finance Department forimplementation of the Scheme are appended atthe end of this Part of the Manual.

______________________________________

416

Chapter 16RESOURCE ARRANGEMENT

16.1.0 As already pointed out, once the ways andmeans forecasts are developed and adopted,the over all position of the cash availabilityand the expenditure commitments during aforecast period become known, departmentwise, with sufficient details and this providesthe required data on which resourcearrangement should be based, involving: -

01. keeping a close watch onthe behavior of theforecasts so that cashaccruals do not fall belowthe desired level at any time;and

02. feeding the individualtreasuries in a manner thatthese have sufficient fundsto meet the local demands.

16.2.0 Monitoring of cash inflow and outflow can beeffective through the apex bank accountmaintained in accordance with the envisagedprocedure with RBI in shape of PrincipalDeposit Account with CAS, Nagpur. TheResources Wing of the Finance Departmentshould make out a daily report from the saidaccount for a critical analysis aimed atidentification of distortions if any, in theforecasts so that required remedial measuresare applied. Such an exercise may even callfor discussing the short comings with theconcerned Controlling Officer(s). This willhelp, not only in taking proposed remedial

417

measures, but will also go a long way inmaking these officers to realize that theirinvolvement is important for effectiveimplementation of various budgetedprogrammes and activities. The FinanceDepartment should accordingly, be in closecontact with the major revenue realization andthe spending Controlling Officers and makeuse of all the data/information available withthem for ensuring that effective steps aretaken by them in actualizing the ways andmeans forecasts for implementation of variousbudgeted programmes and activities.

16.3.0 Feeding of treasuries: - Under the newmechanism of Ways & Means Advance(WMA) facility of RBI, the agency bankbranch, attached to each treasury has tomake payments on behalf of the RBI and theresponsibility of cash availability rests withthat bank branch, as RBI settles the accountwith J&K Bank on daily basis through PAD,New Delhi. So there is no need formaintaining any cash limit. Also the FinanceDepartment shall on daily basis, fix a cashlimit for each treasury for operation for thatparticular day required in accordance with theprescribed WMA limits. The treasury cashlimits have to be fixed reasonably, keeping inview the minimum cash requirements of atreasury in a day as also the fact that funds forabnormal expenditure requirements like thosenecessitated on the days of makingsalary/wage, disbursements can be arrangedspecially.

________________________________________

418

APPENDICES TO PART-IV

APPENDIX- 1(referred in Para 15.1.4)

I- Memorandum of Instructions onAccounting and Reconciliation- StateGovernment transactions

1. In terms of provisions of Sections 20, 21and 21A of the Reserve Bank of India Act,1934 the RBI acts as banker to the Centraland State Governments. The Reserve Bank ofIndia (RBI) provides to the Central and StateGovernments a full range of banking servicessuch as acceptance of monies onGovernment account, Payment / withdrawal offunds and collection and transfer of fundsthroughout India. The work of actual Receiptand Payment of monies on behalf of StateGovernments is carried out at Offices of RBIand its Agency Banks (J&K Bank in our case)authorized to conduct Government Businesson its behalf as per provisions of RBI Act,1934.

2. While the Principal Government DepositAccounts of State Governments aremaintained at Central Accounts Section (CAS)of RBI at Nagpur, the Regional Offices of RBImaintain subsidiary accounts, which are in thenature of Transitory Account. Till 30thSeptember 1987, the accounts were whollycentralized at Central Accounts Section,Nagpur. Due to the centralized reporting /accounting procedure followed by the ReserveBank, State Governments were facingproblems relating to reconciliation of accounts,MIS reporting etc. A comprehensive review by

419

a High Level Committee led to the introductionof “Scheme for Partial Decentralization” forreporting and accounting of State GovernmentTransactions with effect from 1st October1987, with the following features:

The Office of RBI in the State Headquarters (ornearest to the State Headquarters) wouldaccount for the State Government transactionsreported by Agency Banks and maintain in thisregard, detailed subsidiary accounts of thetransactions.

The branches of Agency Banks conductingState Government work would report thetransactions of the States effected by them, totheir Link Office at the State Headquarters (ornearest to the State Headquarters) on dailybasis. The latter would report the transactionsto the RBI Office, Public Accounts Department(PAD) at that centre for accounting andsettlement.

PAD would advise the daily balance of theState Government in their books at the end ofeach day to Central Accounts Section (CAS),Nagpur to enable them to work out the overallbalance position of the State Governmentwhich would be intimated by them along withthe details of other transactions to the office ofthe RBI in the State Head Quarters fortransmission to the State Government. ThePrincipal Government Deposit Accounts of theState Governments would, however, continueto be maintained at CAS.

The PAD maintaining the Deposit Account ofthe State Government would be responsible forthe submission of Monthly Statement toAccountant General / Government and also forthe reconciliation of difference betweenTreasury figures and bank figures, as reportedby Accountant General, under the revisedprocedure introduced in July 1984.

420

CAS, RBI would submit to Accountant Generalof each State, a Monthly Statement of CashBalance and the latter should confirm thebalance within a period of one month.

Explicit reporting arrangements as betweenTreasury / Sub-Treasury and Agency Bankbranches handling State Governmenttransactions and RBI offices (PADs) concernedhave been laid down in the Scheme.

3. The working of the "Partial DecentralizationScheme" revealed certain shortcomingsspecific to monitoring and management offinances by the State Government viz;-

There were delays in reporting Cash Balanceposition.

Information furnished by CAS to the FinanceDepartments was inadequate for analysis andmonitoring.

Figures reported in the Monthly Statements ofCash Balance by CAS could not be reconciledby the Accountants General with thecorresponding figures arrived at from theaccounts rendered by the Treasuries, making itdifficult for the latter to furnish BalanceConfirmation to CAS.

4. A Working Group constituted by RBI in2001, found that the existing Scheme ofPartial Decentralization was broadly adequateto meet the Accounting and Reconciliationrequirements and that the present problemshave been mostly due to inadequacies andlags in implementation of the Scheme by theparties involved. It also observed that withdifferent levels of computerization prevailingand taking place in various StateGovernments, Agency Banks, Reserve BankOffices and the Accountants General Offices,

421

it was appropriate to explore the ways toachieve the following objectives:-

State Governments to get the accounts of theirtransactions expeditiously.

Availability of faster and adequateManagement Information System (MIS) reportsto the parties concerned.

Agency Banks to get timely reimbursement ofPayments.

To avoid errors in reporting and reconciliationby minimizing the points of data inputs andfacilitate faster compilation of accounts at theOffices of Accountants General.

The Working Group desired that a pragmaticapproach be adopted on computerizationinvolving multiple agencies with a coordinatedapproach. There was a need to eliminate thedifferences in the Cash Balance of a State inthe books of the banks and the AccountantsGeneral, as well as to ensure expeditiousaccountal of the cash transactions includingthe reimbursement to the banks. All AgencyBank branches handling Governmentbusiness on one side and Sub-Treasures /Treasuries on the other should have towardscentralized maintenance of accounts andprocessing. Accounting when centralized,reduces cost of operations, ensuresavailability of up-to-date information andimproves management, paving the way foruniformity in standards. All the parties shouldmake efforts to share their data electronically,duly ensuring transparency, correctness andsecurity of the data.

Based on the recommendations of theWorking Group, the following operationalguidelines have been framed forimplementation with immediate effect:-

422

II- Procedure to be followed by the AgencyBank Branch

1. The branch handling the State Governmenttransactions has to send theReceipt/Payments Scrolls on a daily basis inthe prescribed form (TR.44) along with thechallans and cheques to the Sub-Treasury/Treasury to whom they are attached.

2. The challans/cheques and bills will bearranged in the order in which they areentered in Receipt/Payment Scrolls andstitched to the respective scroll. They may beclassified in such a manner as may bedirected by the Accountant General. Further,the paid vouchers (cheques, bills etc.) sent tothe Treasury should be conspicuouslybranded with the ‘Paid’ stamp. This is to avoidmaking payments against same documentmore than once.

3. Two Pass-Books with particulars of totalReceipts and Payments and the number ofsupporting challans/cheques may bemaintained, in which entries will be madebased on Daily Scrolls. The form of the Pass-Book has been given below:

Pass-Book of Daily TransactionsPass-Book of Receipts and Payments-Side ‘A’ (for use by Bank branch)

Dateof

Transmittal

Dateof

Transaction

TotalReceiptsfor the

day

No. ofchallans

TotalPaymentsfor the day

No.of

vouchers

Initialsof

BranchManager

Initials withdate of

Treasury/Sub-Treasury

Officer

Pass-Book of Receipts and Payments-Side ‘B’ (for use by Sub-Treasury/ Treasury)Date

ofTransmittal

Dateof

Transaction

TotalReceiptsfor the

day

No. ofchallans

TotalPaymentsfor the day

No.of

vouchers

Initialsof

BranchManager

Initials withdate of

Treasury/Sub-Treasury

Officer

Preservation Period: Three years after the reconciliation of branch’s monthly account.

423

4. Two Pass-Books in the above mentionedformat may be maintained for being used onalternate days so that one whole day isavailable to the Sub-Treasury/Treasury forchecking the transactions as entered in thePass-Book. Pass-Book envisages that acertificate of correctness of the transactions isgiven by the Sub-Treasury/Treasury, afterverification of each item of Receipt andPayment undertaken by the Agency Bank andrecorded in the scrolls with reference to thechallans and cheques/Cheque DeliveryRegister (CDR) respectively. Further, wheredaily verification of the Receipts andPayments at the Agency Banks is completedby the Sub-Treasury/Treasury on the next dayas prescribed, there could not difficulty inpreparation of the monthly positionexpeditiously and accurately. Scope fordiscrepancies and reconciliation, thereafter,will be minimal. Hence, the signature of theSub-Treasury/Treasury Officer on thePass-Book, is a confirmation andcertificate of correctness of thetransactions.

5. The daily accounts i.e. scrolls will beprepared each day and the Manager orauthorized official of the bank, after satisfyinghimself as to their accuracy will docket andforward to Sub-Treasury/Treasury, the Pass-Book of Daily Receipts and Payments with allchallans and cheques at the close of the day.

6. The scrolls, challans and vouchersshould be sent in locked box by the branchto the Sub-Treasury/Treasury in order to ruleout the possibility of any alteration/obliteration

424

of any paper before they reach the hands atthe other end.

7. There should be no delays in transmissionof scrolls and challans/cheques by the AgencyBank to the Sub-Treasury/Treasury. For thispurpose, specific columns for date of sendingand returning it, in addition to the transactiondate have been provided for in the Pass-Book.This aspect should also be looked into bythe respective Inspection Authorities of theAgency Banks as well as Sub-Treasury/Treasury.

8. For communicating the discrepancies, ifany, the Pass-Book to the Agency Bank bythe Sub-Treasury/Treasury, theMemorandum of Error as per the formatappended shall be used:-

Memorandum of ErrorThe Branch Manager,Bank _____________________________________

Dear Sir,

With reference to your Daily Receipt/Payment Scroll No. …………. Dated……………. We advise that the following deficiencies have been observed:

Sl.No.Inscroll

Receipt/Payment

Amount Nature ofdiscrepancy

Suggestedrectificatoryaction

Please arrange to rectify the above deficiencies at the earliest and confirm.

(Treasury Officer)Date:

The above deficiencies have been rectified on _____________ and reflectedat serial no_________.in our scroll no_________of date _____________.

(Branch Manager)Bank’s SealDate:

Preservation Period: Three years after the reconciliation of branch’s monthlyaccount.

425

Note: Three copies of the above Memorandum may beprepared by the Sub-Treasury/Treasury. Two copies of thesame may be sent to the Agency Bank branch, one of whichmay be retained by the branch and the original returned withconfirmation of rectificatory action, as stated above. Tofacilitate identification, ‘Memorandum of Error’ may beprinted in red.

9. The discrepancies have to becommunicated immediately, but not laterthan the next working day. Three copies ofthe Memorandum of Error may be preparedby the Sub-Treasury/Treasury. Two copies ofthe same may be sent to the Agency bankbranch and one copy may be retained by theSub-Treasury/Treasury. The Scroll containingthe error together with relevant instrument andthe Pass-Book may also be sent along withthe Memorandum of Error to the Bank branch.On Receipt of Memorandum of error alongwith the documents listed above from the Sub-Treasury/Treasury, the branch shouldimmediately rectify the irregularity pointed outtherein after checking the documents andmake necessary correction in the scroll andthe Pass-Book under proper authentication.The entries may also be authenticated by theSub-Treasury/Treasury in the Pass-Book. Inthe computerized environment necessaryrectifications may be made with adequatesafeguards.

10. At the close of business each day, anadvice bearing separate serial numbershowing the aggregate Receipts andPayments of the day on State Governmentaccount is to be sent to the Link Office byfax/telex/telegram/e-mail by the Agency Bankbranch. The transactions should bereported on daily basis and there should

426

not be bunching of two to three daystransactions or reporting only once ortwice in a month.

11. A. The Working Group felt the need forintroducing an element of accountabilityamong the Agency Banks for prompt creditto Government Account by chargingappropriate interest for delayed credit. Ithas been decided that henceforth StateGovernment may claim interest for delayedcredit of collections as under:-

a. Interest of two percentage points abovethe Bank Rate as notified by ReserveBank (DGBA) based on Bank Rateprevailing as on May 1, and November 1,may be charged on delayed receipts of `10 lakhs and above, if the period of delayexceeds the prescribed time for creditingsuch transactions. The prescribed period atpresent is 10 days for normal branches(within same municipal limits) and 15 daysfor the branches situated in far-flung areas.

b. The period for the above purpose will becounted from the date of receipt at thereceiving branch till the date of its credit toState Government account at PublicAccounts Department, Reserve Bank ofIndia. Interest will be calculated for theperiod starting from the date of receipt asper challan in case of cash/transfertransaction or date of realization of chequein case of clearing instruments by thereceiving branch to the date preceding thedate of settlement by the bank Link Cellwith Reserve Bank of India offices.

427

B. The procedure for recovery of this penalinterest by State Government from the Agencybank is as under:-

a. The treasury/Sub treasury officer on thebasis of scrolls/challans received fromthe receiving branch, keep a record ofsuch cases of delay. He may examine indetail each and every case of this natureand find out the stage i.e. receivingbranch or Link Cell where the delay hasoccurred. He will claim interest on allsuch transactions of ` 10 lakhs andabove and raise demand for payment ofinterest directly from the Link Cell of theconcerned bank on a monthly basis. Acopy of the reference made to bank inthis regard will be sent to theAccountant General of the concernedState Government who will also keepwatch on the recovery of the interest.

b. Once the responsibility for delay isfixed/established, interest for therelevant period should be paid by theAgency Bank to the State Governmentwithin a period of two weeks from thedate of receipt of such establishment.

c. Payment of interest will be made by thebank to the state Government by meansof a bank draft drawn on any of theirbranches at the station of the Link Officefavouring the State Governmentconcerned.

d. In case bank fails in making payment ofpenal interest within the above specifiedperiod the RBI reserves itsdiscretion/right to debit the bank’s

428

account in its books and credit stategovernment account pursuant to thePrincipal Agency relationship.

e. Although the interest will be charged onthe remittances of ` 10 lakhs and abovedelayed beyond a period of 10 days(including Sundays and Holidays) fornormal branches (within same Municipallimits) and 15 days for the branchessituated in far flung areas, it is not theintention to allow the banks longer timeto transfer the revenue receipts and thebanks should note to observe thecurrent instructions on the subject underwhich a maximum period of 5 days forlocal transactions and 9 days foroutstations transactions (includingSundays and Holidays) is permitted forthe purpose. All efforts should,therefore, be made by the AgencyBanks to credit the tax collections toGovernment account on a day to daybasis.

12. At the end of each month, the branchshould prepare the Date-wise-MonthlyStatement (DMS) in the prescribed formgiven overleaf, in five copies (forsubmission to Treasury) and in six copies(for submission to sub-treasury), based onthe entries in Pass-Books as verified andcertified both by the branch and sub-treasury/treasury. The DMs should dnotcontain corrections or alterations. All thecopies of DMS should be duly signed by anauthorized official of the branch. Thegeneration of DFMS on computer isrecommended. DMS has to be submitted tothe Sub-Treasury/Treasury not later than

429

first working day of the succeeding monthto which they relate. The statementssubmitted to the Sub-Treasury/Treasurywill be scrutinized and two copies thereofwill be returned within 2 days from the dateof its Receipt from the branch, with acertificate to the effect that it has beenchecked and found to be correct.

Date-wise Monthly Statement (DMS)Statement for the month of ……….., 20…… in respect of ………….State

Government transactions.Name of the Bank Head of Government

AccountCode No.

Name of the Bank Code No.Date Receipts

(`)Payments

(`)Dr./Cr. Net Balance

(`)12..

31Total

Certified that the particulars furnished above are correct to the best of myknowledge.

Officer-in charge of STO/TO Branch Manager Date Date

Size 14” X 8.5” white sheet Preservation period: Three years after the reconciliation ofbranch’s monthly account.Amount to be rounded off to the nearest `.

13. The duly certified copy of DMS receivedfrom the Sub Treasury/Treasury, now becalled Verified Date-wise Monthly Statement(VDMS), will be faxed by the branch to thedesignated Link Office on the day of itsReceipt (i.e. on the 3rd working day ofsucceeding month) from the Sub-Treasury/Treasury, followed by post copy.Branch shall keep a copy of VDMS for itsrecord.

14. All Agency Bank branches handlingGovernment business should move towardscentralized maintenance of accounts andprocessing. Accounting when centralized,reduces cost of operations, ensures

430

availability of up-to-date information, improvesmanagement and ensures uniformity instandards.

15. Procedure to be followed by AgencyBank branches in computerizedenvironment:

The Agency Bank branches will capture thedata of challans in the format given below:-

Sr. NO. Particulars Specification1. Date DDMMYYYY2. Major Head Number, 43. Beneficiary details Character, 304. Depositor’s Name Character, 305. VAT/Professional Tax NO. Number, 106. Amount Number, 167. Flag Character, 1

At the end of the day, the branch will send anelectronic scroll to the Sub-Treasury /Treasury.The data supplied by the branch can be usedby the Sub-Treasury/Treasury for further valueadditions, if required. After checking the data, aflag should be set by the Treasury software toindicate the items, as accepted or unaccepted.The items flagged as unaccepted by theTreasury, will get copied into the floppy of thenext day, prepared by the Sub-Treasury/Treasury.

The software ate the branch should ensurethat the DMS is generated only afterrectification of all such non-accepted items.As there will be no manual intervention, it isexpected that the DMS will be 100%accurate when generated. Further, the datacaptured, can also serve the purpose of anelectronic Pass-Book.

Branch will receive data on cheques issuedby the Sub-Treasury/Treasury throughelectronic mode (floppy/e-mail) undersecured conditions, so that the actualinstruments, when presented to the bank,could be cross verified against the information

431

received from the Sub-Treasury/Treasury inorder to avoid wrong payments.

III- Procedure to be followed by the Sub-Treasury Office

1. The Sub-Treasury Officer will receive thePass-Book along with Receipts/Paymentsscrolls, challans and cheques etc. from thebranch whereupon he will acknowledge theReceipt of each day on the Pass-Booktendered along with scroll, etc. for the sameday/preceding day. He will verify thecorrectness of the entries made in the Pass-book with reference to scrolls, challans andvouchers of previous day. He will intial in thePass-book in the column provided in token ofhaving done so. The Pass-Book will bereturned to the branch on the succeeding dayeither with initials of sub-treasury officer asmentioned above or with a Memorandum ofError indicating corrections. In such an even,the figures should be got reconciled with theleast possible delay (on the same day orfollowing day) and signed by Sub-Treasuryofficer immediately.

2. The Sub-Treasury will forward the dailyscroll, challans and cheques etc. to theTreasury to which it is attached in accordancewith State Treasury Rules for posting in itsbooks and rendering accounts to theAccountant General.

3. On the first working day of every month theSub-Treasury will receive six copies of DMSfrom the Agency Bank branch for thepreceding month. These will be scrutinizedand certified to the effect that they have beenchecked and found correct. Two copies of

432

VDMS will be returned to the concernedbranch within 2 days from the date of itsreceipt, three copies will be sent to Treasuryand remaining one copy will be retained forits record. Sub-Treasury will render monthlyaccounts to Treasury for the entire calendarmonth before 3rd of the succeeding monthexcept for the month of March. In case ofMarch, the monthly accounts will be submittedby 8th of next month.

IV- Procedure to be followed by theTreasury Office

1. The Treasury Officer will receive the PassBook alongwith Reciept/Payment Scrolls,challans and cheques, etc. from the branch,whereupon the Treasury will acknowledge theReceipt of the documents each day on thePass book tendered along with the scroll etc.of the same day/preceding day. The Treasurywill verify the correctness of entries made inthe passbook with reference to scroll, challansand cheques etc. and for doing so, theTreasury gets one day. The Treasury willinitial in the Pass book in the column provided,in token of having received the documentsand ensured the correctness. The Passbookwill be returned to the bank branch on thesucceeding day with the initials of Treasury orwith a Memorandum of Error indicatingcorrections. In such an even, the figuresshould be got reconciled with the leastpossible delay and signed by Treasuryimmediately in the Passbook.

2. In the case of computerized Treasury,required corrections in the computer databasemay also be carried after taking necessarysecurity precautions.

433

3. As detailed in para 6.2 above, the Sub-Treasury Officer will forward the daily scrolls,challans and paid cheques etc. to theTreasury to which it is attached in accordancewith State Treasury Rules for posting in itsbooks and rendering accounts to theAccountant General. Sub-Treasury officer willalso render monthly accounts to the Treasury,which should be for entire calendar month inaccordance with State Treasury Rules andinstructions of the Accountant General.

4. On the first working day of the succeedingmonth, the Treasury will receive DMS from thebranch in five copies, relating to thetransactions of previous month. The Treasurywill scrutinize and certify that the figuescontained in the DMS have been checked andfound correct. Two copies of this Verified DMS(VDMS) should be returned to the AgencyBank branch within 2 days from the day of itsReceipt by Treasury. Two copies of theVDMS together with consolidatedstatement of Receipt and Payment are tobe forwarded to the Accountant General by10th of the succeeding month, except forthe month of March. For March, theyshould be submitted by 15th April.

5. The Treasuries will report to the AccountantGeneral, the Receipts and Paymentstransactions handled by the Agency Banks inthe format prescribed by him.

6. Treasuries should make all GovernmentPayments by cheques only rounding off tothe nearest `.

434

7. The Data on cheques issued bycomputerized Sub-Treasury/Treasury shouldbe in the following format:-

Sr. NO. Particulars Specification1. Instrument Number Character, 3+ Number, 92. Instrument Date DDMMYYYY3. Beneficiary’s Name Character, 304. Amount Number, 165. Signatory Code Number, 5

The date may be transmitted to the bank branch through electronicmedia (floppy/e-mail)under secured conditions.

8. The State Governments should ensuretimely submission of accounts to theAccountants General by the concernedDepartments/Treasuries. While differencemay occur in the month-wise balance, thereshould not be any difference between thecash balance position as per the AccountantsGeneral’s book and the CAS figures, as at theclosing of Annual Accounts by 25th April ofevery year.

9. It is observed that, in some states, morethan one Treasury are linked to an AgencyBank Branch. This arrangement gives scopefor mix up of the documents and figuresrelating to different Treasuries resulting inreconciliation problem between the Treasuriesand banks. PADs may, therefore, arrange tolink ‘one bank branch to one treasury’ inconsultation with the State Governmentand DGBA, Central Office.

V- Procedure to be followed by the LinkOffice of Agency Banks

1. The link Office of Agency Banks will receivethe Daily Advices from its ranches showingaggregate Receipts and Payments of the day

435

on State Government account. Such advicesshould be received from the branches, byfax/telex/telegram / email under securedconditions in all case.

2. The Link Office should consolidate the totalReceipts and Payments on the basis of DailyAdvices received by it and report the same tothe designated Public Accounts Department(PAD), Reserve Bank of India.

3. As Daily Advices relating to StateGovernment transactions of a month continueto be received from the branches even afterthe end of that month, the Link Officeprepares and sends two separateconsolidate advices one for the previousmonth of account and the other for thecurrent month of account to thedesignated PAD.

4. The daily transactions relating to a monthreported by the Agency Bank branches bytelegram/fax or email should, on Receipt ofVDMS from the Agency Bank branches, beverified by the Link Office and in case of anydifference between the figures in the VDMSand the figures as reported by the Link Officeto the PAD, such differences should berectified with reference to the VDMS duringthe current month only.

5. Link Offices has to ensure that branchesconducting Government work prepare DMSon the last day of calendar month and submitit to Sub-treasury/Treasury for certification.The Sub-Treasury/Treasury has to return twocopies of VDMS within 2 dys of its receiptfrom the branch and branch has to forward theVDMS to the Link Office by fax on the same

436

day of receipt. Thus, the Link Office receivesthe VDMS from the branches by the 3rd of thesucceeding month. Link offices sholdconsolidate the VDMS figures and preparethe monthly statement of transactions andforward the same to the PAD by 8th of thesucceeding month.

6. On 8th of each month, the Link Office willCompile and submit to the designated PAD(RBI) six copies of the Statement ofTransactions in the following format:-

Transaction date

Originally reported figures in( ` )

Figures in ` as per VDMS

Receipts Payments Net Receipts Payments Net

Further adjustments in `(Difference between

columns 7&4)

Remarks

1 2 3 4 5 6 7 8 9123...

31Total for

themonth

It may be ensured that the figures of VDMSand the original figures for each transactiondate are shown branch-wise distinctly. Thetotal monthly receipts and payments shown inthis statement should tally with the totalreceipts and payments of each branch asalready advised to the PAD through dailyadvices for that month and the total receiptsand payments of each branch as per theVDMS.

7. Presently, all the Link Offices conductingState Government work with large network ofbranches, have already computerized branchwise receipts/payments figures. The LinkOffice will be getting copy of VDMS fromalmost all the branches (excepting far flung

437

branches and branches not havingtelecommunication facility) by 3rd of thesucceeding month. However, the Link Officewould have not received a few Daily advices.It should not wait for primary figures. The Linkoffice should straightaway adopt the VDMSfigures. On 8th of the succeeding month itshould compile proposed statement oftransaction. (Till full computerization at PAD,the monthly statement of transaction may befurnished in hard copy). The figures in respectof branches, which had not submitted VDMSby the stipulated date may be furnished toPAD later.

8. Transactions of previous months accountreceived from the Agency Bank branches after8th of the succeeding month and transactionspertaining to the other months should beadvised to the PAD, through a separatestatement for accounting in the format givenbelow:-

Transaction

month &Date

Originally reported figures in(` )

Figures in ` as perVDMS

Receipts Payments Net Receipts Payments Net

Furtheradjustments in `

(Differencebetween

columns 7&4)

Remarks

1 2 3 4 5 6 7 8 9Month &

Date

Link Office should follow strictly this method ofreporting the transactions separately undertwo months’ of account, irrespective of closureof month of account at the PAD or CentralAccounts Section, Nagpur (CAS). It is for theReserve Bank of India (PAD or CAS) todetermine in which month of account theadjustments are to be incorporated. Anyadjustment for previous month should not bemixed up with but should be distinctly. The

438

above arrangement dispenses with theneed for maintenance of Branch Cards atLink Office and PADs. The Link Officeshould report transactions separately inrespect of each transaction date. For exampleon a reporting date say, 14th April 2002, if theLink office reports the current datestransactions as also those of previous days(say 2nd April 2002, 10th April 2002), all thetransactions should be shown distinctly withreference to each transaction date, as shownbelow, irrespective of whether accounts of themonth are open or closed at PAD/ CAS.

Incorrect method of reporting

Reporting Date: 14.04.2002

Receipt Payment NetTransactionDate Credit Debit Credit Debit

14.04.2002 11,000 10,550 450

Incorrect method of reporting

Reporting Date: 14.04.2002

Receipt Payment NetTransactionDate Credit Debit Credit Debit

14.04.2002 1,000 750 250 -

Previousadjustments

10000 9800 200 -

450

Correct method of reporting

Reporting Date: 14.04.2002

14.04.2002 1,000 750 250 -02.04.2002 7,000 9,500 - 2,50010.04.2002 3,000 300 2,700 -

Total 11,000 10550 2950 2500Net 450

The reporting of figures in respect of eachtransaction date is necessary to enablecomparison and reconciliation of differences, ifany, vis-à-vis the VDMS figures at a laterstage.

9. Once the Link offices are fullycomputerized, they may in consultation with

439

PADs submit the daily report on branch-wiseand transaction date-wise position to theconcerned PADs, electronically.

VI- Procedure to be followed by the PublicAccounts Department (PAD), ReserveBank of India

1. PAD will open an account styled ‘AgenciesTransactions Account- State’ in GeneralLedger. Separate subsidiary accounts will bemaintained in the name of the Agency Banksfor settlement of banks transactions relating toState Government. These accounts will bedebited./credited with the total payments/totalreceipts reported by the Link office every dayirrespective of month of transaction.

To facilitate the accounting of transactions thefollowing Subsidiary Books of accounts will bemaintained:

(a) Agencies Transactions Day Book(Form D)

(b) Agencies Transactions Account –State Ledger (Form E)

(c) Agencies Transactions Account-Agency Bank-wise SubsidiaryLedger-Account IAgencies Transactions Account-Agency Bank-wise SubsidiaryLedger-State Account II

(d) Agencies Transactions Account-State-wise Subsidiary Ledger-State Account I

Agencies Transactions Account-State-wise Subsidiary Ledger-State Account II

440

(a) Agencies Transactions Day Book: Thedaily Receipts and Payments on account ofthe State Government/s reported by the LinkOffices through Daily Statement will be postedby PAD under Receipts and Payment columnsin a separate Day Book called AgenciesTransactions Day Book (Form D) on a day-to-day basis. The total amount of Payments /Receipts as per the posting in the Day Bookwill be debited / credited to the AgenciesTransactions Account. The net amountpayable to or receivable from the AgencyBanks will be credited or debited to theiraccount maintained in Deposit AccountsDepartment (DAD).

(b) Agencies Transactions Account – StateLedger: Agencies Transactions Account –State Ledger (Form E) will be maintained torecord daily total Receipts and Payments inrespect of all State Governments reported byall Link Offices. The balance in the ledgeraccount will show, on any day, the net amountof transactions effected by the Agency Bankson State Government account. The totalReceipts and total Payments arrived at in theAgencies Transactions Day Book will beposted daily under Receipt and Paymentcolumns respectively of the ledger and thebalance arrived at.

(c) Agencies Transactions Account –Agency Bank-wise Subsidiary Ledger-Account I and Account II : SubsidiaryLedger (Form F) to record the Agency Bank-wise Receipts and Payments of the StateGovernment/s reported by the Link Office/sthrough daily statements. Separate accounts(Account I and II) will be maintained inthe Subsidiary Ledger to record the current

441

month‟s transactions and the previousmonth‟s transactions. The total of thebalances appearing in these accounts will betallied daily with the balance appearing in themain ledger viz. Agencies TransactionsAccount – State Ledger. Advices relating totransactions of a month reported upto 8th ofthe succeeding month will be posted in therelevant account in the ledger. The Link Officewill furnish on 8th of the month succeeding themonth of transactions, a monthly Statement ofTransactions showing Receipts and Paymentseffected by each of the branches and reportedto PAD for adjustment in State Governmentaccount through daily statements. The figuresof Receipts and Payments shown in themonthly Statement of Transactions should beagreed with the figures appearing in thesubsidiary ledger account of the Agency Bankconcerned. Thereafter, the balances in theAgencies Transactions Account of theState will be transferred to CAS, Nagpur asat the close of business on 11th of thesucceeding month.

(d) Agencies Transactions Account – Statewise Subsidiary Ledger- State Account Iand Account II : This ledger (Form G) will bemaintained to record the State wise Receiptsand Payments on month of account basis asreported by Link Office through their dailystatements. The Account I and II will beopened to record the transactions of alternatemonths. These will be operatedsimultaneously from 1st to 8th of thesucceeding month. The Receipt andPayments of previous and current month‟saccount reported daily by Agency Bankthrough separate statements will be posted inthe relevant account and balance arrived

442

at. The total of balance appearing in theseaccounts will be agreed daily with the balanceappearing in the Agencies TransactionsAccount and the figures will be included in theState Government balance as advised byPAD in the daily position advice/s to CAS.

2. The daily Receipts and Payments onaccount of the State Government/s reportedby the Link Offices, through the Daily Memomay be posted in the Day-Book on a day-to-day basis. The total amount of Receipts /Payments as per the posting in the Day Bookmay be debited / credited to the AgenciesTransaction Account and the net amountpayable to or recoverable from the AgencyBank be credited or debited to their accountmaintained in Deposit Accounts Department(DAD) and will also be posted in the AgencyTransaction Day Book under the "Summary"column.

3. The daily position figures of StateGovernments will be advised to CAS alongwith the balances of various accounts throughFax as well as e-mail. The balances of theState Government viz. the balance held inGovernment Deposit Account and AgenciesTransaction Account as at the close ofbusiness each day will be advised to CAS.

4. On the last working day of each calendarmonth, PAD will transfer balances inGovernment Deposit Account of the StateGovernment maintained by it to CAS throughRBI General Account. The month-end transferof balances of the State Government will notinclude Agency transactions. The month-endtransfer message will however distinctlyshow the balance in the Agencies

443

Transaction Account, which has beenretained by the Office.

5. On 8th of the month following the month oftransaction, the Link Office will submit monthlyStatement of Transaction showing branchwise, transaction date wise, Receipts andPayments figures. The total figures ofReceipts and Payments shown in the monthlystatement submitted by the Link Office shouldbe tallied with the figures appearing in theDay-Book.

6. PAD will maintain another subsidiaryregister styled “Agency Transaction –Discrepancy Adjustment”, to recordtransactions pertaining to earlier months, butreported after 8th of the month and otheradjustments of earlier months. Theadjustments on account of thesediscrepancies should not be included in thecurrent / previous month's account. Therefore,after all the transactions of previous month‟saccount as reported upto the 8th ofsucceeding month are accounted for and afterensuring that the total Receipts and Paymentsas advised in the monthly Statement ofTransactions received from the Link Officeagree with the figures appearing in the booksof PAD, following adjusting entries should bepassed:-

Dr. / Cr. Agencies Transaction Account State/sCr. / Dr. concerned bank‟s Account.

7. The transfer of balance of previous month'saccount in the Agencies Transaction Accounton 11th of the succeeding month to CAS maybe made only after ensuring that adjustmenton account of discrepancies have beencarried out and posted in the relevant State

444

Government Account. Detailed statementshowing name of branch, monthof transaction, month in which actuallyaccounted for and amount (Dr. / Cr.) will beprepared in four copies and sent to CAS alongwith four copies of bank-wise, branch-wiseStatement of Transaction received from theLink Offices.

8. PAD will furnish to Accountant General andFinance Department an advance copy of themonthly closing statement showing themonthly Receipts and Payments at the Officeand also at the Agency Bank and the netamount transferred to CAS. One copy ofmonthly Statement of Transaction receivedfrom the Link Offices will also be forwarded toAccountant General. Format of monthlystatement is given hereunder :

Statement showing the monthly Receipts and Payments of …………State Government at Public Accounts Department (PAD), ReserveBank of India……….. for the month of …………… Year ……..

Payments Receipts Net balance

1. Transactions during ………. at PADReserve Bank of India…………..2. Transactions during……….. at thebranches of Agency Bank branches.(a) State Bank of(b) Punjab National Bank(c) ………………………PAD No. DatedForwarded to(i) The Accountant General……………(ii) The Secretary to Government of ………… Finance Department

Assistant General Manager

445

9. PAD will continue to carry out adjustmentsof discrepancies etc., reported by the AgencyBanks in the manner stated above, even afterthe relevant monthly statements are renderedto CAS. However, the adjustments inrespect of previous months should bebased on copy of VDMS submitted by theLink Office.

10. PAD maintaining accounts of more thanone State Government, should ensure that thetransactions are correctly accounted for in therespective State Government account and theaccounting procedure outlined above iscorrectly followed.

11. On Receipt of advice regarding the DailyBalance position of State Government /s fromCAS, Nagpur; alternatively downloadinginformation from CAS website, the PAD willimmediately send on daily basis an advice tothe Finance Department of the concernedGovernment in the form appended:

Reserve Bank of IndiaPublic Account Department / State Government Cell

Advice No.Daily Position of State Government Balance ason ………………….. DateSl.No.

Amount in thousand ofRupees

1. Previous day‟s Balance Dr.Cr.

2. Adjustment of discrepancies relatingtransactions of pre-decentralisationperiod

Dr.Cr.

3. Receipt on State Government Account

(i) At RBI Office Cr.

(ii) At Agency Bank branches Cr.

4. Payments on State Government Account

446

(i) At RBI Office Dr.

(ii) At Agency Bank branches Dr.

5. Inter Government Adjustments by CAS(vide Clearance Memo No. )

Dr.Cr.

6. Closing Balance Dr.Cr.

7. Treasury Bill Holding – ProgressiveBalance

8. Ways and Means Advances

Adjustments include(i) Rediscounting of Intermediate Treasury Bills `(ii) Investment in Intermediate Treasury Bills `(iii) Grant of Ways and Means Advances `(iv) Repayment of Ways and Means Advances `

12. It is observed that, in some States, morethan one Treasury are linked to an AgencyBank branch. This arrangement gives scopefor mix up of the documents and figuresrelating to different Treasuries resulting inreconciliation problem between the Treasuriesand banks. PADs may therefore arrange tolink ‘one bank branch to one treasury’ inconsultation with the State Governmentand RBI, DGBA, Central Office.

13. PADs should convene quarterly meetingsof officials from State Government,Accountant General and Agency Banksheaded by the Banking Department in-chargeto discuss and resolve the issues relating toaccounting of State Government transactions.The minutes of the meeting may be forwardedto DGBA, CO. PADs handling more than oneState Government accounts, may considerconvening such quarterly meetings in therespective State Headquarters in turns.

14. Discrepancies pertaining to post-1987period, should be settled through the existingarrangements of regular meetings of the

447

representatives of Accountant General,Agency Bank and Public AccountsDepartment (PAD).

15. As the Accountant General Offices havelaunched a massive voucher levelcomputerization project in 20 States that havegone on-line, a proper electronic link isrequired to be established between theAccountant General Offices and RBI Offices(PADs) on the one hand and AccountantGeneral offices and the CAS on the other, forbetter and speedy co-ordination. ReserveBank Offices may finalise the arrangements inconsultation with Department of InformationTechnology (DIT).

VII- Procedure to be followed by theCentral Accounts Section (CAS), RBI,Nagpur

1. CAS will maintain Principal GovernmentDeposit Accounts (PGDA) of all StateGovernments as hitherto.

2. CAS will continue to account for the StateGovernment transactions / adjustmentspertaining to the pre-partial decentralizationperiod. Agency Banks should, therefore,report the State Government transactions,adjustments to the State Governmenttransactions, etc., for the period prior to 1stOctober 1987 to CAS for accounting /settlement.

3. CAS will receive the daily position figures ofGovernment transactions including those ofGovernment Deposit Account from PADs byFax as well by e-mail. On the basis of above

448

particulars, it will arrive at the balance in theaccount of the State Government concerned.

4. CAS will receive Inter-GovernmentAdjustment Advices (IGAs) from the AccountsOfficers of various Ministries / Departments ofCentral Government and the AccountantsGeneral of various State Governments fordebit / credit of the amount mentioned on theadvices to the accounts of the StateGovernments.

5. CAS will arrive at the Daily Balance positionof the State Governments on the basis ofopening balances, balances reported by thePADs, IGAs and other adjustments carried outby it in respect of discrepancies in agencybank transactions relating to pre-partialdecentralization period which get reflectedonly in PGDA and adjustments on account ofmiscellaneous transactions such as dischargevalue / interest Payment on State Governmentborrowings, Liaison Office transactions,Currency Transfer transactions in respect ofnon-banking Treasuries, etc.

6. CAS will take necessary action to investsurplus balance in 14-Day IntermediateTreasury Bill or rediscount Treasury Billsholding of State Government or grant orrecover Ways and Means advances andarrive at the net closing balance of the StateGovernment as per instructions received fromCentral Office of RBI from time to time in thisregard.

7. On transfer of balances in GovernmentDeposit Account on the last working day of themonth in respect of transactions undertakenby PAD through RBI General Account and on

449

11th of succeeding month in respect ofAgency Transactions through RBI GeneralAccount, CAS will respond both the entriesand account for them in the respectivePrincipal Government Deposit Account ofState Governments.

8. CAS will send advice to each PADsmaintaining Deposit Account of the StateGovernment giving the closing balance of theState Government, net adjustments carriedout by it including amount of investment inIntermediate Treasury Bills, rediscounting ofTreasury Bills, grant / repayment of Ways andMeans Advances, etc.

9. CAS will receive four copies of the MonthlyStatement of Transactions effected at thePAD and four copies of bank-wise, branch-wise Monthly Statement of Transactionsfurnished by the Link Offices on 11th of thesucceeding month. CAS will compile andconsolidate all the transactions and forwardthree copies of the Statements along withdetails of the transactions to the respectiveAccountants General by 15th of thesucceeding month in case of all months otherthan March and by 15th May in case ofMarch Account.

10. The Inter Government transactions aredirectly put through by CAS on the basis ofadvices received from the AccountantsGeneral or the Pay and Accounts Officers.Increase or decrease in the Cash Balance of aState on this account is reported by the CASthrough the Clearance Memo (CM). It is anon-going process and therefore, it is notuncommon to encounter differences in theCash Balance of a State as per Banker‟s

450

Books (CAS) and the Books of the Accountant(Accountants General). The AccountantsGeneral, correspondingly increases ordecreases the Cash Balance of a State in hisbooks, only on Receipt of the CM. CAS isgiving, on a monthly basis, to the AccountantsGeneral, a list of CM. Such a list shouldaccompany the monthly report of CashBalance being sent by CAS on the 15th of thefollowing month. Further, the ClearanceMemo may be serially numbered, to enablethe Accountants General to track themissing Memo.

11. The State Governments should ensuretimely submission of accounts to theAccountants General by the concernedDepartments / Treasuries. While differencemay occur in the month-wise balance, thereshould not be any difference between thecash balance position as per the AccountantsGeneral's book and the CAS figures, as at theclosing of Annual Accounts by 25th April ofevery year.

12. As per the directions of Comptroller andAuditor General of India(C&AG), a cell called“RBD Cell” has been functioning in the officeof the Accountants General (A&E) II,Maharashtra, Nagpur, since 2001 tocoordinate with the Accountants General andCAS for the clearance of the outstandingdiscrepancies of the pre-1987 period. Tostrengthen these efforts, the Agency Banksand CAS may also set up separate cellsconsisting of dedicated staff so as to havebetter liaison with the Accountants General.There should be regular meeting of officials ofthe CAS, Agency Banks and the AccountantsGeneral Office at every quarter to sort out the

451

differences, if any. The minutes of the meetingmay be forwarded to RBI (DGBA).

13. As the Accountant General Offices havelaunched a massive voucher levelcomputerization project in 20 States that havegone on-line, a proper electronic link isrequired to be established between theAccountant General Offices and PADs on theone hand and Accountant General offices andthe CAS on the other, for better and speedyco-ordination.

14. For freezing the old outstandingdiscrepancies 'as it were basis' and adoptingthe same by the parties concerned,particularly in the context of non-availability ofold records and details to establish ordisprove the claims of the parties (AgencyBank, Central and State Governments),following proposals may be implemented:

(i) The old outstanding discrepancies(prior to 1987) may be settled withreference to VDMS or otheracceptable documents by mutualconcurrence of the parties concernedthrough the meetings arranged by theRBD Cell of Accountant General(A&E) II, Maharashtra Nagpur.

(ii) Where relevant records are notavailable, approval of the StateGovernment concerned may betaken for clearance of individualitems up to Rs 20,000/- on adhocbasis, as was done in the case ofRajasthan Government.

452

(iii) Identify the discrepant items andamount that remains outstandingafter doing the exercise mentioned in(i) & (ii) above and refer these casesto a Group comprising of an officerfrom RBI, Comptroller and AuditorGeneral of India and Agency Bank(by rotation), to take a decision onthe basis of facts and figuresavailable.

VIII- Procedure to be followed by theAccountant General (AG)

1. The Accountant General will receive twocopies of certified Date-wise monthlystatements (VDMS) from the Treasury Officeralong with normal monthly cash (RBD)statement in the usual manner.

2. The Accountant General will also receivefrom PAD(RBI), an advance copy ofstatements of monthly transactions along withmonthly Statement of Transactions submittedby Link Offices of Agency Banks.

3. To facilitate timely compilation of the StateGovernment accounts, CAS may send theCash Balance report together with otherdocuments by 15th of the following month.

4. The Accountant General will verify thefigures reported by the Treasury with thosereported by the CAS. Discrepancies betweenthe two sets of figures may be listed andadvised to PAD in the State or nearest to theState Headquarters, for rectification of thedifferences. While doing so, a copy of the

453

VDMS received from the Treasury should alsobe forwarded to PAD.

5. The Cash Balance of a State consists of (i)Transactions reported by the Agency Banks(ii) Transactions directly carried out atRegional Offices of RBI (iii) Inter GovernmentAdjustments carried out at CAS and (iv)Adjustment Transactions of pre October 1987period. The monthly statement of CashBalance sent by the CAS to the AccountantGeneral contains the net position (Debit orCredit) of all the above four items clubbedtogether. Simultaneously, the AccountantGeneral arrives at the monthly Cash Balanceof the State based on the computation of theaccounts rendered by the Treasuries andother sources. Differences between the CashBalance of a State as arrived at by theAccountants General and CAS have to bereconciled and cleared.

6. In respect of Inter Government Adjustmentsand other transactions carried out by CAS, theAccountant General may reconcile andconfirm the balances on a case-by-case basis.To facilitate the item-wise reconciliation, CASwill furnish the net Cash Balance under eachitem supported by details. For example, whilefurnishing the Receipts, Payments and netbalance under Inter Government Adjustmentsmade by CAS, a list of advices supporting theReceipts and Payments will be sent to theAccountant General. Similarly, in respect ofother State transactions put through at PADs,CAS will furnish the list of transactions alongwith the summary of Receipts, Payments andBalance. The format of Statement of theClosing Balance is given below:

454

Closing Balance Statement and Confirmation

Reserve Bank of IndiaCentral Accounts Section

NagpurThe Accountant GeneralGovernment of _____________

Dear Sir,

We append the monthly account statement of closing balance of your State for theMonth of _________. The supporting documents are also enclosed. We shall be glad ifyou will confirm that the balances shown in respect of items 1 to 9 in the statementagrees with the books of your Office. Please use enclosed Form „A‟ for theconfirmation.

( )P. Regional DirectorEnclosure : Sheets

Amount in `

Sl.No.

Particulars Receipts Payments Net

1. Inter-Government and other transactionsbooked directly by CAS (as per date-wise listattached)

2. Transactions originated at RBI Offices otherthan that attached to your State and bookedby CAS. (as per date-wise list attached)

3. Transactions of pre 1.10.1987 period,adjusted by CAS (as per statement attached)

4. Sub Total (1+2+3)

5. Transactions at RBI Office

6. Sub Total (4+5)

7. Transactions of Agency Banks (as persummary)

8. Total (6+7)

9. Net Dr. / Cr. for the month

10. Progressive Total brought forward fromprevious month

11. Progressive total up to current month carriedover

12. Net Progressive Dr. / Cr.

455

7. The Accountants General may giveconfirmation to the CAS on item-wise CashBalance during the month within fifteen daysof the reporting of the balances by the CAS. Ifthe figures of an Accountant General varyfrom that reported by RBI during any month,the differences should be identified andreconciled expeditiously. Apart from themonthly reconciliation, there should be asystem of confirmation of Annual CashBalance of State within two months from thedate of Receipt of the figures from RBI.Specimen of Certificate of Confirmation ofBalances by the Accountant General is givenbelow :

Certificate of Confirmation of BalancesForm ‘A’

The Regional DirectorReserve Bank of IndiaCentral Accounts SectionNagpur

Dear Sir,

With reference to your monthly account statement for the month of ______ we confirm thatthe net amounts shown against items 1-9 tallies with our books.

With reference to your monthly account statement for the month of ________ we advise that the itemsshown below do not tally with our books for reasons mentioned there against.

Amount in `

Sl.No.

Particulars NetAmount asper Books

of RBI

Net Amountas per AG‟s

Books

Reasonsfor

variation

Remarks

1. Inter-Govt and othertransactions bookeddirectly by CAS (date-wiselist attached)

2. Transactions originated atRBI Offices other than thatattached to your State andbooked by CAS. (date-wiselist attached)

456

3. Transactions of pre1.10.1987 period, adjustedby CAS (statementattached)

4. Sub Total (1+2+3)

5. Transactions at RBI Office________(attached to theState)

6. Sub Total (4+5)

7. Transactions of AgencyBanks put through (as persummary)

8. Total (6+7)

9. Net Dr./ Cr. for the month

10.11.12.

(Signature of the authorized official)Accountant GeneralGovt. of ___________________________

Date:

Strike out whichever is not applicableAttach work- sheets if necessary

8. As the Accountant General Offices havelaunched a massive voucher levelcomputerization project in 20 States that havegone on-line, a proper electronic link isrequired to be established between theAccountant General Offices and ReserveBank Office (PADs) on the one hand andAccountant General Offices and the CAS onthe other, for better and speedy co-ordination.

____________________________________

457

APPENDIX- 2(referred in Para 15.1.4)

Government of Jammu and KashmirFinance Department

(Circular No. DGAT/PS-DR/269 dated 30.03.2011)

Sub : Conduct of treasury cash business in the State by Reserve Bank of India(RBI) through J&K Bank (as Agency Bank of RBI).

C I R C U L A R

The State Government has executed an agreement with the Reserve Bankof India (RBI) for conducting the treasury cash business through J&K Bank asAgency Bank of RBI. The new system shall come into force w.e.f. 01.04.2011. Inthis connection both the Joint Directors of Accounts & Treasuries and all theTreasury Officers are hereby directed to adhere to the following system w.e.f.01.04.2011.

i. The Treasury Officers will receive the Pass Book along with Receipts /Payment Scrolls, challans and cheques etc. from the branchwhereupon he will acknowledge the Receipt of each day on the PassBook tendered along with scroll etc. for the same day / preceding day.He will verify the correctness of the entries made in the Pass Book withreference to scrolls, challan and vouchers of the previous day. He willinitial in the Pass Book in the column provided in token of having doneso. The Pass Book will be returned to the branch on the succeedingday either with initials of Treasury Officer as mentioned above or witha Memorandum of Error indicating corrections. In such an event, thefigures should be got reconciled with the least possible delay (on thesame day or the following day) and signed by Treasury Officerimmediately.

ii. The branch handling the State Government transactions has to sendthe receipt/payment scrolls on a daily basis in the prescribed formalongwith the challans and cheques to the Sub Treasury / Treasury towhom they are attached.

iii. The challans / cheques and bills will be arranged in the order in whichthey are entered in receipt / payment scrolls and stitched to therespective scroll. They may be classified in such a manner as may bedirected by the Accountant General. Further, the paid vouchers(cheques, bills etc.) sent to the Treasury should be conspicuously

458

branded with the “Paid” stamp. This is to avoid making paymentsagainst the same document more than once.

iv. Two Pass Books with particulars of total receipts and payments andthe number of supporting challans / cheuqes may be maintained, inwhich entries will be made based on Daily Scrolls. The form of thePass Book has been given below.

Pass Book of Receipts and Payments – Side “A” (for use by Bank Branch)Date ofTransmittal

Date ofTransaction

TotalReceiptsfor theday

No. ofchallans

TotalPaymentsfor theday

No. ofvouchers

InitialsofBranchManager

Initials ofTreasury/ SubTreasuryOfficer

Pass Book of Receipts and Payments – Side “B” (for use by Sub Treasury / Treasury)Date ofReceipt

Date ofTransa-ction

CertifiedReceiptsfor theday.

No. ofchallansreceipts

CertifiedPaymentsfor theday

No. ofvouchersreceived

Remarks(attachworkingsheets ifrequired)

Initials ofTreasury/ SubTreasuryOfficer

Initials ofBranchManager(withdate)

Preservation Period : Three years after reconciliation of branch’s monthly account

The two Pass Books in the above mentioned format may bemaintained for being used on alternate days so that one whole dayis available to the Sub Treasury / Treasury for checking thetransactions as entered in the Pass Book. Pass Book envisages thata certificate of correctness of the transactions is given by the SubTreasury / Treasury, after verification of each item of receipt andpayment under taken by the Agency Bank and recorded in thescroll with reference to the challans and cheques / Cheque DeliveryRegister (CDR) respectively. Further, where daily verification of thereceipts and payments at the Agency Banks is completed by theSub Treasury / Treasury on the next day as prescribed, there couldbe no difficulty in preparation of the monthly position expeditiouslyand accurately. Scope for discrepancies and reconciliation,thereafter, will be minimal. Hence the signature of the SubTreasury / Treasury Officer on the Pass Book is a confirmation andcertificate of correctness of the transactions.

v. The daily accounts i.e. scrolls will be prepared each day and theManager or authorized official of the Bank, after satisfying himself asto their accuracy will docket and forward to Sub Treasury / Treasury

459

the Pass Book of Daily Receipts and Payments with all challans andcheques at the close of the day.

The Scrolls, challans and vouchers should be sent in a locked boxby the branch to the Sub Treasury / Treasury in order to rule outthe possibility of any alteration / obliteration of any paper beforethey reach the hands at the other end.

There should be no delays in transmission of scrolls and challans /cheques by the Agency Bank to the Sub Treasury / Treasury. Forthis purpose, specific columns for date of sending and returning it,in addition to the transaction date have been provided for in thePass Book. This aspect should also be looked into by the respectiveInspection Authorities of the Agency Banks as well as Sub Treasury/ Treasury.

vi. For communicating the discrepancies, if any, in the Pass Book to theAgency Bank by the Sub Treasury / Treasury, the “Memorandum ofError” as per the format appended, shall be used.

Memorandum of ErrorThe Branch Manager,________ Bank.

Dear Sir,

With reference to your Daily Receipt / Payment Scroll No. _______ dated ______we advise that the following deficiencies have been observed:

S. No. inScroll

Receipt /Payment

Amount Nature ofdiscrepancy

Suggestedrectificatoryaction.

Please arrange to rectify the above deficiencies at the earliest and confirm.Treasury OfficerDate :

The above deficiencies have been rectified on __________ and reflected at S.No._____ in our scroll No. _______ of date ____________.Branch ManagerBank’s SealDate :Preservation Period : Three years after the reconciliation of branch’s monthlyaccount.

460

Note : Three copies of the above Memorandum may be preparedby the Sub Treasury / Treasury. Two copies of the same may besent to the Agency Bank branch, one of which may be retained bythe branch and the original returned with confirmation ofrectificatory action, as stated above. To facilitate identification,“Memorandum of Error” may be printed in red.

The discrepancies have to be communicated immediately, but notlater than the next working day. Three copies of the Memorandumof Error may be prepared by the Sub Treasury / Treasury. Twocopies of the same may be sent to the Agency bank branch andone copy may be retained by the Sub Treasury / Treasury. Thescroll contained the error together with relevant instrument and thePass Book may also be sent along with the Memorandum of Errorto Bank branch.

On receipt of Memorandum of Error along with the documentslisted above from the Sub Treasury / Treasury, the branch shouldimmediately rectify the irregularity pointed out therein afterchecking the documents and make necessary correction in thescroll and the Pass Book under proper authentication. The entriesmay also be authenticated by the Sub Treasury / Treasury in thePass Book. In the computerized environment necessaryrectifications may be made with adequate safeguards.

In the case of computerized treasury, required corrections in thecomputer database may also be carried out after taking necessarysecurity precautions.

vii. On the first working day of succeeding month the Treasury will receivesix copies of DMS (Datewise Monthly Statement) from the AgencyBank branch for the preceding month. These will be scrutinized andcertified to the effect that they have been checked and found correct.Two copies of the VDMS (Verified Datewise Monthly Statements) willbe returned to the concerned branch within 2 days from the date of itsreceipts. Two copies of the VDMS together with consolidatedstatement of receipt and payment are to be forwarded to theAccountant General by 10th of the succeeding month, except for themonth of March. For March these should be submitted by 15th April. Inthe case of our state these statements shall be submitted to theDirector General Accounts & Treasuries through concerned DistrictTreasury Officers and the concerned Joint Directors for consolidation.

461

The format prescribed for DMS/VDMS is as under:-

Date-wise Monthly Statement (DMS)

Statement for the month of ………., 20…. in respect of ………… StateGovernment transactions.Name of the Bank Head of Government

AccountCode No.

Name of Branch Code No.

Date Receipts(Rupees)

Payments(Rupees)

Dr / Cr. Net Balance(Rupees)

1.2.3...31.Total

Certified that the particulars furnished above are correct to the best of myknowledge.

Officer in-charge of STO / TO Branch ManagerDate : Date :Size 14” X 8.5” white sheet.Preservation Period : Three years after the reconciliation of branch’s monthlyaccount.Amount to be rounded off to the nearest Rupee.

The duly certified copy of DMS received from the Sub Treasury / Treasury,now be called Verified Date-wise Monthly State (VDMS).

3. The treasuries will report to the Director General Accounts & Treasuries,through the respective Joint Directors the receipts and payments transactionshandled by the Agency Banks in the prescribed formats.

462

4. The data on cheques issued by computerized Sub Treasury / Treasuryshould be in the following format:-

The data may be transmitted to the bank branch through electronic media(floppy / e-mail) under secured conditions.

5. All the Treasury Officers should ensure timely submission of accounts tothe Accountant General and other quarters.

6. It has also been decided that henceforth State Government will claiminterest for delayed credit of collections from the Agency Banks. In thisconnection all the Treasury Officers will ensure immediate credit of all thereceipts that the J&K Bank branches receive on behalf of the State Government.In the event there is any delay in this behalf that should immediately be broughtto the notice of the concerned Joint Directors / Director General Accounts &Treasuries further necessary action.

---.---

S.No.

Particulars Specification

1. Instrument Number Character, 3 + Number, 92. Instrument Date DDMMYYYY3. Beneficiary’s name Character, 304. Amount Number, 165. Signatory Code Number, 5

463

APPENDIX- 3(referred in Para 15.1.4)

Government of Jammu and KashmirFinance Department

(Circular No. DGAT/PS-DR/297 dated 06.04.2011)

Subject:- Dispensing away with the MT system and introduction of revisedprocedure for authorisation of drawals at the Government treasuries inthe J&K State.

C I R C U L A R

With the switching over to the conduct of treasury cash business in theState by Reserve Bank of India (RBI) through J&K Bank (as Agency Bank of RBI) anddispensing away with the MT system , it is hereby enjoined upon the Joint Directors ofAccounts & Treasuries Kashmir /Jammu , District Treasury officers/ Treasury officersthat:-

a) The District Treasury officers will prepare liability / demand headwise / treasurywise in the already devised format and submit the same to the respective JointDirectors of Accounts & Treasuries Kashmir/ Jammu on daily basis.

b) Likewise, the Joint Director , Accounts & Treasuries Kashmir/ Jammu shallconsolidate the liability / demand , headwise / treasury wise and submit thesame to the Director General, Accounts & Treasuries on daily basis as per theexisting system.

c) The Director General, Accounts & Treasuries shall daily release the amounts tothe District/ Additonal treasuries through Joint Director , Accounts & TreasuriesKashmir /Jammu as per the resources available with the Government (FinanceDepartment). However, in respect of the treasuries of Civil Secretariat , Leh ,Kargil , New Delhi and Mumbai the amounts shall be released directly by theDirector General, Accounts & Treasuries, on the daily basis.

d) The District Treasury officers shall, as usual , submit the daily treasury wise andobject wise distribution statements to their respective Joint Directors who in turnshall furnish the distribution statements to the Director General, Accounts &Treasuries on daily basis.

e) The District Treasury officers / Treasury officers of Leh. Kargil, Civil SecretariatTreasury, New Delhi and Mumbai shall, however, render their distribution/utilisation statements directly to the Director General, Accounts & Treasuries ondaily basis.

464

f) The Muffasil and sub-treasuries shall conduct the verification of the cashauthority letter with their respective District Treasury officers who would thenconduct verification with respective Joint Directors and the Joint Directors shallalso conduct monthly verification with the Director General, Accounts &Treasuries office. Likewise the Treasury officer, Civil Secretariat , Leh, Kargil,New Delhi and Mumbai shall conduct the verification with the office of DirectorGeneral, Accounts & Treasuries directly.

g) The receipts realized will be credited / transferred to the agency bank /government account on daily basis and no payment out of these receipts shall beauthorised/ made during the day.

---.---

465

APPENDIX- 4(referred in Para 15.1.4)

Government of Jammu and KashmirFinance Department

Subject:- Revised procedure for reimbursement of pensions paid by the J&KBank Ltd. to the State pensioners.

Government Order No. 115 - F of 2011Dated : 15.04.2011.

Vide Government Order No. 401 –F of 1977 dated 13.06.1977 it wasnotified that all Civil Pensioners of the State including Family Pensionersand All India Service Pensioners who retire/have retired from the StateGovernment and are drawing pension from the State treasuries shall have anoption either to draw their pension from the respective treasuries or through anybranch of the Jammu and Kashmir Bank in the State convenient to them. Itwas further ordered that State pensioners in Delhi who draw their pension fromthe State Treasury New Delhi can also opt for drawal of their pension throughthe Irwin Road branch of the J&K Bank, New Delhi.

In the year 1983, two treasuries namely, Additional Treasury, Tankipora,Srinagar and Additional Treasury, Old Secretariat, Jammu were nominated asNodal treasuries respectively for the erstwhile Districts of Srinagar (nowtrifurcated into Srinagar, Budgam and Ganderbal), Jammu and Kathua (nowbifurcated into Kathua and Samba) for transfer of pension payment orders(PPOs) of the pensioners who opt for transfer of their pension cases to J&K bankBranches of their choice . The pension payment sheets (normally on monthlybasis) were routed by the Bank branches of Jammu, Samba and Kathuabranches through J&K Bank Chowk-Chabutra Branch Jammu for onwardtransmission to the J&K Bank Civil Secretariat Branch, where the reimbursementwas made to the J&K Bank by debiting the said amount toCommissioner/Secretary Finance’s OD-I account. Disbursement of the pensionpaid by the various other branches was being made by debiting the paid amountto government account in the respective District Treasuries.

Now with the introduction of the new system of Cash Management forconduct of treasury cash business in the State by Reserve Bank of India (RBI)through J&K Bank (as Agency Bank of RBI) and due to freezing of OD-I / OD-IIand government accounts of all treasuries, the existing system of reimbursementof amounts on acount of pension paid to the pensioners by J&K Bank, is revised

466

as under. However, the scheme of drawing pension by the pensioners throughvarious branches of J&K Bank as notified vide Government Order No. 401-F of1977 dated 13.09.1977 shall remain unchanged / in force without anyalteration:-

i. All the Treasury officers including Assistant Treasury officers shall becompetent to transfer the pension cases to the pensioner’s choiceBranches of the J&K Bank within their respective districts. In case thepension cases are to be transferred in the jurisdiction of the anotherTreasury officer, an intimation of such transfer should be given to thatTreasury Officer also enabling him to watch the reimbursement ofpension paid by the Bank thereafter. A proper register as per the treasuryguidelines issued by the Director General Accounts and Treasuries shouldbe invariably maintained to watch and monitor the pension transfer casesauthorised by the Treasury officers. In case any pensioner desires totransfer his pension case outside a particular district, the same should begot processed through the office of Principal Accountant General asrequired under rules. Similarly the pension cases should not betransferred from one treasury to the another treasury without orders ofthe Principal Accountant General’s office;

ii. The Bank Managers disbursing the pensions shall be required tohandover the Pensioners half of the Pension Payment Orders (PPos) tothe concerned pensioners and retain only the treasury half of the PensionPayment Orders at the Bank and post the monthly pension payments inthe Treasury Half of the Pension Payment Orders (PPos) as advised bythe Principal Accountant General in the review meetings of the Treasurieschaired by the Hon’ble Finance Minister and the periodical audit reports.

iii. In the event the PPO half of any of the pensioner is not available with theBank branch the same may be got issued from the nearest treasury afterdeposition of the prescribed fee of 1/- in each case by the concernedpensioner. The Treasury Officer will issue Xeros copy of the PPO half(Treasury Half) of the PPO duly attested under his own seal andsignatures and return the treasury half of the PPO to the concernedpension paying branch of J&K Bank;

iv. It shall be deemed that all the cases to the nearest Bank branch havebeen transferred by the Treasury Officer of the area so that the re-imbursement sheet/sheets of a particular month are sent to the TreasuryOfficer nearer to the Bank Branch paying pension and not to the TreasuryOfficer who has actually transferred the pension case;

v. The Bank Managers paying pension shall be required to provide a list ofthe category-wise pensioners as on 01.04.2011 to the nearest Treasury

467

Officer who would in turn maintain a proper record and use it forconducting atleast half yearly on spot verification of the pensionpayments at the Bank branch /branches instead of leaving this job forPAG’s audit parties;

vi. The Bank Managers dealing with the pension payments are required tonote that the pension becomes due to a pensioner on the 1st day of thefollowing month so no credits to pensioners be afforded on the last dayof the month of pension. This has been pin pointed by the PAG’s auditparties while checking the pension records at the Bank branches;

vii. Reimbursement of pension payments to civil pensioners of J&K StateGovernment shall be claimed only from the respective Treasury (nearesttreasury only). Both Centralized Pension Payment Department andBusiness Units (which have not so far implemented centralized pensionpayment mechanism and are themselves directly disbursing pension)shall also follow the revised procedure on seeking reimbursement fromthe concerned Treasury/ies and not raise debit to or seek reimbursementfrom Moving Secretariat branch; and

viii. In the event of recovery of excess pension paid to a pensionerafter any discrepancy is detected by the pension paying branch orbrought to its notice by Treasury Officer, Inspecting Officers/ Auditors,the concerned branch shall take immediate action for recovery of theexcess amount drawn and pass on the credit on account of recoveriesmade from the pensioner to the concerned Treasury branch forcrediting Government account under “Major Head 2071 – Other Pensionand Pensionary Benefits - Recoveries”.

ix. The J&K Bank Managers paying pension to the pensioners willhenceforth pass on the monthly paid pension sheet / sheets (induplicate) to the Treasury Branches nearest to their non-treasury BankBranches for reimbursement of the amounts of pension released by thosebranches in favour of the State pensioners who are drawing theirpension through the Bank;

x. All Treasury pension paying branches and non Treasury pension payingbranches of the J&K Bank shall make payments to the State pensionersdrawing pensions from their respective branches from their ownresources as per the PPOs on or after first day of the following month towhich the pension pertains;

xi. The claim for re-imbursement of the pension so paid to the StateGovernment Pensioners shall be lodged immediately by the respective

468

treasury or non-treasury branches of the J&K Bank to the nearestTreasury Officer through the treasury branch connected with thattreasury by submitting the pension payment statements/sheets;

xii. On receipt of the paid pension Statements / sheets from the connectedTreasury Bank branch, the concerned Treasury officer shall checkarithmetical accuracy of those sheets and project the amount in his dailyliability statement for reimbursement;

xiii. The Treasury officer shall open a separate ledger of pension paymentsthrough J&K Bank and enter branch-wise total amounts of pensionclaimed by the Bank Branch alongwith the number of pensionersindicated in the pension payment sheet / sheets and closely monitor theexcesses/ reductions in the volume of monthly payments or number ofthe pensioners;

xiv. Wherever the Treasury officer notices any abnormal increase or decreasein the pension payment amounts he should immediately ascertainreasons thereof from the concerned Bank Manager. However, thereimbursement of the amounts so claimed by the Bank Branch should notbe delayed on this account;

xv. On receipt of the authority letter for reimbursement of amounts ofpension payments to the J&K Bank, the Treasury officer shall pass thepension payments sheet/ sheets as received from the Treasury BankBranch and handover one copy of the payment sheet to the J&K Bankbranch handling the treasury business after recording treasury vouchernumber and date therein;

xvi. Second copy of the payment sheet also bearing the same treasuryvoucher number and date but marked “Not For Payment” will beretained by the Treasury Officer for his record and reference;

By order of the Government of Jammu and Kashmir.

---.---

469

APPENDIX- 5(referred in Para 15.1.4)

Government of Jammu and KashmirFinance Department

Subject:- Procedure for collection of government receipts at J&K BankBranches and their transfer and incorporation in the governmentaccounts.

Government Order No : 116 - F of 2011D a t e d : 15 - 04 – 2011

The procedure for acceptance and accounting of governmentreceipts as was in vogue before taking over of Cash management by the ReserveBank of India (RBI), shall remain unchanged. The Treasury officers are as suchrequired to maintain a proper General Receipts Register as properly explainedat para-3 of the Treasury Guidelines, issued by the Director General Accountsand Treasuries and also prescribed in the J&K Treasury Code Volume I. Theentries in the General Receipts Register are to be cross checked with thegovernment copies of the Treasury Remittance Challans (TRs) received fromthe connected branch of the J&K Bank, called as Treasury Branch by theauthorities of the Bank, with the daily Bank Scroll and ensure that 100 %Treasury Receipts Numbers (T.R. Nos.) are given to the said T.R. Challans forincorporation of such receipts in the Government account.

Under different government orders and circular instructions, a fewbranches of the J&K Bank have been indentified as the designated branches forreceipt of Commercial Taxes, Excise, Revenue, Passenger Tax and electriccharges (Power Receipts). The revenue collections so made by the designatedBank Branches were periodically (normally weekly) transferred to the erstwhileOD-I & II accounts maintained, at the Civil Secretariat branch of J&K Bank, inthe name of the Commissioner/Secretary Finance for crediting them to theproper account heads of the State Government. With the taking over of J&KState Government treasury business by the Reserve Bank of India (RBI) throughJ&K Bank (as their agency bank) w.e.f. 01.04.2011, the following guidelines areissued to all the treasuries and branches of the J&K Bank connected with therevenue receipts on behalf of the State Government.

i. Challans of all the State Government receipts received should bepassed on to the nearest Treasury through the concerned treasurybranch of the Bank for recording the T.R.No. and date and making anentry in the General Receipt Register by the Treasury Officer so thatsquaring is watched in respect of the daily receipts made directly by

470

the Treasury and receipts transferred by the nearest non-treasurybranch / branches of the J&K Bank.

ii. The treasury branches of the J&K Bank shall ensure that the Challansreceived from the non-treasury Bank branch is passed to the TreasuryOfficer with the daily receipts and payments sheet (scroll) forrecording of TR Nos. and date as enumerated at para-I above.

iii. Managers of non-treasury branches shall prepare Major Head wiseChallans indicating the detailed receipt heads like VAT, GST, TrafficPolice fines etc. therein as it would not be practically possible to allotTR Nos. and date on combined Challans showing receipts underdifferent Major Heads of Accounts in view of maintenance of HeadWise Receipt Cash Books at the treasuries.

iv. It shall be obligatory on the part of the Treasury Officers not to allotTreasury Receipt (TR) Nos. to the Treasury challans accompanying theGovernment receipts on the next day until the T.R. Nos. are allotted toall the Government copies of the TRs and Remittance Challans of thedesignated branches of the previous working day.

v. At the close of the month reconciliation between the branches of Bankand the concerned treasuries shall be invariably conducted so as toensure that no receipt is left out of the government / treasuryaccounts and in case there is any variation the matter be sorted outinstantly

vi. The Receipt Heads of Power Development Department, Sales Tax,Passenger Tax, Police (Traffic) and Commercial Taxes are given asunder:-

S.NO.

DEPARTMENT MAJOR HEAD

1. Receipts of PowerDevelopment Department

- 8782 Public WorksRemittances – Power Receipts.

2. Commercial Taxes - 0040 – VAT, GST, Entry Tax& Motor Spirit Tax

3. Passenger Tax - 00424. Property Tax - 00355. Stamps - 0030 – Sale of Stamps6. Excess Pension Recoveries - 2071 – Pension and other

retirement benefits –Recoveries.

7. Traffic Police fines - 0055

By order of the Government of Jammu & Kashmir.--.---

471

APPENDIX- 6(referred in Para 15.1.4)

Government of Jammu and KashmirFinance Department

(Circular No. DGAT/PS-DR/441 dated 06.06.2011)

Subject:- Procedure for collection of government receipts at J&K Bank Branchesand their transfer and incorporation in the government accounts .

C I R C U L A R

Vide Government Order No. 116-F of 2011 dated 15.04.2011 theprocedure for collection of government receipts at J&K Bank branches and their transferand incorporation in the government accounts was ordered. Addendum to theaforementioned Government order was issued under NO. DGAT/PS/DR/393 dated24.05.2011 whereunder some more receipt heads were incorporated in Clause (vi) ofthe said Government order.

The issue was thoroughly discussed in the review meeting of treasuries ofJammu Division chaired by the Hon’ble Minister for Finance and Ladakh Affairs on27.05.2011 as also in a meeting with the officers of Principal Accountant General and itwas desired to incorporate the full and correct classification as under :-

S.No. Department Major Head / Minor Head1. Receipts of Power

Development Department8782 , Public Works Remittances– Power Receipts

2. Commercial Taxes 0040-VAT, GST, Entry Tax andMotor Spirit Tax

In respect ofDivisions creditshould be givento Major Head8782- remittanceinto the treasuriesinstead of FinalHead of Accountto which it isactually creditedby the chestholders /divisions.

3. Passenger Tax Major Head - 0042103- Tax Collection PassengerTax

4. Property Tax Major Head – 0035101- Ordinary collection urbanareas and non-urban areas

5. Stamps 0030- Sale of Stamps

472

6. Excess Pension Recoveries 2071- Pension and otherRetirement Benefits – Recoveries

7. Traffic Police Fines Major Head – 0055- Police103- Fees, Fines and forfeituresOr 800- Other receipts

8. Refund of Closing Balance,Government Accounts No.________ Treasury freezedon 01.04.2011

8675- Other Deposits withReserve Bank106- States2500- Treasuries

9. Difference of daily receiptsand payments worked outby the Treasury branches asper scrolls

8675- Other Deposits withReserve Bank106- States2500- Treasuries

10. RTO’s Receipts 0041- Taxes on Vehicles102- Receipts under State Motorvehicles Taxation Act

The Treasury officers are, as such, instructed to see that full and correctclassification as indicated above is recorded in the treasury challans giving no chance ofcomplaint from the office of Principal Accountant General.

_________________________________________________________

473

PART-V

474

PART- VChapter 17

CONTINGENCY FUND

17.1.0 The Contingency Fund is in nature of imprestat the disposal of the Head of the State.Advances made from and out of this Fundhave to be recouped to it. Financialrequirement for such recoupement has to beadequately provided for in the revisedestimates. It may be noted that advances fromthe Fund are made for meeting expenditureon New Services not envisaged in the budgetof a year such as making payments to satisfydecrees issued by the courts. Thus, whilemaking estimates for these recoupments allthe details are already known. Sometimes itmay happen that there are possibilities ofarranging funds required for the purposethrough re-appropriation as a result of savingsavailable in a Grant. In such situations a tokenamount is included in the SupplementaryBudget of the Government with explanationthat the remaining amount is being arrangedthrough the process of re-appropriation offunds.

17.2.0 J&K Contingency Fund Act, 1957, the rulesmade there under and instructions issuedfrom time to time by Finance Department inthe maintenance of accounts of the Fund areappended at the end of this Part of theManual.

_______________________________________

475

CHAPTER 18

SYSTEMS TO ENSURE CORRECTCLASSIFICATION OF EXPENDITURE /RECEIPTS AND TO CHECK LEGITIMACYOF EXPENDITURE INCURRED

18.1.0 Appropriation Accounts

18.1.1 As soon as possible after the close of thefinancial year, Controlling Officers shouldobtain from Disbursing Officers statements ofexpenditure incurred during the year undervarious units of appropriation and should dealat once with cases in which expenditure is inexcess of allotments or far below the revisedestimates. The causes of the latter, if they arelikely to occur every year, should be noted forguidance in framing Budget estimates infuture. In case of expenditure in excess ofallotment of funds, disciplinary action shouldbe initiated against the defaulters.

18.1.2 When the final figures are obtained from theAccountant General, any discrepancies withthe departmental figures should be examined,and steps taken to remove the causes of suchdiscrepancies, if possible. The ControllingOfficers should then decide what action forenforcing responsibility is required againstDisbursing Officers who have exceeded theirallotments (if any). Controlling Officer shouldalso prepare explanations for use before thePublic Accounts Committee:-

476

a) if the voted grants have beenexceeded;

b) if units of appropriation have beenexceeded without reappropriationhaving been made.

18.1.3 In order to enable the Accountant General, tosubmit the Appropriation Accounts and AuditReports to the Comptroller and AuditorGeneral in time, it is essential that theControlling Officers should bear in mind thetime factor prescribed for giving materials tothe communications relating to theAppropriation Accounts. They should betreated as immediate and final replies shouldbe sent to the Accountant General within thetime-limit and in no case should they remainunanswered for more than two months.The submission of belated replies to theAccountant General hampers the progress ofcompilation of the Appropriation Accounts inthat office and consequently delays theirpublication and presentation to theLegislature. The delay in submitting replies orfurnishing incomplete and inadequatematerials compels the Accountant General toomit many explanations to which the PublicAccounts Committee take exception. TheAppropriation Accounts and the Audit Reportfor the year should generally be madeavailable to the Legislature before thediscussion of the Budget for the subsequentyear starts i.e. by February. Unless the timefactor is adhered to by the ControllingOfficers, it will not be possible to present thedocument in time to the Legislature.

477

The following instructions should becarefully observed by all heads ofdepartments and Controlling Officers:-

i. Explanations for variations shouldbe concise, accurate and fullyinformative and should containinformation as to whether thevariation was inevitable andwhether it could not be foreseen;

ii. Vaguely worded phrases such as“original provision provedinsufficient or excessive”, “basedon progress of actuals, etc.”should be avoided;

iii. It should be specifically stated whythe original provision provedinsufficient or excessive and howand why the actuals varied fromthe estimates;

iv. If the variation is due to more thanone cause, the amount due toeach cause should be stated.

18.1.4 The Comptroller and Auditor General presentsto the Governor every year the AppropriationAccounts and the Finance Accounts for theprevious year, with the audit report thereon, tobe laid before the State Legislative Assemblyunder Article 151 (2) of the Constitution ofIndia. On their receipt, the Finance Ministerwill place them on the table of the LegislativeAssembly and move their publication. Afterthe motion is approved, the AssemblySecretariat takes steps to place theAppropriation Accounts, the Finance Accountsand the Audit Reports thereon before thePublic Accounts Committee of the Assembly.

478

18.1.5 The Appropriation Accounts, the FinanceAccounts and the Audit Report of theComptroller and Auditor General of India aresupplied to the Controlling Officers by theFinance Department. These are otherwisealso available on website: “http//agjk.nic.in”.On receipt of these documents eachControlling Officer should examine them andnote special comments, if any, and shouldalso be ready with explanation to giveevidence in case the Public AccountsCommittee wishes to examine the ControllingOfficer at any time after one month fromthe date of presentation of Appropriation andFinance Accounts to the Legislature.Controlling Officer should also furnishinformation which the Finance Department orthe Public Accounts Committee require ofhim/her for the examination of the report bythe Committee within a period of one monthunless circumstances warrant a longer periodand even in such cases, the Committeeshould be appraised of the latest position fromtime to time.

18.1.6 Objective of Appropriation Accounts: Theobjective of the preparation of AppropriationAccounts and the Audit Report thereon is topresent to the Legislature the AuditedAccounts of all the expenditure incurredduring a financial year, separately for eachgrant, with the more important observationswhich the Audit Officer consider it necessaryto make as a result of their investigations. Theappropriation accounts have been describedas the coping stones of the financial structureof the year. The Audit Report on theAppropriation Accounts embody thecomments of Audit on losses, nugatoryexpenditure, financial irregularities and other

479

topics of interest as are revealed during thecourse of the audit investigation.

18.1.7 It is difficult precisely to define the meaning ofthe term “Financial irregularity”, but it may belaid down that the vast majority of financialirregularities fall under one or other of thefollowing headings:-

a) Expenditure incurred withoutsufficient sanction of appropriation;

b) Re-appropriation within a grant, notmade in accordance with the rulessanctioned by the Government;

c) Expenditure on a ‘new service” notsanctioned by Government;

d) Breaches of the Jammu and KashmirFinancial Code and rules in otherauthorized codes;

e) Loss of public money or property dueto fraud, neglect or misappropriation;

f) Drawing money from treasurieswhich is not required for immediatedisbursement;

g) Abandonment of revenue withoutproper sanction;

h) Any irregularity connected with acontract such as:-

i. placing of a contract withoutobtaining competitivetenders in an open andpublic manner;

ii. acceptance withoutadequate reason of a tenderother than the lowest;

iii. inadequate scrutiny oftendered rates beforeacceptance;

480

iv. unsuitability of the form ofcontract;

v. failure to complete allnecessary formalitiesconnected with a contractincluding the obtaining ofadministrative approval andtechnical sanction to theexpenditure beforepermitting the contractor tostart work;

vi. deviation from contractterms in favour of thecontractor;

vii. other omission to enforceconditions of contract suchas those which require thedeposit of security for duefulfillment or the payment ofpenalty for failure to fulfil it.

i) any irregularity connected withpurchases, such as:-

i. purchases which contravenethe orders of the supply ofarticles for the publicservice;

ii. purchases largely in excessof requirements;

iii. purchases of materials ofinferior quality.

j) any extraordinary or apparentlyunnecessary expenditure such as:-

a) payments made as acts ofgrace;

b) compensation paid fordamage sustained;

481

c) payments in excess ofamounts admissible understatute, contract or rules;

d) payments necessitated byfailure to enforce the terms ofcontract;

e) irrecoverable balances ofadvance payments made onaccount of services etc., whichwere ultimately not rendered;

k) any un-economical or apparentlywasteful expenditure due to:-

i) the inception of workswithout adequateinvestigation of their utility orfeasibility;

ii) the fixation of the rents ofthe residential buildings;

iii) other similar causes.

l) any irregularity connected with agrant-in-aid such as neglect:

i) by the sanctioning authority of theconditions precedent to the grant,or (ii) by the grant of conditions,expressed or implied, attached tothe grant by the sanctioningauthority.

m) any instance of the absence ofadministrative regulations andprocedure sufficient to secure aproper and effective check uponmonetary transactions.

482

18.2.0 Reconciliation of expenditure and receipts

18.2.1 The State Government have in consultationwith the Accountant General circulated amongDepartments a time-table according to whichthe departmental representatives by variousDepartments of the Government have to bedeputed to the Audit Office on specific datesfor reconciliation of accounts (both of receiptsand expenditure) booked in their office withthese booked in the Audit Office. The date onwhich the departmental representatives haveto attend the Audit Office, the sections of theAudit Office which are responsible forreconciliation in respect of each item and theprocedure of reconciliation are already issuedfrom time to time by the Audit Office. Aprocedure has been also laid down inconsultation with the Accountant General thatin case where the departmental representativewould have any difficulty in effectingreconciliation according to the datesprescribed, he would bring his difficulties (lackof cooperation or any other difficulty) to thenotice of the branch officer concerned in theAudit Office who should take remedialmeasures. If, however, no proper action wouldbe taken, the concerned Controlling Officershould approach the Accountant General whowill make necessary arrangements to ensurecooperation. These instructions are reiteratedhere for the use of the departmentalrepresentatives who in future should ensurethat they attend the Audit Office on regulardates for reconciliation of accounts. Thequarter-wise programme for reconciliation inthe office of Accountant General is as under:-

483

1st Quarter ……..1st to 15th August2nd Quarter ………1st to 15th November3rd Quarter ………1st to 15th February4th Quarter ……… 1st to 15th June

In order to avoid any inconvenience,Controlling Officers should check with AuditOffice in advance for the dates allotted for theconduct of quarterly reconciliation andaccordingly depute their respectivereconciliation teams to that office. A list ofHeads of Departments /Controlling Officers isplaced as Appendix- 4 at the end of this Partof the Manual.

18.2.2 Nomination of officials for reconciliation: Ineach Department where reconciliation is to bedone, the responsibility should be cast on anofficial to be nominated under intimation toFinance and Audit Departments. Wheresubsequently the official is replaced by another,his name who is to take should also similarly becommunicated. An attempt should, however, bemade to nominate an Accounts Officer or Asstt.Accounts Officer (AAO) for this purpose. Anyother official may be nominated only, wheneven AAO is not available.

18.2.3 The official so nominated will be responsible forreconciliation of the expenditure in accordancewith the prescribed time table in the AuditDepartment and in case any difficulty isexperienced by him in this behalf, he will takethe following action:-

i. If the difficulty is experienced in theAudit Department, he will bring thematter to the notice of the BranchOfficer concerned of the AuditDepartment;

484

ii. If the difficulty is experienced in anoffice other than the AuditDepartment, he should report thematter to the Head of Departmentwith a copy to the FinanceDepartment indicating specificallywhat difficulty has beenexperienced by him in the dischargeof his duties.

18.2.4 If the official fails to discharge his duties, hispay should be stopped forthwith and notdisbursed so long as a certificate is obtained byhim that expenditure figures have beenreconciled. In case of persistent failure on twodifferent occasions, the increment of the officialshould be stopped.

18.2.5 It is expected that the concerned will takeaction strictly in accordance with the foregoinginstructions. Any further reports that thereconciliation has not been done by anyDepartment in time will be viewed byGovernment with displeasure.

18.2.6 All the departments are required to nominatetheir representatives under intimation to theFinance Department in order to enable aregister being maintained by the FinanceDepartment (Accounts & TreasuriesOrganization) of officials responsible for thiswork in all offices so that at any time theresponsibility in this behalf can be specificallylocated.

18.2.7 Procedure of reconciliation: According to theprocedure, the Head of the Department aloneand not the Controlling or the drawing anddisbursing officer will be responsible forreconciliation of the two sets of figures and

485

where there is more than one Head ofDepartment incharge of a grant, thereconciliation will have to be made by theSecretariat Department concerned, who willhave to consolidate the total grant andexpenditure incurred against the same. For thispurpose, the Departments will have to obtainregularly necessary details from theirsubordinate drawing, disbursing and controllingofficers. It is, however, again emphasized thatthe responsibility for reconciliation will rest withthe Head of Department, or the SecretariatDepartment incharge in case of a grant havingmore than one Head of Department. To enablethe Head of Department to reconcile theexpenditure/receipts figures, it will benecessary for him/her to obtainvoucher – wise / challan - wise details ofexpenditure/receipts from the drawing anddisbursing officers and take other action asindicated by the Finance Department from timeto time.

18.2.8 Re-appropriation of Funds: It has been foundthat large savings accrue because the fundsprovided in the budget are not utilized by theDepartments concerned for one reason or theother. Large savings in grants is a financialirregularity which is to be avoided. Also fundsare locked up when provisions are made in thebudget and not utilized and sometimes ithappens that the Departments which can spendfunds profitably do not get them. As a result ofthese savings the Finance Department are notin a position to estimate the ways and meansposition accurately. In order to avoid this, it isnecessary that if as a result of review ofprogress of expenditure it is found that savingsare likely to occur in individual grants, thecontrolling officers and Heads of Departments

486

should immediately informthe Finance Department of such likely savingsand the Finance Department will before theclose of the financial year issue sanctionsaccepting all these savings specifying theindividual primary units of appropriation withinthe grants from which amounts have beensurrendered. When this is done, the detailedappropriation accounts of individual units ofappropriation will be prepared againstappropriations so reduced, which will be treatedas final modified grant.

18.3.0 Coordination of Expenditure

18.3.1 The provision of the Budget Manual in thematter of watching the progress of expenditureare to be followed strictly. As provided in theBudget Manual, it is necessary that after theclose of each month every disbursing officershould forward to the controlling officerimmediately superior to him by the 7th of themonth following that to which the expenditurerelates, an extract of his/her accounts undereach minor and detailed head. The controllingofficer should after consolidating the figuressupplied by his/her subordinate offices send aconsolidated statement to his/her Head ofDepartment by the 15th of the same month. TheHead of Department will consolidate the figuresfor the Department as a whole and add to themthe figures of book adjustments carried out bythe Accountant General and prepare astatement in the same form in duplicate andsend one copy to the administrative Secretariatconcerned and the other to the FinanceDepartment by the end of the same month. Ifthis procedure is strictly adopted by all theDepartments, it will be very easy for the Headof Department concerned to watch the progress

487

of expenditure and obtain necessary sanctionsto re-appropriations, surrenders and extragrants in time and on a realistic basis. He/Shewill also be able to keep a better watch onhis/her subordinate Departments both infinancial and administrative matters.

(Note: For purposes of this paragraph also theAdministrative Secretary concerned will be theHead of the Department in respect of the grantscontrolled by more than one ControllingOfficer).

18.4.0 Draft Paras

18.4.1 Disposal of draft paras proposed forincorporation in the Audit Report:- Draftparas are prepared by the Accountant Generalfor incorporation in Audit Report bringing outsome major topics of interest and irregularitiesnoticed during the course of audit. Before theseare finally incorporated in the Audit Report,these paras are, however, forwarded to theSecretaries to Government concerned forfavour of examination and communication oftheir remarks, if any, within a prescribedperiod which is six weeks. It has generallybeen observed that Departments have not beenable to examine and communicate their viewsto the Accountant General within the time limitspecified above and in many cases eveninterim replies have not been sent for muchlonger durations. It is again stressed upon theDepartments that as soon as draft paras arereceived from the Audit Department in theconcerned Department of the Secretariat,material required for its examination andpreparation of comments thereon should beobtained from the Heads of Departments orsubordinate offices concerned, as the case may

488

be, in order to ensure that a proper reply isprepared at the appropriate level and is sent tothe Audit office within the period prescribed. Ifthis procedure is strictly followed, it is expectedthat many of the draft paras will on receipt ofsuitable explanations from the AdministrativeDepartment be dropped from the Audit Report.

18.5.0 Objections—settlement of.

18.5.1 Audit Objections and Audit InspectionReports:- A constant complaint, both of theAccountant General and the Public AccountsCommittee, has been that adequate attentiontowards these two items has not been given inmost of the cases with the result that itemshave piled up from year to year. A stage comesdue to factor of time limit itself that thesettlement of these objections becomes difficultfor some genuine reasons. The AccountantGeneral, in order to ensure the expeditiousclearance of these objections, forwards to thedepartments half yearly consolidatedstatements indicating the lists outstanding andthe progress of clearance during the previoushalf year. A quite helpful action in this directionwould be for the Departments themselves totake further action to review these cases on thebasis of reports received from the AccountantGeneral with the concerned officers and fix atime schedule in each case for the clearance ofthe objections. A time schedule can beprescribed in each case and proper registersopened to keep a watch of the action taken.When even after a considerable lapse of time,the latest departmental replies are not foundconducive for dropping of Audit InspectionReport paras, Accountant General leaves thetask of taking appropriate administrative actionon such paras to the departments and stops

489

including paras pertaining to a period prior to acertain cut off date in its half yearlyconsolidated statements. It has been observedthat once those paras are taken off the halfyearly consolidated statements, thedepartments become complacent and do notbother to take any further action in the matter.Such a situation is unwarranted anddepartments are advised to take conclusiveaction of dropping them on their administrativeresponsibility or of pursuing them for taking dueaction by subordinate offices before droppingthem finally. FA & CAOs in the departments arecharged with the responsibility of ensuring thesame. A ‘Standing Guard File’ indicatingprocedures to be observed for ensuring speedysettlement of Audit Inspection Reports andtimely disposal of draft paras is placed asAppendix- 5 at the end of this Part of theManual.

18.6.0 Special Audit and InspectionsReports – settlement of objections.

18.6.1 Action for speedy settlement of audit andinspection paras of Special Audit Reportsissued by Directorate of Audit & Inspections willalso be taken, mutatis mutandis, as per theprocedure laid down in the foregoing paras20.5, 20.6 and in the Audit Manual of theDirectorate of Audit & Inspections.

18.7.0 Administrative Inspections

18.7.1 A serious view has been taken by the PublicAccounts Committee about the limited numberof administrative inspections conducted byvarious Departments at different levels. TheCommittee have repeatedly stressed the needfor ensuring that administrative inspection of

490

each office is conducted by the authorityimmediately superior to it at least once a year ifnot more and that copies of such inspectionnotes should be prepared and follow up actionwatched. The procedure have been explainedto the Departments on various occasions and toreiterate briefly it may be stated that all officesof Heads of Departments should be inspectedby the Secretaries to Government at least oncea year in accordance with the circular of theAdministrative Reforms & InspectionDepartment issued in this behalf. In nocircumstances should there be any lapse in thisbehalf as the inspection of Heads ofDepartments by the Secretary to Government isvery necessary to ensure not only the properworking of the Department but also to ascertainthe progress of reconciliation settlement ofaudit objections, physical verifications and otherallied, matters which in course of time comeup before the Public Accounts Committee.Similarly, the Heads of the Departments shouldinspect the offices immediately subordinate tothem and the system of administrativeinspections in all Departments should besystematized in such a fool proof way thatregular and effective annual inspections uptothe lowest administrative unit in eachDepartment are ensured. The administrativeDepartment, in order to ensure this should takesuitable steps by prescribing a firm schedule ofinspection and make it incumbent upon variousofficers of the Departments under theirSecretariat to conduct inspections according tothat time schedule. This would ensure that theinspections are phased over a year and are notallowed to fall into arrears.

491

18.8.0 Stock Verification

18.8.1 Verifications of stock is another item whichrequires constant attention. It is not necessary,as has generally been the impression, that suchverifications should be conducted only at theclose of March each year. The actualrequirement is that physical verifications ofstores should take place at least once a yearand not necessarily at the close of the year. Inthis connection, the proforma in which suchverifications should be conducted and theprocedure to be followed is reproduced asannexure to this brochure. The need for suchregular verifications need not be overemphasized and the Departments shouldensure that such verifications are conductedstrictly according to the procedure laid down inthe Appendix- 6 at the end of this Part of theManual. The Departments can with advantageintroduce a concurrent system of verification incase of large stores as is the procedurefollowed elsewhere.

___________________________________________

492

APPENDICES TO PART- V

APPENDIX- 1(referred in Para 17.2.0)

JAMMU & KASHMIR CONTINGENCYFUND ACT, 1957

--.--Act No. XXIV of 1957(24th September, 1957)

An Act to provide for the establishment andmaintenance of a Contingency Fund for theState of Jammu and Kashmir.

Whereas section 116 of the Jammu andKashmir Constitution provides that theLegislature may by law establish aContingency Fund in the nature of animprest;

And whereas it is expedient to establish sucha Contingency Fund for the State of Jammuand Kashmir.

It is hereby enacted as follows:-1. Short title, extent and commencement

(1) This Act may be called the Jammu andKashmir Contingency Fund Act, 1957.

(2) It extends to the whole of the State ofJammu and Kashmir.

(3) It shall come in to force at once.

2. Establishment of a Contingency Fund

(1) There shall be established for the State ofJammu and Kashmir a Contingency Fund inthe nature of an imprest, called the“Contingency Fund of State of Jammu and

493

Kashmir” and consisting of a sum of [onehundred lakhs ] of rupees withdrawn form theConsolidated Fund of the State.

(2) Such Contingency Fund shall be at thedisposal of the [Governor]; and he shall havethe authority to make advances there fromfor the purpose of meeting any unforeseenexpenditure, pending authorization of suchexpenditure by the State Legislature by lawunder section 82 or section 83 of theConstitution of Jammu and Kashmir.

(3) As often as any such expenditure isauthorized by law as aforesaid, theGovernment shall recoup to the ContingencyFund an amount equal to the advance takenfrom such Fund to meet the expenditure.

3. Power to make rules:-

The Government may, by notification,make rules for the purpose of carryinginto effect the provisions of this Act.

_______________________________________

494

APPENDIX- 2(referred in Para 17.2.0)

JAMMU & KASHMIR CONTINGECY FUNDRULES, 1958

Finance Deptt. Notification No. 109-F of 1958 dated 27th March, 1958

In exercise of the powers conferred bysection 3 of the Jammu and KashmirContingency Fund Act, 1957 theGovernment hereby make the flowingrules;

1. These rules may be called the‘Contingency Fund of Jammu and KashmirRules, 1958.

2. The Contingency Fund of the State ofJammu and Kashmir shall be held onbehalf of the Governor of Jammu andKashmir by the Finance Department.

3. Advances from the Fund shall be madefor the purposes of meeting unforeseenexpenditure including expenditure on anew service not contemplated in theAnnual Financial Statement.

4 Applications for advances from the Fundshall be referred to the FinanceDepartment by the AdministrativeDepartment. The applications shall give:-

(i) brief particulars of the additionalexpenditure involved;

(ii) the circumstances in which provisioncould not be included in the Budget;

495

(iii) the reasons why its postponement is notpossible;

(iv) the amount required to be advancedfrom the Fund with full cost of theproposal for the year or part of theyear, as the case may be; and

(v) the grant or appropriation under whichsupplementary provision will eventuallyhave to be obtained.

5.Supplementary estimates for allexpenditure so financed shall be presentedto the State Legislature at the first sessionmeeting immediately after the advance issanctioned. As soon as the StateLegislature has authorized the additionalexpenditure by including it in anySupplementary Appropriation Act, theadvances made from the Fund shall beresumed to the Fund.

Note 1. – In exceptional circumstances tobe recorded in writing, the supplementaryestimates, when they cannot be presentedto the State Legislature in the ensuingsession, may be so presented at asubsequent session.

Note 2.- While presenting to the StateLegislature estimates for all expenditurefinanced from the Contingency Fund, anote to the following effect will beappended to such estimates.

496

“A sum of `………………… has beenadvanced from the Contingency Fund in………………and an equivalent amount isrequired to enable repayment to be madeto that Fund.”

Note 3. – If the expenditure on a newservice not contemplated in the AnnualFinancial Statement can be met, wholly orpartly, from savings available withinauthorized appropriation, the noteappended to the estimate submitted shallbe in the following form :-

“The expenditure is on a new service. Asum of `………. Has been advanced fromthe Contingency Fund in ……………. Andan equivalent amount is required to enablere-payment to be made to that Fund.

The amount, viz `………………. A part ofthat amount viz `………….. can be foundby the reappropriation of savings withingrant and a token vote only is nowrequired/a vote is require for the balanceviz `…………… only”

6.A copy of the order sanctioning theadvance which shall specify the amount ofgrant or appropriation to which it relates,and give brief particulars by sub-heads andunits of appropriation of the expenditure formeeting which it is made, shall beforwarded by the Finance Department tothe Accountant General, Jammu andKashmir.

6-A.All advances sanctioned from theContingency Fund to meet expenditure in

497

excess of the provision for the serviceincluded in an Appropriation (Vote onAccount) Act shall be resumed to theContingency Fund as soon as theAppropriation Act in respect of theexpenditure on the service for the wholeyear, including the excess met from theadvances from the Contingency Fund hasbeen passed.

An advance obtained from the ContingencyFund for the expenditure on “New Service”during the (Vote on Account) period forwhich adequate provision exists in theAppropriation Bill for the year will standresumed to the Fund as soon as theAppropriation Act for the whole year hasbeen passed by the Legislature andassented to by the Governor.

[The Legislature may be apprised of suchadvances by placing a statement in theprescribed from (Form AA) on the table ofthe House by the Finance Minister showingadvances sanctioned from the ContingencyFund during the “Vote on Account” periodfor expenditure on “New Service” items forwhich necessary provision has been madein the Budget Estimates of that year beforethe Appropriation Bill for the whole year isintroduced in the Legislature. Thisarrangement will however, not apply to theContingency Fund Advances forexpenditure on “New Service” itemssanctioned during the “Vote on Account”period but after the relevant demand forgrant has been passed by the Legislature.]

498

7.A copy of the order resuming theadvance, which shall give reference to thenumber and date of the order in which theoriginal advance was made and to thesupplementary Appropriation Act referredto in rule 5 shall be forwarded by theFinance Department to the AccountantGeneral, Jammu and Kashmir, a copy tothe Department concerned.

8. An account of the transactions of theFund shall be maintained by the FinanceDepartment in Form-A annexed to theserules.

9. Actual expenditure incurred againstadvances from the Contingency Fund ofthe State of Jammu and Kashmir shall berecorded in the account relating to theContingency Fund in the same detail aswould have been shown if it had been paidout of the Consolidated Fund

FORM ‘A’CONTINGENCY FUND OF THE STATE OF JAMMU AND

KASHMIRAmount of the Fund……………………… `……………………

s.no. DateofTransAction

No. andname ofthe grantor app-ropriation

No andDate ofthe ofThe app-licationforadvance

No. andDate oftheOrdermakingTheadvance

Amo-unt ofadva-ce

Supp-lemen-taryAppropri-ationAct pro-vidingfor theaddl.expend-iture

Amo-unt oftheadva-nceresu-med

Bala-NiceAfter’eachtrans-action

InitialsofofficeIncharge

Rem-raks

1 2 3 4 5 6 7 8 9 10 11

Note:1 - The balance should be struck after each transaction.2 - The amount of the advances should be entered in black ink,

when made and in red ink, when resumed.

499

APPENDIX- 3(referred in Para 17.2.0)

CIRCULAR

GOVERNMENT OF JAMMU AND KASHMIR,FINANCE DEPARTMENT

Subject. – Contingency Fund of Jammu and Kashmir.

Attention of all Departments of theSecretariat, Heads of Departments andHeads of Offices is invited to theContingency Fund of Jammu and KashmirRules made under the Jammu andKashmir Contingency Fund Act, 1957 andpublished under Government order No.109- F of dated 27th of March, 1958 andthey are requested to comply strictly withthe provisions of these rules.

2. All Controlling Officers are requested toobtain from the Disbursing Officersconcerned, the particulars of actualexpenditure incurred in each month inrespect of the allotments made out of anadvance authorized from the ContingencyFund in the form of the statement enclosedas Form ‘C’ to this Circular. All theparticulars received from the DisbursingOfficers as above should be got typedseparately in respect of each advance inthe above form by the Controlling Officersconcerned and copies thereof should besent to the Finance Department and theAccountant General, Jammu and Kashmirby the 10th of the month following themonth to which the report relates.

3. On the basis of the information receivedfrom the Disbursing Officers, the Controlling

500

Officers concerned should maintain the formof the Statement ‘B’ attached to thiscircular a monthly account of progressiveexpenditure separately in respect of eachallotment made out of an advance from theContingency Fund. On the basis of theprogress of expenditure in respect of eachallotment as revealed by the above accountthe Controlling Officers should redistribute, ifnecessary, the amount of advance accordingto the requirement of the Disbursing Officers.

4. A monthly account of progressiveexpenditure in respect of each advancefrom the Contingency Fund should also bemaintained by the Controlling Officers inthe above Form ‘B’ and a copy thereofshould be forwarded each to the FinanceDepartment and the AdministrativeDepartment of the Secretariat concernedby the 10th of the month following themonth to which the account relates.

5. On the basis of the figures of monthlyexpenditure incurred out of the advancessanctioned from the Contingency Fundwhich information will be received inaccordance with the instruction inparagraph 4 above the Departments of theSecretariat are requested to forwardreports to the Finance Departmentregarding the actual total expenditure likelyto be incurred against the variousadvances from the Contingency Fund. Thereport may be furnished twice a year, bythe end of June and January, in respect ofthe advances sanctioned during the firsthalf and the second half of the yearrespectively.

501

6. With a view to facilitating the properappreciation of the operation of theContingency Fund Rules, detailedinstructions in this behalf are enclosed asAnnexure “I’ to this Circular. AllAdministrative Departments of theSecretariat and the Heads of Departmentsand the Heads of Offices under them arerequested to study them carefully andfollow them strictly in respect of alladvances from the contingency Fund.

7. In order to ensure correct accounting ofthe expenditure met out of advances fromthe Contingency Fund, instructionscontained in Annexure II hereto should befollowed by all departmental officers.

FORM “AA” Statement showing advances, drawn fromthe Contingency Fund during the “Vote-on-Account” period for expenditure on a “NewServices” for which necessary provisionshad been made in the Budget estimates for______. The advances were later recoupedto the Fund after the Appropriation Act waspassed.

ParticularsOf

services

Name ofDepartment

Amount ofAdvanceFrom the

ContingencyFund

Number andName of

The grant inwhich prov-Ision existsIn the Bu-dget Est-Imates,

with amo-unt of pro-

vision

Brief reasonsWhy the ex-

penditureCould not

be deferredtill the De-mands for

Grants werevoted by theLegislature

1 2 3 4 5

502

ANNEXURE “I”I. GENERAL

Contingency Fund of the State forms aseparate part of the Accounts of the Stateand is distinct from the Consolidated Fundand the Public Account. Expenditure onitems which are unforeseen and unavoidableincluding expenditure on a new serviceshould be met from an advance from theContingency Fund pending approval of theLegislature to such items. The debit to theContingency Fund is only to the extent ofexpenditure incurred out of such advances.No advance from the Contingency Fund canbe sanctioned to cover any expenditurewhich has already been incurred out of theConsolidated Fund. Sanctions authorizingwithdrawals from the Contingency fund lapsewith the close of the financial year. They,however, lapse as soon as theSupplementary Appropriation Act,incorporating, the grants authorized by theLegislature in the first session meeting afterthe advance is sanctioned, is passed.

II. WHEN AND HOW TO APPLY FOR ADVANCEFROM THE CONTINGENCY FUND.

The Administrative Department, whilerecommending to the Finance Departmentproposals involving expenditure which cannotbe met from sanctioned grants or which is ona “new” services should forward along with itsfile, an application in triplicate for an advancefrom the Contingency Fund in accordancewith Rule 4 of the Contingency Fund rules.The reasons why this expenditure could notbe foreseen and why it cannot bepostponed till the necessary approval ofthe Legislature is obtained in its next session

503

should be clearly and convincingly stated. Theclassification of expenditure up to the smallestunit of appropriation viz. the sub-head shouldbe given. Separate applications should bemade for advances required under differentsub-heads. The probable expenditure till theend of the financial year should also bestated. The advance applied for should berestricted to the exact requirements till thenext Supplementary Appropriation Billincorporating the sums required for repaymentof the advance is enacted. In the remarkscolumn, it should be stated whether theexpenditure during the financial year can bemet from savings and whether the scheme isincluded in the Five Year Plan.

III. HOW TO KEEP THE ACCOUNT OF ADVANCE

(a) Administrative Department -- As soon asan advance is sanctioned the branch whichwill prepare the Supplementary Demandrequired to recoup the Contingency Fund,should enter the relevant details in a looseleaf register in the shape of Form ‘B’enclosed to this Circular, by the 10th of everymonth, when the Controlling Officer sendshis report of withdrawals from theContingency Fund in respect of this advancethe relevant entries should be made and thebalance struck. It is the responsibility of theAdministrative Department to watch theprogress of expenditure from theseadvances and to intimate to the FinanceDepartment to cancel, reduce or increase theadvance on the basis of progress ofexpenditure.

(c)Controlling Officer- As soon as an advanceis sanctioned; the Controlling Officer should

504

enter the details in respect of the totaladvance as well as allotments to variousOfficers under him in Form ‘B’ attached.When the Disbursing Officers forward thedetails of withdrawals by the 5th of everymonth, relevant entries should be made inthis register. The total withdrawals in amonth in respect of each advance should beintimated to the Finance Department and theAdministrative Department concerned by the10th of the next month. On the basis ofprogress of expenditure in respect of eachallotment, the Controlling Officer shouldredistribute, if necessary, the advanceamong the Disbursing Officers according totheir requirements. If the amount advancedrequires to be modified, this fact should bebrought to the notice of the AdministrativeDepartment concerned. The ControllingOfficer should also get all the treasury-wisedetails of withdrawals furnished by hissubordinate officers typed in duplicate inForm ‘C’ attached, in respect of eachadvance and forward one copy to theFinance Department and the other to theAccountant General, Jammu and Kashmir,by the 10th of every month.

(c) Disbursing Officer -- When an allotmentfrom the advance from the ContingencyFund is made by the Controlling Officer; theDisbursing Officer should enter the details ina loose-leaf register in the form enclosed asForm ‘C’. Whenever any expenditure isincurred out of the allotment, relevant entryshould be made. The balance should bestruck at the end of every month. By the 5th

of every month details of transactions of theprevious month in respect of eachallotment separately should be sent to theControlling Officer. The Disbursing Officer

505

should in no case exceed the allotment. Aseparate bill should be preferred in respectof any expenditure incurred or any schemeor pay and allowances of additional staffetc., which has been directed to be metinitially by debit to the Contingency Fund.The words “Contingency Fund” should bewritten in bold type in red ink at the top of thebill.

IV. HOW TO RECOUP THE CONTINGENCY FUND

It is the responsibility of the AdministrativeDepartment to recoup the Contingency Fundto the extent it has been expended bypresenting a supplementary demand at thefirst session of the Legislature. The demandshould be restricted to the probablewithdrawal from the Contingency Fund till theSupplementary Appropriation Bill is enactedplus the expenditure that is likely to beincurred thereafter till the end of the financialyear. If the entire amount can be found fromsavings within (i) the same sub-head, or (ii)any other head under the same grant (whichusually is the same as a major head), only atoken Supplementary demand should bepresented. In the case of (ii), necessary re-appropriation orders should be issued assoon as the Supplementary Appropriation Billis enacted and the Finance departmentissues a memorandum to the AccountantGeneral, Jammu and Kashmir, to recoup theContingency fund in respect of theseadvances. In cases where the advance wassanctioned in the previous financial year, theSupplementary demand in respect ofexpenditure incurred till 31st March of thatyear should be under the minor head“Repayments to the Contingency Fund” and

506

should be restricted to the actual amountoutstanding against the Contingency Fundon 31st March in respect of this advance. Forexpenditure incurred during the samefinancial year the Supplementary demandshould be asked for under the regular sub-head to which it is finally debitable.

When the Contingency Fund is thusrecouped by debit to the grants under therelevant head, the fact should be noted atthe time of framing the revised estimates.Any expenditure incurred after the advanceis recouped, should be debited to the regularservice head and not to the ContingencyFund. The transaction in the enclosed form‘B’ and ‘C’ come to a close at this stage andthe words “Recouped” may be written acrossthem in red ink.

FORM “B”

Progressive totals of withdrawals from theContingency Fund.

Number and date of the order sanctioningthe scheme.Subject ….. ….. ….. ……

Number and date of the Order sanctioningthe advance.

Amount of advance sanctioned allotment made out of advance

Designation of Controlling/ DisbursingOfficer at whose disposal the advance/allotment is placed.

507

Major, Minor and Sub-Heads to which theexpenditure is finally debitable.

Month inwhich theexpenditurehas beenIncurred

Amount withdrawn duringthe month

`

TotalWithdrawalstill date

`

Balance inThe advancefrom allotmentmade out ofthe contingencyFund

`

Remarks

1 2 3 4 5

Note 1: On the basis of the reports receivedfrom the Disbursing Officers a progressiveaccount of expenditure should be kept in thisfrom:(a) separately in respect of each of the

allotments made out of an advance fromthe Contingency Fund; and

(b) in respect of each of the advancesauthorized from the Contingency Fund.

Note 2: Balance in the allotment or advancefrom the Contingency Fund, as the case maybe, should be struck after each entry in theaccounts kept in the above form.

Note 3 : A monthly report of the progressiveexpenditure in respect of each advance fromthe Contingency Fund should be forwardedin the above form to the Finance Departmentand the Administrative Department of theSecretariat concerned by the 10th of the nextmonth.No…………...... Date……………..

Forwarded to the Finance DepartmentAdministrative Department.

Signature of the Controlling Officer.

508

FORM “C”

TREASURY-WISE DETAILS OF WITHDRAWALSFROM THE CONTINGENCY FUND

Number and date of the order sanctioningthe scheme.

Subject …………….Number and date of the order sanctioningthe advance.

Amount of Advance sanctioned Allotment made out of advance

Designation of Controlling/ Disbursing Officerat whose disposal the advance/allotment isplaced.

Major, Minor and Sub- Head to which theexpenditure is finally debitable.

DesignatonOf Drwaing

Officers

Name ofTreasuary

VoucherNo.

Date AmountWith drawn

from theContingency

Fund`

Balance

`

Remarks

1 2 3 4 5 6 7

Note 1:- At the end of each month, balancein the allotment should be struck. TheDisbursing Officer should forward to theControlling Officer the details of transactionsof each month in respect of each allotmentout of an advance from the ContingencyFund separately by the 5th of the next month.

509

The Controlling Officer should consolidate induplicate reports from all subordinate officesin respect of each advance in this form andsend the details to the Finance Departmentand the Accountant General, Jammu andKashmir, by the 10th of the next month.

No………………… Date………………..

Controlling OfficerForwarded to the Finance Department Jammu andKashmirAccountant General

Signature of the Disbursing Officer Controlling Officer

510

ANNEXURE II

EXTRACTS FROM FINANCE DEPARTMENTCIRCULAR LETTER NO. FD[VII-31 (6) 4552/68-69DATED 18-04-1970.

---.---Adjustment of advances from ContingencyFund of the state in the accounts.

---.---With a view to ensure correct accounting ofthe expenditure met out of advances fromthe Contingency Fund, the followinginstructions are issued for the guidance ofdepartmental officers:-

(i) The actual expenditure incurred out ofadvances from the Contingency Fund shouldbe recorded under the Major Head“Contingency Fund” in the same details as itwould have been recorded if it had been metout of the Consolidated Fund. For thispurpose, each major head of expenditure(e.g. General Administration, Education,Police, Agriculture etc.) should be treated asminor head subordinate to the Major Head“Contingency Fund”. All bills for suchexpenditure presented at the treasury shouldconspicuously be labeled as pertaining to theContingency Fund, quoting the ordersanctioning the advance from the Fund, andthe usual classification of expenditure on thebills, viz. detailed head, unit of appropriationetc. should also invariably be given by thedisbursing officers. In respect ofP.W.D. and Forest Department disbursingofficers who draw funds by means ofcheques, such classification should be givenin the vouchers concerned and reflectedaccordingly in the monthly accounts.

511

(ii) The Controlling and Disbursing Officersshall maintain a separate record of alltransactions concerned with the expenditureout of the advances from the ContingencyFund in the same form or forms as are usedfor the maintenance of records ofexpenditure out of the Consolidated Fundand in similar details in respect of Major andMinor Heads and units of Appropriation aswould have been operated upon, had theexpenditure been incurred out of theConsolidated Fund. The form or formsreferred to above may, however, be soamplified as to enable the ControllingOfficers to keep a close watch on theprogress of expenditure from and out ofindividual advances from the Fund as also tokeep a record of the details in respect ofrecoupment, when made, of these advancesto the fund.(iii) The actual debit in respect of theexpenditure incurred out of the advancesfrom the Contingency Fund will fall on theConsolidated Fund in the year in whichrecoupment is made.

(iv) When supplementary funds forexpenditure financed initially from theContingency fund are provided byLegislature during the same financial year inwhich the advance was sanctioned anddrawn by debit to the Contingency Fund, theentire expenditure is to be transferred from“Part-II- Contingency Fund” to “Part-I-Consolidated Fund” by minus debit under thevarious heads under the Contingency Fund,such expenditure as is recouped to theContingency Fund during the same financialyear will thus be wiped off from the Fund andonly that expenditure which is not recouped

512

before the end of the financial year willremain outstanding under the ContingencyFund.

(v) When funds for recouping expenditureare provided by Legislature during thefinancial year following that in which it wasincurred, the adjustment will be made bycontra credit to the minor head‘Appropriations from the Consolidated Fundor from any Reserve Fund’. For suchrepayment from Consolidated Fund to theContingency Fund of an advance taken in anearlier year but not recouped the same year,a new minor head ‘Repayment to theContingency Fund’ will have to be openedunder the Major Head concerned.

(vi) The Disbursing Officers of Departmentsrendering compiled accounts monthly to theAccountant General (e.g. P.W.D.,Forest)should carry out the adjustments mentionedabove in their accounts. Such adjustment inrespect of the other Departments will,however, be carried out by the AccountantGeneral under intimation to the Departmentconcerned.

(vii) While submitting the Excesses andSurrenders Statement to the FinanceDepartment for adopting revised estimates,the items of the expenditure financed duringthe year out of the ‘Contingency Fund’should be shown distinctly so that obtainingof the supplementary vote from theLegislature by the Finance Department isfacilitated.

____________________________________________

513

APPENDIX- 4(referred in Para 18.2.1)

List of Major Heads of Departments/Controlling OfficersS.No. Name of the Department Name of the Controlling Officer

1. Director Stationery and Office Supplies J&K

2. General Manager Ranbir Government PressJammu

1. ARI Training Department

(03 controlling officers)

3. General Manager Government Press Srinagar

4. Director Animal Husbandry Jammu

5. Director Animal Husbandry Srinagar

6. Director Sheep Husbandry Jammu

2. Animal /Sheep Husbandry Department

(04 Controlling Officers)

7. Director Sheep Husbandry Srinagar

8. Director Tourism Kashmir

9. Director Tourism Jammu

10. Director SKICC, Srinagar

11. Director Libraries, J&K

12. Director Archives, Archaeology andMuseums, J&K

13. Managing Director J&K TDC

14. Managing Director J&K State Cable CarCorporation

15. Secretary, Royal Spring Golf Course, Srinagar

16. Principal, Jawahar Institute ofMountaineering

17. Gulmarg Dev. Authority

18. Pahalgam Dev. Authority

19. Sonamarg Dev. Authority

20. Kokernag Dev. Authority

21. Wullar-Manasbal Dev. Authority

22. Aharbal Dev. Authority

23. Yousmarg Dev. Authority

24. Doodpathri Dev. Authority

25. Verinag Dev. Authority

26. Leh Dev. Authority

27. Kargil Dev. Authority

28. Zanaskar Dev. Authority

29. Patnitop Dev. Authority

30. Bhaderwah Dev. Authority

31. Kishtwar Dev. Authority

32. Poonch Dev. Authority

33. Rajouri Dev. Authority

34. Lakhanpur-Sarthal Dev. Authority

35. Surinsar-Mansar Dev. Authority

36. Secretary J&K Academy of Art, Culture &Languages

3. Tourism Department

(30 Controlling Officers)

37. Executive Director, Mubarak Mandi HeritageSociety, Jammu

514

38. Director General Police J&K

39. Director General Fire & Emergency Services,J&K

40. Addl. Director General Home Guards /CD/Auxiliary Police, J&K

41. Inspector General Prisons, J&K

42. Director Forensic Science Laboratory J&K.

43. Director Sainik Welfare Board J&K

4. Home Department(07 Controlling Officers)

44. Chairman, State Advisory Board (underPublic Safety Act) Jammu.

45. Director Agriculture Jammu

46. Director Agriculture Kashmir

47. Director Rakh & Farms

48. Director Horticulture Jammu

49. Director Horticulture Kashmir

50. Director, Horticulture (P&M)

51. Director Command Area Development,Jammu

52. Director Command Area Development,Kashmir

53. Director Sericulture, J&K

54. Registrar, Cooperative Societies J&K

55. Director Floriculture Jammu

56. Director Floriculture Kashmir

57. SKUAST, Jammu

58. SKUAST, Kashmir

59. J&K State Agro Industries DevelopmentCorporation

60. J&K Horticulture Processing & MarketingCorporation.

5. Agriculture production Department

(17 Controlling Officers)

61. J&K State Advisory Board for theDevelopment of Kissans

62. Principal Government Medical CollegeSrinagar

63. Principal Government Medical CollegeJammu

64. Principal Government Dental CollegeSrinagar

65. Principal Indira Gandhi Government DentalCollege Jammu

66. Director Health Services Kashmir

67. Director Health Services Jammu

68. Administrator Associated Hospitals Srinagar.

69. Administrator Associated Hospitals Jammu.

70. Director Indian System of Medicines J&K.

71. Director Family Welfare J&K

6. Health & Medical EducationDepartment

(11 Controlling Officers)

72. Controller Drug and Food ControlOrganisation J&K.

515

73. Pr. Chief Conservator of Forests J&K

74. Director Fisheries, J&K

75. Director Environment & Ecology, J&K

76. Director State Forest Research Institute J&K

77. Director Soil Conservation J&K

78. Project Chief IWDP Hills-II J&K

79. Director Social Forestry Department J&K

80. Director Forest Protection Force J&K

81. Chief Wildlife Warden J&K

82. Chairman State Pollution Control Board.

7. Forest Department

(11 Controlling Officers)

83. Managing Director SFC J&K

84. Registrar General High Court J&K

85. Advocate General J&K

86. Secretary J&K Legislative Assembly

87. Secretary J&K Legislative Council

88. Secretary State Human Rights Commission.

89. Secretary, J&K Accountability commission.

90. Presiding Officer Industrial Tribunal LabourCourt.

91. Director Litigation Jammu.

92. Director Litigation Kashmir.

93. Presiding officer TADA/POTA Court Srinagar

94. Presiding officer MACT Tribunal Jammu.

95. Presiding officer, Transport Appellate Court,Srinagar / MACT Srinagar.

8. Department of Law, Justice andParliamentary Affairs.

(13 Controlling Officers)

96. State Legal Authority J&K.

97. State Electricity Regulatory Commission J&K

98. Development Commissioner Power, J&K

99. CE, EM& RE Wing Kashmir

100. CE, EM& RE Wing Jammu

101. CE, System & Operation Jammu

102. CE, System & Operation Srinagar

103. CE, Electric Planning & Design, J&K

104. CE, Electric Procurement & MaterialManagement J&K

105. CE, Commercial & Survey, J&K

106. Financial Organisation, Power Dev.Department

107. SE, Training Testing Inspection andCommissioning (TTIC)

9. Power Development Department

(12 Controlling Officers)

108. Accounts Officer, Migrant Cell PDD

516

109. Director, Social Welfare DepartmentKashmir/Jammu

110. Secretary, Backward Classes CommissionJ&K.

111. Secretary, Advisory Board for PahariSpeaking People J&K

112. Secretary, Scheduled Caste Advisory BoardJammu.

113. Secretary, Gujjar and Bakerwal AdvisoryBoard J&K.

114. Secretary, State Commission for WomenJ&K.

115. M.D, SC/ ST/ BCs Development CorporationJammu

116. M.D, Womens’ Development Corporation /Director, Madri Meharban Women and ChildWelfare Institute Miskeen Bagh Srinagar.

117. Executive Director/ Secretary, State SocialWelfare Board J&K

118. Executive Director/ Secretary, Social WelfareBoard J&K

10. Social Welfare Department

(11 Controlling Officers)

119. Executive Director Rehabilitation CouncilSocial Welfare Department J&K.

120. Director Industries & Commerce Jammu.

121. Director I&C Kashmir

122. Director Geology & Mining

123. Director Handicrafts Dev. Deptt.

11. Industries and Commerce Department

(05 Controlling Officers)

124. Director Handloom Dev. Deptt.

125. Director School Education, Jammu.

126. Director School Education , Kashmir

127. Deputy Director General, NCC

128. Director, Libraries/Research, J&K

12. Education Department

(05 Controlling Officers)

129. Chief Accounts Officer, Migrant Cell.

130. Chief Engineer I&FC Department, Jammu

131. Chief Engineer I&FC Department, Kashmir.

132. Chief Engineer, PHE Department, Jammu.

133. Chief Engineer, PHE Department, Kashmir

13. PHE/ I&FC Department

(05 Controlling Officers)

134. CE Ravi Tawi Irrigation Complex, Jammu

135. Financial Commissioner (Revenue)

136. Relief and Rehabilitation Commissioner(Migrants), J&K

137. Provincial Rehabilitation Officer

138. Chief Executive Officer FC (R)

139. Special Officer Auqaf

14. Revenue Department

(06 Controlling Officers)

140. Custodian General

517

141. Chief Engineer R&B Jammu

142. Chief Engineer Mechanical EngineeringDepartment Kashmir

143. Chief Engineer R&B Kashmir

144. Chief Engineer Mechanical EngineeringDepartment Jammu

145. Director Stores Procurement DepartmentJammu.

146. Chief Engineer Design Inspection and QualityControl Jammu.

147. Chief Engineer PMGSY Kashmir

15. 16 Public Works (R&B) Department

(08 Controlling Officers)

148. Chief Engineer PMGSY Jammu.

149. FA & CAO GAD

150. CAO Vigilance

16. General Administrative Department(FA & CAO’s)(03 Controlling Officers)

FA & CAO GAD is the controlling officer forall the Administrative Departments of CivilSecretariat

151. Accounts Officer Civil Aviation

152. Principal S.P. College

153. Principal Amar Singh College

154. Principal Govt. College of Edu. Srinagar.

155. Principal Govt. Women College M.A. Road,Srinagar

156. Principal Govt. College for WomenNawadakal

157. Principal Govt. Degree College Bemina

158. Principal Govt. College Ganderbal

159. Principal Govt. College Beerwah

160. Principal Govt. College Budgam

161. Principal Govt. College Bandipore

162. Principal GDC Boys Anantnag

163. Principal Govt. College for WomenAnantnag.

164. Principal Govt. College Dooru

165. Principal Govt. College Bijbehara

166. Principal Govt. College Kulgam

167. Principal GDC Boys Pulwama

168. Principal Govt. College for Women Pulwama

169. Principal Govt. College Tral

170. Principal Govt. College Shopian

171. Principal GDC Boys Baramulla

17. Higher Education Deptt.

Kashmir Division(35 Controlling Officers)

172. Principal Govt. College for Women Baramulla

518

173. Principal Govt. Degree College for BoysCollege Sopore

174. Principal Govt. College for Women Sopore

175. Principal Govt. Degree College Uri

176. Principal Govt. Degree College Handwara

177. Principal Govt. Degree College Kupwara

178. Principal Govt. Degree College Pattan

179. Principal Govt. Degree College Gurez

180. Principal Govt. Degree College Uttrasoo

181. Principal Govt. College for Women Srinagar

182. Principal Govt. Degree College Kokernag

183. Principal Govt. Degree College Tanghdar

184. Principal Govt. Degree College Sogam

185. Principal GDC Khan Sahib

186. Principal Govt. Degree College Kellam

187. Principal GGM Science College

188. Principal Govt. M.A. M. College

189. Principal Women College Gandhinagar

190. Principal SPMR Commerce College

191. Principal Women College Paradeground

192. Principal Govt. College Paloura

193. Principal Govt. College of Education

194. Principal GCET, Jammu

195. Principal Govt. College R.S. Pura

196. Principal Govt. College Akhnoor

197. Principal Govt. College Samba

198. Principal GDC Boys Kathua

199. Principal Women College Kathua

200. Principal Govt. College Hiranagar

201. Principal Govt. College Basohli

202. Principal Govt. College Billawar

203. Principal Govt. College Poonch

204. Principal Govt. College Mendhar

205. Principal Govt. College Rajouri

206. Principal Govt. College Thanamandi

207. Principal GDC Boys Udhampur

208. Principal Women College Udhampur

209. Principal Govt. College Ramnagar

210. Principal Govt. College Reasi

Jammu Division(36 Controlling Officers)

211. Principal Govt. College Doda

519

212. Principal Govt. College Bhaderwah

213. Principal Govt. College Kishtwar

214. Principal Govt. College Ramban

215. Principal Govt. Degree College Chatroo

216. Principal Govt. Degree College Khilotaran

217. Principal Govt. College Banihal

218. Principal Govt. College Nowshehra

219. Principal Govt. College Dharmari

220. Principal Govt. College Budhal

221. Principal Govt. College Bani

222. Principal Govt. College Bishnah

223. Director Technical Education, J&K, Jammu.

224. Director State Gazetteers

225. Director Youth Services & Sports

226. Principal Govt. College of Physical Education,Ganderbal

227. Dy. Director Youth Services & Sports,Kashmir.

18. Technical Education.

(06 Controlling Officers)

228. Dy. Director Youth Services & Sports,Jammu.

229. Transport Commissioner19. Transport Department

(02 Controlling Officers) 230. Director State Motor Garages

231. Director Employment J&K, Jammu.20. Labour and Employment Department

(02 Controlling Officers) 232. Labour Commissioner J&K, Jammu.

233. Director, Urban Local Bodies Jammu.

234. Director, Urban Local Bodies Kashmir.

235. Chief Engineer, UEED, J&K

236. Chief Architect, J&K.

237. Chief Town Planner, Jammu.

21. Housing & Urban DevelopmentDepartment

(06 Controlling Officers)

238. Chief Town Planner, Kashmir.

239. Director Rural Development DepartmentJammu.

240. Director Rural Development DepartmentKashmir.

241. Director Rural Sanitation J&K

22. Rural Development Department

(04 Controlling Officers)

242. State Nutrition Officer J&K.

243. Director CA&PD Jammu

244. Director CA&PD Kashmir

23. CA & PD, Department.

(03 Controlling Officers)245. Controller Legal Metrology

520

246. Resident Commissioner New Delhi

247. Assistant Resident Commissioner Mumbai

248. Director Hospitality Protocol

249. Toshakhana Officer J&K

24. Hospitality & Protocol

(05 Controlling Officers)

250. Director Estates, J&K

251. Chief Executive Officer JAKEDA

252. Additional Director (S&T)

25. Science and Technology Department

(03 Controlling Officers)253. Project Director IREP

26. Planning and DevelopmentDepartment

(01 Controlling Officer)

254. Director Economics and Statistics.

255. Dy. Commissioner/CEO LAHDC Leh27. Ladakh Affairs Department

(02 Controlling Officers) 256. Dy. Commissioner/CEO LAHDC Kargil

28. Director /Secretary to GovernmentSKIMS Srinagar(01 Controlling Officer)

257. Director/ Secretary to Government SKIMSSrinagar.

258. Director General Accounts & Treasuries

259. Joint Director Accounts & TreasuriesKashmir.

260. Joint Director Accounts & Treasuries Jammu.

261. Director J&K Funds Organisation

262. Joint Director Funds Kashmir

263. Joint Director Funds Jammu

264. Director Audit & Inspection

265. Chief Accounts Officer (Resources) FinanceDepartment

266. Commissioner Commercial Taxes

267. Commissioner Stamps

268. Excise Commissioner

29. Finance Department

( 12 Controlling Officers)

269. Registrar Sales Tax Tribunal

521

APPENDIX- 5(referred in Para 18.5.1)

STANDING GUARD FILE

A) Speedy Settlement of Audit Objections

1. The responsibility for the removal ofobjections and the settlement of other pointsraised in audit devolves primarily upondisbursing officers, heads of offices, andControlling authorities.

2. Audit objections and Inspection Reports areinitially forwarded normally to the Heads of theoffices concerned. Irregularities of a seriousnature such as defalcation, culpable negligenceetc. will be reported by the Accountant General,as soon as they are discovered, to theSecretary of the Department by name. Thelatter should give urgent attention to therectification of the defect or remedial action tobe taken and inform the Accountant General asquickly as possible of the action Governmentare taking or propose to take.

3. Responsibility for ensuring prompt attentionto audit objections should be place upon adesignated senior officer in each Department.

4. To enable the Department to have an idea ofthe objections/Inspection Reports pendingagainst it as well as the offices attached orsubordinate to it, the Accountant General willsend half yearly lists of objections/InspectionReports outstanding for over six months.

522

These lists will be sent to theDepartments by the 15th June and 15th

December each year in respect of objectionsetc. raised during April to September andOctober to March and not settled by the 2nd ofMarch and September respectively. Forinstance, the half yearly list of objections etc.raised during the period from April toSeptember 2011 and not settled by the end ofMarch, 2011 shall be sent to the Department bythe 15th June, 2012. Similarly, the half yearly listof objections etc. raised during the period fromOctober, 2011 to March 2012 and not settled bythe end of September, 2012 shall be sent to theDepartment by the 15th December, 2012.

5. Manner of preparation of half yearly lists. (i)All old items which are settled in a half year willbe omitted and new items added in the nexthalf year. In respect of the old items whichremain unsettled at the time of the issue of thenext list only a reference to the list in which theitems are originally included will be given. (ii)The half yearly list will be compiled office orDepartment wise in duplicate. (iii) Actionrequired to be taken against each item of thelist will be indicated in the list. (iv) The halfyearly list will contain relevant details such asparticulars of objections (which are outstandingfor over 6 months) period to which they relate,money value of the objections and replies of theadministrative authorities, together with theirlatest references etc.

6. The Departments should obtain periodicalreturns from their own Branches and Sectionsand attached and subordinate offices showingthe particulars of outstanding objections andthe reasons for their non-settlement so that

523

they may check up these returns with the halfyearly lists received from Audit and take suchaction as may be necessary in thecircumstances of each item.

7. A copy of the half yearly lists of outstandingobjections/Inspection Reports will be forwardedto the Financial Advisor & Chief AccountsOfficer of the Department.

8. On receipt of the lists from Audit, theadministrative Departments shall takenecessary steps to settle the outstanding auditobjections expeditiously in consultation withtheir Financial Advisors. Special care should bebestowed on such items as involve thepossibility of recurring loss unless quickremedial action is taken. The replies in respectof audit objections may be sent by theDepartments direct to Audit except in caseswhere the objection relates to views alreadyexpressed by the Finance Department orrelates to the exercise of financial powers notdelegated to the administrative Department ordiscloses any need for amending rules of afinancial nature, in which case draft replies willbe shown to the Finance Department beforeissue.

9. The Departments might also arrange thatoutstanding of objections are periodicallydiscussed by the administrative authorities inthe subordinate offices as well as in theDepartments with the representatives of Auditat appropriate levels. This would facilitate abetter understanding of each other’s view pointand lead to a quicker settlement of objections.

524

10. The Departments should intimate to Audit,half yearly the progress of settlement of auditobjections. These progress returns should besent by the 15th September (in respect of the listreceived from Audit by the 15th June) and bythe 15th March following (in respect of thelist received by the 15th December). The FA &CAOs in the Departments shall also maintain aregister containing the items of outstandingobjections, as reported by audit authorities,both in respect of the Secretariat proper and inrespect of the attached and subordinate offices,and indicate the progress of action taken oneach item. The Register will be open toinspection periodically by the accredited officerof Finance Department.

11. The progress of settlement of auditobjections included in the half yearly lists sentby audit officers should be invariably reviewedby the Financial Adviser in the periodicalmeetings held to review the progress ofexpenditure and the progress indicated inminutes of the meeting. A copy of such minutesshall be forwarded to the Finance Department.

12. General: Each Department should fix atarget date for clearance of outstanding auditobjections and see that the date is adhered to.

13. The Executive Officers should, whileinspecting the subordinate offices, make it apoint to enquire about the disposal of auditobjections and improvements effected in theprocedure as a result thereof.

14. In every case in which an audit objectionhas been raised concerning irregular claims oraction of officers, the officers concerned with

525

the alleged irregularity should never themselvesdeal with the objection but should submit thepapers to higher authorities.

15. Delegation of powers to regularize minorirregularities: In all cases of audit objectionsarising out of breaches of rules and regulations,efforts should first be made to assess theloss/financial implication, if any, involved in theirregularity, where the loss to Government orthe financial implication involved can beassessed, the Heads of Departments maythemselves regularize such irregularitiesprovided:

i. the regularization does not involve theexercise of powers in excess of thosedelegated under the said Rules;

ii. the irregularity does not disclose adefect in the rule or regulation, theamendment of which requires theorders of a higher authority;

iii. there has not been any seriousnegligence on the part of someindividual Government officer orofficers which may possibly call fordisciplinary action requiring the ordersof a higher authority.

iv. The Head of the Department is nothimself responsible for the irregularity.

Similarly, Administrative Departments may alsoexercise this power. However, all cases wherethe loss/financial implication involved exceeds` 5,000 should continue to be referred to theFinance Department.

526

B) Disposal of Draft Audit Paragraphs

16. The Branch Officers concerned in theSecretariat should ensure that all receipts,which disclose existing or likely audit objectionsand draft paragraphs for inclusion in the AuditReport, are invariably shown to theSecretary/Special Secretary concerned in dak.

17. Irregularities discovered in the course ofaudit which are likely to find place in the AuditReport will be discussed by an officer of thestatus of Dy. Accountant General or above withthe Special/Additional Secretary dealing withsubject in the Department concerned. If thesediscussions do not result in the settlement ofthe difference and the removal of theobjections, the matter will be taken up by theAccountant General with the Secretary of theDepartment. The Special/Additional Secretaryshould keep the Secretary informed from timeto time, of the disposal of these objections togive the latter an opportunity to intervene, ifnecessary and expedite a settlement.

18. As soon as the Accountant General decidesthat a case should be mentioned in the AuditReport, he would send the draft para to theSecretary concerned for verification andacceptance of facts.

19. The draft paras should be disposed of asexpeditiously as possible and the comments ofthe Department intimated to Audit within aperiod not exceeding six weeks. If no final replyis sent within this prescribed period of sixweeks, the paragraphs as prepared by Auditwill be treated as final and included in the AuditReport.

527

Facts coming to the notice of theDepartments after the draft para has beenfinalized by Audit should also be reported toAudit for due verification and posting the PublicAccounts Committee with up to dateinformation at the time these cases are takenup for consideration by the Committee.

20. It is not necessary that the contents or thelanguage of the draft paragraphs should bespecifically agreed to or that there should beany prior agreement as to what should bementioned in the Report, but it is desirable that,on the facts as stated, there should be nodispute, though the conclusions and opinionswill be those of Accountant General. This doesnot, however, preclude a Secretary from takingup with the Accountant General, the desirabilityor otherwise of mentioning particular cases inthe Audit Report.

21. The names of the Departments,Organizations and parties connected with theirregularities may be mentioned by Audit in thedraft Audit paragraphs except in cases in whichthe comments bring out some fraud ormisappropriation on the part of an officialagainst whom criminal proceedings have beeninitiated and any indication of the Departmentor Organization would give a clue to his identity.The names of the private firms etc. will not bementioned in the Report where the facts of thecase are likely to be the subject matter oflitigation, etc. The names of individuals andofficials will not, however, be mentioned andonly the designation of the concerned officialswill be indicated. In cases in which the mentionof the names in question is not considereddesirable, the same should be brought to the

528

notice of the Audit officer concerned well intime.

22. Final replies to Audit in respect of draft auditparas and audit note will invariably be shown tothe Finance Department before they areforwarded to audit.

23. Prompt action on irregularities reportedin the Audit Report of the Comptroller andAuditor General of India to theAppropriation Accounts and FinanceAccounts:- Whenever irregularities arementioned in the Audit Report, action to rectifythem should be taken in advance of theirconsideration by the Public AccountsCommittee, so that the Committee are informedof the final position and not merely told that thematter would be looked into.

24. The representatives of the Departmentsshould have in their possession all the factsrelating to the cases under examination whenthey appear before the Public AccountsCommittee and, for this purpose, theDepartments should take necessary action wellin time by way of obtaining explanations,comments, etc. on the irregularities cited in theAudit Report.

25. Explanations and observations on the AuditReport by the Executive should always besubmitted to the Public Accounts Committee inthe first instance and should not be laid on theTable of the House.

26. Secretariat of Jammu and KashmirLegislative Assembly has notified in May, 2003,the “Rules of Procedure (Internal Working) ofthe Public Accounts Committee” as

529

supplemented to the provisions contained inRules 343 and 344 of the Rules of Procedureand Conduct of Business in the Jammu andKashmir Legislative Assembly. Some of theserules describing the kind of assistance variousauthorities and officers of Government and theAccountant General are supposed to render tothe Committee in the conduct of their business,are discussed briefly as under:-

i. As required under Rules 4 and 10, theAccountant General or in his absence hisdeputy, has to attend all the meetings ofthe Committee to assist them by pointingout the important items in the Accountsand Audit Report entrusted to them forscrutiny and advising them on the variouspoints that may arise during subsequentdiscussions. The Comptroller and AuditorGeneral of India may also attend anymeeting of the Committee and offersimilar advice.

ii. Under Rule 6, Committee can call uponDepartments to submit notes,memoranda, etc. either in pursuance ofaction taken on the recommendations ofthe Committee or in reference to the pointor points on which information is calledfor by the Committee or a memberthereof and such notes and memorandaare required to be shown first to theAccountant General with all connectedpapers for purpose of verifying all thefigures and statements of facts containedtherein before their submission to thePublic Accounts Committee.

iii. It is provided in Rule 10 that Committeemay call the Secretaries to theGovernment and such other officers to

530

give evidence before them in person. Ifthey are unable to attend in person forunavoidable reasons, they will deputesuitable representatives with thepermission of the Chairman. Officerssummoned to give evidence may, ifallowed by the Chairman, bring suchother officers for their assistance as theyconsider necessary. The Committee mayinvite Secretary to Government, FinanceDepartment whenever necessary toadvice them on the points that may arise.Further, like Accountant General, DirectorAccounts & Treasuries is also required toattend all the meetings of the Committee.

iv. Under provisions of Rule 14, theCommittee is empowered to require theattendance of persons or the productionof papers or records, if such a course isconsidered necessary for the dischargeof their duties.

v. It is envisaged in Rule 17 that if aDepartment is to be represented by morethan one officer and desires that thegrants with which a particular officer isconcerned should first be considered,information shall be given in advance tothe Committee regarding the order inwhich the particular grants are desired tobe dealt with.

vi. Rule 29 ibid further envisages that on thebasis of the replies given by theDepartments etc., the Committee Branchof the Legislative Assembly Secretariatshall bring up to date the “Statementshowing action taken or proposed to betaken on the recommendations of the

531

Public Accounts Committee” and arrangeto circulate it to the Members of theCommittee a week before the date ofcommencement of the meeting of theCommittee for the examination ofAccounts and Report. The statementshall also be accompanied by copies ofthe Memoranda, Notes or other literatureforwarded by the Departments etc.stating the action taken by them on theparticular item/items with which they areconcerned.

27. Draft paras relating to StateUndertakings: The draft paragraphs forinclusion in the Audit Report in respect of casesrelating to the Public Undertakings will also beforwarded to the Secretary of the Departmentconcerned and copies endorsed simultaneouslyto the Management of the concern. Theprocedure explained above in respect ofdisposal of draft paras will apply in these casesalso.

C) Continuance of Payments Objected to byAudit28. If any payment of a recurring nature isconsidered inadmissible by audit, the auditpoint of view should ordinarily be provisionallyaccepted by the administrative authority andfurther payments on that account should notnormally be made till a final decision is obtainedfrom the competent authority.

29. In exceptional cases where theadministrative authorities consider that, in thepublic interest, the continuance of suchpayments pending a final decision by thecompetent authority is absolutely necessary,payments should be made provisionally and

532

subject to recovery; the payee being soinformed. The fact that payments are beingcontinued in spite of the audit objection shouldalso be reported to the authority to whom thecase is referred for a final decision.

533

APPENDIX- 6(referred in Para 18.8.1)

Instructions regarding Physical Verification ofStores

(i) A physical verification of all stores should beconducted at least once a year. The workshould be entrusted to a responsible officerother than the Store-keeper or the personresponsible for the custody of the stores. Theofficer entrusted with the work of physicalverification should be fully conversant with theclassification, nomenclature or specification ofthe particular class of stores to be verified.

(ii) An essential pre-requisite for a successfulstores verification is the maintenance of Storeand Stock books and other connected recordsupto date. Unless the books are written up andall transactions upto the date of verificationrecorded therein, it will be difficult to comparethe book and ground balances and work out thesurpluses or deficiencies.

(iii) While stock verification is in progress, allreceipt/issue transactions in respect of itemsactually taken up for verification by the StockVerifier will remain suspended until the processof counting of such items is completed.

(iv) While stock books, showing the book balancesof stores to be verified should not be madeavailable to the Stock Verifier. Instead acomplete list of stores held indicating the serialnumber, location, Part No. Nomenclature, etc.of each article (without giving the book balance)duly signed by the Store-keeper and his Headof Office should be given to the Stock Verifier intriplicate. These lists will be called ‘StockVerification Sheets’. A specimen of the form ofStock Verification Sheet is given at the end,and should be made use of, with suitablemodification, where necessary, depending on

534

the nature of stores handled by a particularoffice/Department. The Stock Verifier will recordthe quantity, weight or number, as the casemay be, as physically verified by him, againsteach article in column 5 of the StockVerification Sheet. Separate Stock VerificationSheets should be prepared for each categoryand make of stores.

(v) The stores should be physically verified by theStock Verifier in the presence of the Store-keeper or his representative by actual countweighment or measurement, as the case maybe, and the result of verification recorded in thestock sheet. When stores of the samedescription are kept at more than one place,physical verification of such stores should bearranged at the same time by deputing morethan one Stock Verifier. At the conclusion ofeach day’s verification, the Stock Verifier willrecord the date of verification in the StockVerification Sheet which will be signed by him.The Store-keeper or his representative will alsosign the Stock Verification Sheet in token of hisacceptance of the ground balances as recordedtherein.

(vi) If the Store-Keeper or his representative hasany doubt regarding the result of count, heshould ask for a recount before the groundbalances are accepted. This should be donewithin two days of the completion of the stockverification of the make/category. This recountshould be carried out by the Stock Verifier, inthe presence of Store-keeper or hisrepresentative. The recounted figure if differentfrom the previous figure should be boldlywritten above the original figure which shouldbe encircled under the attestation of the StoreVerifier and the Store-keeper.

535

Over-writing or erasing of figures ofground balances in the stock sheet will not bepermitted. If corrections are necessary, theoriginal figures will be scored out and correctfigures written and attested by Stock Verifier.

(vii) When the verification is completed, two copiesof the Stock Verification Sheet should beforwarded by the Stock Verifier to the StoreKeeper who should enter therein the bookbalances as recorded in his books and theexcesses or shortages, as the case may be.The book balances as recorded by the Store-keeper on the Stock Verification Sheet will bechecked by the Stock Verifier who will recordthereon a certificate in the following form:-

“Certified that the book balances as recordedin column 6 have been checked by me withthe stock registers and found correct.”

One copy, after action as indicated above iscompleted, should be forwarded by the Store-keeper to the Head of the Office/Departmentwithin 2 days of the date of completion of theStock-taking.

(viii) While verifying the physical balances, the StockVerifier should give a distinct note against allstore articles which are broken defective orunserviceable and the Store-keeper, whileforwarding the verified sheet to the Head of theOffice/Department, should indicate actionproposed to be taken in regard to such broken,defective and unserviceable articles.

(ix) The Stock Verifier will post the ground balancesas verified by him in the Stock Books. He willdraw a red line below the last entry in the stockregister after leaving 4 lines blank. The groundbalance will be recorded just below the red line.Cross reference to the serial number and pagenumber of the Stock Sheet along with the dateof stock verification should be noted against the

536

ground balance, which will be attested by theStock Verifier. Further transactions in the stockbook will be recorded with reference to theground balance as posted in the Stock Books.

(x) Excesses that came to notice as a result ofverification should be promptly brought oncharge on a credit voucher. In the case ofshortages, the reasons therefore should be fullyinvestigated and if responsibility can be fixedthe value of shortages should be recoveredfrom the person at fault, otherwise the sameshould be written off with the sanction of thecompetent authority. The adjustment ofexcesses/shortages should be recorded in thestock book in the blank space above the redline, giving reference to the credit voucher orrecovery/loss statement, as the case may be. Inthe case of Public Works Department, whereboth quantity and value accounts are kept, thevalue of stores found surplus or short, will beadjusted in accounts as per the procedure laiddown in the State Public Works Account Code.

(xi) The Stock Verifier should, on completion of theverification of stock, render a certificate to theHead of Office/Department in the followingform:-

“Certified that all the items of stores locatedin different store houses in thisoffice/department have actually been verifiedby me.”

(xii) The Head of the Office will forward a copy ofthis certificate to the administrative Head of theDepartment. Within a period of three monthsfrom the completion of the stock verification hewill also render a certificate to the Head of theDepartment that “Action as required under therules/orders has been taken in the case ofexcesses/shortages (as the case be) whichcame to notice as a result of stock verification.”

537

Specimen Form of Stock Verification Sheet

S.No.

Location Part No. Nomenclature Ground balanceQty./weight/No.(as the case maybe)

Book balanceQty./Weight/No.

(as the case may be)

Excess(col.minuscol.6)

Shortage(col.6minuscol.5)

Remarks

1 2 3 4 5 6 7 8 9

________________________________________

538

PART-VIBUDGET FORMS

(B-1 TO B-11)

539

PART- VI

FORM B-1

BUDGET YEAR: 20…-20…

DEPARTMENT : ………………………….

OFFICE : ………………………….

HEAD OF ACCOUNT : ………………………….

S.No.

Receipt headdescription

Accountsof thepreviousfin. year

Receiptsfor last 6monthsof thepreviousfin. year

Receiptsfor 1st 6monthsof theongoingfin. year

OriginalEstimatesfor theongoingfin. year

RevisedEstimatesfor theongoingfin. year

Estimatesfor theBudgetyear

1 2 3 4 5 6 7 8

Deduct Refunds*

Grand Total:

* Where applicable.

Signature and Designation of officerDate:

Note: In column 3, kindly indicate actual realization during the financial year preceding the ongoingfinancial year. In columns 4 and 5, indicate realization during last six months of the year precedingthe ongoing financial year and for first six months of the ongoing financial year. In columns 6 and 7,indicate original and revised estimates of the ongoing financial year. Column 8 relates tothe Budget year.

540

FORM B-1 (a)Estimates of recovery of Revenue Receipt (tax/non-tax) arrears with their age profile.

BUDGET YEAR: 20…-20…

DEPARTMENT : ………………………….OFFICE : ………………………….HEAD OF ACCOUNT : ………………………….

Arrears at the close of previousfin. year

Arrears at the close of ongoingfin. Year

Receipt Headdescription

Morethan5yrs.old

3 yrs.to5 yrs.old

Lessthan 3yrs.old

Currentfromearlierfinancialyear

Recoveryrealizationestimatesfor ongoingfinancialyear.

Morethan5yrs.old

3 yrs.to5 yrs.old

Lessthan 3yrs.old

Currentfrompreviousfinancialyear

Total

1 2 3 4 5 6 7 8 9 10 11

Arrears (est.) at the close of Budget yearRecoveryrealization

estimates for theBudget Yr.

Morethan5yrs.old

3 yrs.to5 yrs.old

Lessthan 3yrs.old

Currentfromongoingfinancialyear

Total

12 13 14 15 16 17

Signature and Designation of officerDate:

541

FORM B-2

BUDGET YEAR: 20…-20…

DEPARTMENT : ………………………….OFFICE : ………………………….DEMAND NO. : ………………………….MAJOR HEAD : ………………………….MINOR HEAD : ………………………….SUB-HEAD/DETAILED HEAD : ………………………….

(in lakh `)S.

No.Code Object Head Accounts

of theprevious

year

Accountsfor last 6

months ofthe

previousyear

Accountsfor 1st 6

months ofthe

ongoingfin. year

OriginalEstimatesfor yearongoingfin. year

RevisedEstimates

for theongoingfin. year

Estimatesfor theBudget

year

1 2 3 4 5 6 7 8 91 001 Salaries

.

.

.

2 008 ElectricityCharges.

.

.

3 011 Books &Periodicals.

.

.

4 043 Uniforms

.

.

.

5 297 Furniture

.

.

.

Grand Total

Signature and Designation of officerDate:

Notes:01. Separate forms shall be filled for Non-Plan(NP), State Plan (SP), Centrally Sponsored

Schemes (CSS), Central Plan (CP) and Externally Auded Projects (EAP).02. In column 4, kindly indicate accounts (actuals) of the financial year preceding the ongoing

financial year. In columns 5 and 6, indicate accounts for last six months of the yearpreceding the ongoing financial year and for first six months of the ongoing financial year.In columns 7 and 8, indicate original and revised estimates of the ongoing financial year.Column 9 relates to the Budget year.

02. “Voted” and “Charged” items should be shown separately.

542

FORM B-3

BUDGET YEAR: 20…-20…

DEPARTMENT : ………………………….OFFICE : ………………………….DEMAND NO. : ………………………….MAJOR HEAD : ………………………….MINOR HEAD : ………………………….SUB-HEAD/DETAILED HEAD : ………………………….

Code Object Head Designation/ PayBand/No. of

sanctioned posts

Amount(in `)

(a) Pay of Officers001

Total : (a)(b) Pay of Establishment

001

Total: (b)(c) Others

002 Travel Expenses..

008 Electricity Charges..

011 Books & Periodicals..

043 Uniforms..

297 Furniture..

Total: (c)Grand Total: (a+b+c)

Signature and Designation of officerDate:

Notes:-01. Separate forms shall be filled for Non-Plan(NP), State Plan (SP), Centrally Sponsored

Schemes (CSS), Central Plan (CP) and Externally Auded Projects (EAP).02. “Voted” and “Charged” items should be shown separately.

543

FORM B-4

Details of provision proposed for pay of Officers / Establishment.

BUDGET YEAR: 20…-20…

DEPARTMENT : ………………………….OFFICE : ………………………….DEMAND NO. : ………………………….MAJOR HEAD : ………………………….MINOR HEAD : ………………………….SUB-HEAD/DETAILED HEAD : ………………………….

(in `)Description Pay Band

of the postActualpay of

theGovt.

servantdue on

1st

Aprilnextyear

Amountof

provisionfor theyear at

the ratesin Col.3

Amountof

incrementfor theyear

Provisionfor

PP/SP/CA

Totalprovision

for theyear i.e.total of

Col.4+5+6

Remarks(mention‘vacant’,

if so)

1 2 3 4 5 6 7 8A- Gazetted

Total:(Gazetted)

B- Non-Gazetted

Total:(Non-Gazetted)

PP- Personal Pay; SP- Special Pay; CA-Charge Allowance

Signature and Designation of officerDate:

Notes: 01. “Voted” and “Charged” items should be shown separately.02. Numbers and amount of provision should agree with entries in FORM B-4(ii).03. Name need not be given.

544

FORM B-4 (i)

Object Head-wise provision proposed for pay of Officers / Establishment.

BUDGET YEAR: 20…-20…DEPARTMENT : ………………………….OFFICE : ………………………….DEMAND NO. : ………………………….MAJOR HEAD : ………………………….MINOR HEAD : ………………………….SUB-HEAD/DETAILED HEAD : ………………………….

(in `)Object Head Accounts

of theprevious fin.

Year

OriginalEstimates

for theongoingfin. year

RevisedEstimates

for theongoingfin. year

Estimatesfor the

Budget year

1 2 3 4 5A- Pay of officersPay Band PayGrade PayPP/SP/CAD.AM.AH.R.AC.C.AT.M.AOthers*

Total (A)B- Pay of EstablishmentPay Band PayGrade PayPP/SP/CAD.AM.AH.R.AC.C.AT.M.AOthers*

Total (B)Total (A+B)

PP- Personal Pay; SP- Special Pay; CA-Charge Allowance* Each of the allowance that is drawn along with salary should be shown separately with nomenclature.

Signature and Designation of officerDate:

Notes: 01. In column 2, kindly indicate accounts (actuals) of the year preceding the ongoingfinancial year. In columns 3 and 4, indicate original and revised estimates for the

ongoing financial year. Column 5 relates to the Budget year.02. “Voted” and “Charged” items to be shown separately.

545

FORM B-4 (ii)

Details of posts / nomenclature-wise provision proposed for pay of Officers /Establishment

BUDGET YEAR: 20…-20…

DEPARTMENT : ………………………….OFFICE : ………………………….DEMAND NO. : ………………………….MAJOR HEAD : ………………………….MINOR HEAD : ………………………….SUB-HEAD/DETAILED HEAD : ………………………….

Revised Estimates for the ongoing financial year (in `)

Salary AllowancesS.No.

Sanctionedstrength and

nomenclature ofposts

PayBand

Pay Gr.Pay PP/SP/CA

SalaryTotal

DA MA HRA CCA TMA Others

AllowancesTotal

GrandTotal

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15A- Gazetted

1.2.3...

Total(Gazetted)

B- Non-Gazetted1.2.3...

Total(Non-Gazetted)

Estimates for the Budget yearSalary Allowances

S.No.

Sanctionedstrength and

nomenclature ofposts

PayBand Pay Gr.Pay PP/SP/CA

SalaryTotal DA MA HRA CCA TMA Others

AllowancesTotal Grand

Total

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15A- Gazetted

1.2.3...

Total(Gazetted)

B- Non-Gazetted1.2.3...

Total(Non-Gazetted)

Signature and Designation of officerDate:

Note: “Voted” and “Charged” items to be shown separately.

546

FORM B-5

Schedule of new expenditure proposed for inclusion in the estimates ofBudget year: 20…-20…

DEPARTMENT : ………………………….

OFFICE : ………………………….

DEMAND NO. : ………………………….

MAJOR HEAD : ………………………….

MINOR HEAD : ………………………….

Recurring Expenditure Non-recurring expenditureS.No.Of

item

Sub-Head /DetailedHead /Object Head

Particularsof

Schemes Cost inbudgetyear

Ultimaterecurring

cost as faras

ascertained

Cost inbudget year

Furtherexpenditure

to beincurred, if

any

Number anddate of the

orderconveying

administrativeapproval

Remarks Col. foropinion of

theFinance

Department

1 2 3 4 5 6 7 8 9 10

Signature and Designation of officerDate:

Notes: 01. The schedule should be prepared for each minor head separately.

02. No scheme should be entered in this schedule if funds have been provided for in theestimates of ordinary expenditure submitted to the Finance Department.

547

FORM B-6

To be submitted in triplicate by the concerned officer if the sanctioning authorityis the Minister-in-charge or the Finance Department.

FORM OF APPLICATION FOR REAPPROPRIATION OF FUNDSFinancial Year: 20…-20…

DEPARTMENT : ………………………….OFFICE : ………………………….DEMAND NO. : ………………………….MAJOR HEAD : ………………………….MINOR HEAD : ………………………….

Appropriation and progress of expenditureSub-head / Detailed Head /Object Head

Amount as inthe

sanctionedestimates

Actualexpenditureup to date

Probableexpenditure

duringremainderof the year

Amount ofadditional

appropriationrequired oravailable for

reappropriation

Reasonsfor increaseor reduction

1 2 3 4 5 6

Head of account proposed tobe increased.Head of account proposed tobe reduced.

Signature and Designation of officerDate:

Notes:01. Separate statements should be submitted for voted or charged expenditure.02. The statement should not relate to more than one grant.03. Column (2) should always show the amounts provided in the sanctioned budget but all

reappropriation from or to the unit of appropriation and extra grants under it sanctioned by competentauthority up to the date of the application should also be entered in this column by means of plus orminus figures with explanatory notes indicating the authority for the sanctions.

*(A) For use in the Administrative Department. (B) Order of sanction.

Re-appropriation of ` …………………sanctioned. (C) Communication of sanction.

Copy forwarded to:- #(1) Finance Department. (2) A.G. (Audit).$(3) Secretary to Government/Head of the

Department/Controlling Officer

* Meant for the authorities forwarding the proposal to the next higher authority.# In case two minor heads are involved.$ Score out the officers to whom copies are not to be sent.

548

FORM B-7

APPLICATION FOR EXTRA GRANT (Ongoing Financial Year: 20…-20… )

DEPARTMENT : ………………………….OFFICE : ………………………….DEMAND NO. : ………………………….MAJOR HEAD : ………………………….MINOR HEAD : ………………………….

Expenditure Additional appropriationrequired

ExplanationMajor andMinor heads,Sub-Head,DetailedHead andObject Head

Originalappropriationas modifiedbycompetentauthority

Actualsup to themonth of

Amountrequiredfor theremainingmonths ofthe year

Amountavailable byreappropriation

Amountproposedas anextra grant

For use in the Administrative Department.

Signature and Designation of officerDate:

549

FORM B-8

Schedule of new expenditure for the Budget year: 20…-20…(for use by Finance Department)

Recurring expenditure Non-recurring expenditureMajorhead ofthebudgetto whichthecharge isdebitable

S..No. ofitemarrangedin orderofurgency

Nature ofitemtogetherwith minoranddetailedheads towhich theproposedexpenditureis debitable

Cost inbudgetyear

Ultimaterecurring

cost, as faras

ascertained

Cost inbudgetyear

Furtherexpenditure

to beincurred, if

any

OrderofBudgetCouncil

Remarks

1 2 3 4 5 6 7 8 9

Signature and Designation of officerDate:

550

FORM B-9

Form for sending the receipts and expenditure forecast for the month of ……(current and next two months)

(should be sent to Finance Department on the 15th of every monthfor the ensuing three months)

Receipts for the three monthsbeginning with the current month

Expenditure forthe three monthsbeginning with thecurrent month

S.No.

ObjectHead

Actualsof thelastmonthavailable

Forecastpreviouslymade bytheControllingOfficer forthe samemonth

Currentsay,December

January February

Remarks(Details ofan itemmay bementioned)

1 2 3 4 5 6 7 8 9 10 11

Signature and Designation of officerDate:

551

FORM B-10

Statement of Excess and Surrenders for the ongoing financial year: 20…-20…

DEPARTMENT : ………………………….OFFICE : ………………………….DEMAND NO. : ………………………….MAJOR HEAD : ………………………….MINOR HEAD : ………………………….SUB-HEAD/DETAILED HEAD : ………………………….

(in lakh `)S.

No.Code Object Head Budget

provisionfor theyear

Sanctionedadditions oralternation

by re-appropriation

or extragrant

Total(3+4)

Actualfor last

sixmonths

ofPreviousfin. year

Actualfor 1st

sixmonths

ofongoingfin. year

Total(6+7)

Anticipatedtotal

expenditurefor the fin.

year

Surrender Excess RevisedEstimatesadoptedby the

FinanceDeptt.

Explanationfor

varioation

1 2 3 4 5 6 7 8 9 10 11 12 13

1 001 Salaries

.

.

.2 008 Electricity

Charges.

.

.3 011 Books &

Periodicals.

.

.4 043 Uniforms

.

.

.5 297 Furniture

.

.

.

Signature and Designation of officerDate:

552

FORM B-11

Application for Advance out of the Jammu and Kashmir Contingency Fund.(Ongoing Financial Year: 20…-20… )

DEPARTMENT : ………………………….

OFFICE : ………………………….

Briefparticularsof theadditionalexpenditureinvolvedwith fullcost of theproposalfor the yearor part ofthe year

Circumstancein whichprovision wasnot includedin the Budget

Reasons forwhichpostponementis not possible

Amountto beadvancedfrom thefund

Grant orAppropriationunder whichsupplementaryprovision willbe obtained

Remarks(for usein F.D)

No……………………………… Date………………

Submitted to the Secretary to Government, Finance Department through the ………..

Signature and Designation of officerDate: