1. Annual Financial Statement : All moneys coming into the possession of and disbursed by the public officers of the State in the course of their official duties have to be properly accounted for in the primary accounts maintained by them and the form in which the accounts are to be kept is prescribed by the Comtroller and Auditor General of India. The Finance Department is required to prepare for each financial year, a statement of all receipts and expenditure expected to be realised or incurred during the year, which is called the Annual Financial Statement or the Budget as laid down in Article 202 of the Constitution.

In exercise of these powers, the Comtroller and Auditor General of India has prescribed a list of major and minor heads of accounts in which Government accounts should be kept.

2. Under Article 150 of the Constitution of India, the accounts of States are to be kept in such form as the Comtroller and Auditor General of India may, with the approval of the President, prescribe. The Comtroller and Auditor General of India, with the approval of the President is the authority to determine how many transactions or class of transactions of receipt or expenditure should be shown or classified in Government Accounts. The form at present in force in India has descended from the past but changes necessitated by the Government of India Act, 1935, and by the Constitution of India, 1950, have been carried out therein. The demands for grants and appropriations for year are intended to give an idea of the expenditure that will be incurred during that year and since the form of accounts is laid down, it is necessary to prepare the demands or appropriations in the same detailed form. There are no forms stipulations regarding the manner and form in which the demands for grants have to be structured, in this State. We have generally formvtted the grants in such a manner, as to be co-extensive with the functions of Government departments which would facilitate easy reappropriations between major heads. The entire budget is so prepared that it shows an approximate picture of the accounts in advance of the relative year and furnishes ready material for working out the demands. The chief aim of the budget is, of course, to be an efficient tool of economic management in the husbanding of the resources of the State and placing its economy on part of sustained economic growth.

3. According to Article 202 of the Constitution, the annual financial statement is laid before the Legislature. The estimates of expenditure embodied in this statement should show separately : -

(a) the sums required to meet expenditure described in the Constitution as charged upon the Consolidated Fund of the State ; and

(b) the sums required to meet other expenditure proposed to be made from the Consolidated Fund of the State and shall distinguish expenditure on Revenue Account from other expenditure. Here other expenditure generally refers to Capital expenditure including loans and advances. In other words, Revenue and Capital expenditure have to be shown separately and hence if so facto there can not be any reappropriation as between the two. In accordance with the provisions of Articles 266 and 267 of the Constitution,the accounts of the Government are to be maintained into the following three main parts :

part I - Consolidated Fund of the State.

part II - Contingency Fund of the State.

part III - Public Account of the State.

These accounts are also shown in the budget. The Consolidated Fund of the State accounts for every stream of public revenue out of which every form of expenditure on public services incurred. This account pertaining to this is further divided into two main divisions viz : -

(1) Revenue, consisting of sections for Receipts Heads (Revenue Account) and Expenditure Heads (Revenue Account).

(2) Capital,Public Debt, Loans etc., consisting of sections for 'Receipt Heads' (Capital Account)' 'Expenditure Heads' (Capital Account) and 'Public Debt.' (Loans, Advances etc.)

The Revenue Division combines the account of -(1) Current or arrears of income of Government derived mainly from taxes, duties, cesses, levies, etc., imposed by law, fees recovered for services rendered,fines and penalties for breach of law and regulations, revenue for assessment of land rent or other proceeds from Government estates such as buildings, forests, irrigations systems etc., and certain grants-in-aid received from the Union Government and other miscellaneous and incidental collection of all taxes, etc., for rendering services to the community, with incidental charges and miscellaneous adjustments. The receipt are collectively called "Revenue Receipts" and the outgoing as "Revenue Expenditure". The difference between these two represents the revenue surplus or deficit according to excess of revenue over expenditure or vice - versa.

The Section 'Receipt Heads' (Capital Account) in this division includes the amounts of receipts of a capital nature. "Expenditure Heads" under Capital Account deals with expenditure usually met from borrowed funds and revenue surplus with the object either of increasing concrete assets of a material and permanent character such as construction of reservoirs for irrigation or water supply or of reducing recurring laibilities. These concrete assets may not necessarily be of a productive character. In certain circumstances it may be necessary and justifiable to treat as capital expenditure whether the amount is large and the expenditure is incurred to serve both present and future generations of the State / Country. Capital expenditure is also met from sources other than borrowed funds e.g. accumulated cash balances including surplus revenues of previous years, if any and capital receipts.

Section "Public Debt" and "Loans and Advances" etc., of the second division comprises of loans raised and their repayments by Government such as Internal Debt of the State Government consisting of market loans, Loans and Advances from the Central Government, Commercial Banks, Financial Institutions and Loans and Advances made (and their recoveries) by Government. The section also includes certain special types of heads for transactions relating to transfer from the Consolidated Fund to the Contingency Fund and Inter State Settlements.

Part II of the accounts records transactions relating to the Contingency Fund set up by the Government under Article 267 of the Constitution of India, the detailed procedure for which is described in para 126.

Part III of the accounts contains the transactions relating to Debt (Other than those included in part I) deposits, advances, remittances and suspense and as a whole is known as Public account of the State.

The transactions under Debt, deposits and Advances in this part are those in respect of which Government incurs a laibility to repay the moneys received or has a claim to recover the amounts paid and also the recoveries of the advances. Deposits of local funds, civil deposits, State Provident Fund, etc. are also accounted for under the caption Public Account.

The transactions relating to "Remittances and Suspense" in this part embrace merely adjusting heads under which transactions such as remittances of cash between treasuries and currency chests, accounts between different accounting circles, etc., are recorded. The initial debits or credits to these heads will be cleared eventually by corresponding receipts or payments, either within the same circle of account or in another such circle under the relevant accounting head in the Consolidated Fund.

4. According to the Article 202 of the Constitution, the expenditure is classified either as charged on the revenues or as voted. In the budget, as well as in the accounts,charged expenditure and voted expenditure are shown sperately.

Items of expenditure which are charged on the Consolidated Fund of the State are as under : -

(a) the emoluments and allowances of the Governor and other expenditure relating to his office;

(b) the salaries and allowances of the speaker and the Deputy Speaker of the Legislative Assembly and, in the case of a State having a Legislative Council, also of the Chairman and the Deputy Chairman of the Legislative Council;

(c) debt charges for which the State is liable including interest, sinking fund charges and redemption charges, and other expenditure relating to the raising of loans and the services and redemption of debt;

(d) expenditure in respect of the salaries and allowances of Judges of any High Court;

(e) any sums required to satisfy any judgment, decree or award of any court or arbitral tribunal;

(f) any other expenditure declared by this Constitution,or by the Legislature of the State by law, to be so charged.

5. Structure of account and estimates : - (a) The accounts of the State Government are kept in accordance with such methods and principles as the Comtroller and Auditor General with the approval of the President may prescribe. The general structure of the budget closely follows the structure of the accounts. Both the accounts and the estimates,are divided into three parts described in paragraph 3. The manner in which they are further sub-divided is dealt within the following paragraphs.

(b) Considerable changes have been made in the structure and classification of Government account from 1974. Prior to 1974, the accounts of Government corresponded with the department in which the expenditure was incurred. How ever, the growth and complexity of Government expenditure and the development of new management techniques for administration necessitated a complete change in the manner in which Government accounts were presented.

The current system of maintaining Government accounts is based on a functional classification of Government activities having a programme and performance orientation. The classification also facilitates easy grouping of expenditures by their respective economic categories. The five tier system of classification that has been followed would also facilitate mechanization of government account whenever it is introduced.

Within each of the divisions/sections mentioned in paragraph 3, the transactions shall be grouped into sectors and sub-sectors as follows : -

A. General services : -

(a) Organs of State

(b) Fiscal Services

(c) Interest payment and servicing of debts

(d) Administration Services

(e) Pensions and Miscellaneous services

(f) Defense Services

B. Social and community services

C. Economic Services

(a) General economic services

(b) Agriculture and allied services

(c) Industries and Minerals

(d) Water and Power Development

(e) Transport and communications

(f) Railways

(g) Post and Telegraphs

D. Grant - in - Aid and Contributions : -

This is a programme classification identified with minor heads of accounts. Every function of the Government,for example,agriculture has certain major objectives. The achievement of this objective can be possible by undertaking several programmes like development of food crops, development of commercial crops,agriculture education and reserch etc. Each one of these programmes have now been identified with a minor head. The large the objectives of these programmes are attained through implementing different schemes. These schemes would be treated as sub-heads under the accounting classification (being the fourth tier classification). The fifth and the most important tier of classification is the objectives classification of expenditure popularaly known as the primary unit of appropriation. It is from this classification only, that the objects on which Government expenditure is incurred can be known. For example, if there is a scheme like the promotion of high yielding variety of cotton, the expenditure on establishment, grant-in-aid, etc. In other words, the letter are the objects on which Government money are spent. From these angles it is possible to group Government expenditure by economic categories as to how much of Government on establishment has gone by way of direct consumption expenditure or for capital formation, for transfer of income to other sectors under the society, etc.

The system of modification of the classification of Government accounts is also simple. The first tier of classification namely the sectorial classification has been given alphabets for identification like a,b,c,d,e, etc. Every major head has been allotted a code number which consist of four digit arabic number code. The first digit indicates whether a particular major head pertains to the revenue,capital,receipt section / revenue expenditure section / capital revenue section / public debt and loans and advances. The next three digit indicates the function to which it pertains. These three digits are common for all the sections in the Consolidated Fund.

Under the scheme of codification, the receipt major heads have been assigned with the consecutive serial numbers 0020 to 1999 and expenditure major heads of revenue account from 2011 to 3999. The only capital receipt major head on the capital account has been assigned the code number 4000. Expenditure major heads on capital account have been assigned the code numbers from 4011 to 5999 while major heads under public debt carry the code numbers from 6001 to 6010. The major head under "Loans and Advances", "Inter State Settlements" and "Transfers to the Contingency Fund" have been assigned the code numbers from 6011 to 7999. The major head for contingency Fund has been assigned the code number 8000. Under the public account the code numbers are from 8001 to 8099. The importance and the mode of operation of this scheme of modification would be clear by taking the major heads for the functions "Education" in the section social and community services and "Agriculture" in the section economic Services. These major heads will have the code numbers as indicated below:-

The above examples would make it clear that it is externally easy to corelate a major head with its function as well as whether it is on the revenue account, capital account or on the loan account. There are of course some exception to this general rule where in a few cases separate major heads have been assigned. The object wise classification of expenditure prescribed by the Comtroller and Auditor General of India is reproduced below : -

01. Salaries

02. Wages

03. Travel Expenses

04. Office Expenses

05. Payments for professional and special services

06. Rents, Rates and Taxes/Royalty

07. Publications

08. Advertising, Sales and Publicity expenses

09. Grants-in-aid / Subsidies

10. Scholarships and stipends

11. Hospitality expenses / sumpturery Allowance etc.

12. Secret Services Expenditure

13. Major Works 14. Minor Works

15. Machinery and equipment, tools and plant

16. Purchase of Motor Vehicles

17. Maintenance

18. Investments

19. Materials and supplies

20. Interest / dividend

21. Pensions / Gratuities

22. Depreciation

23. Inter Account Transfers

24. Writes off/Losses

25. Suspense

26. Other Charges

27. Petrol, Oil & Lubricant

28. Seminars/Conferences

29. Payment of decreetal charges.

30. Rewards

31. Arms and ammunition

32. Purchase of Land & Buildings

33. Contribution

34. Compensation

35. Loans & Advances

Notes : briefly explaining the scope of the Standard Detailed heads : -

1. Salaries : Will include pay, allowances in all forms of officers and staff, except travel expenses (Other than leave Travel Concession).This object classification will also be utilized for recording expenditure on emoluments and allowances of heads of states and other High Dignitaries.

2. Wages : Will include wages of labours and of staff at present paid out of contingencies.

3. Travel Expenses : Will cover all expenses on account of travel on duty including conveyance and fixed traveling allowances but excluding leave travel concession.

4. Office Expenses : Will include all contingent expenditure for running an office , such as furniture, postage,purchase and maintenance of office machines and equipment, liveries, hot and cold weather charges (Excluding wages of staff paid from contingencies) telephones, electricity and water charges, stationery, printing of forms, maintenance of staff cars and other vehicles for office use, as distinct from vehicles for functional purposes like Ambulance Vans, etc. (Vide 16).

5. Payments for professional and special services : Will include charges for legal services consultancy fees, remuneration to examiners, invigllators, etc, for conducting examinations, and all other types of remuneration for professional services. It will also include payment for services rendered supplies made by other departments such as Railways, Police, etc. A distinction being made in respect of supplies made, services rendered for the running of an office in which case the expenditure will be recorded under "Office Expenditure".

6. Rents, Rates and Taxes/Royalty : Will include payment of rent for hired buildings, municipal rates and taxes etc. It will also include lease charges for land.

7. Publications : Will include expenditure on printing of office Code and Manuals and other documents whether priced or non-priced but will exclude expenditure on printing of publicity material. This will also include discount to agents on sales.

8. Advertising, Sales and Publicity expenses : Will include commission to Agents and Printing of publicity material.

9. Grant-in-aid/Subsidies; will include grant/subsidy given to person(s) institutions, public under-takings.

10. Scholareship and stipends; will include remunerution to student and Govaernment. trainees.

11. Hospitality expenses / sumpturery Allowance etc. : Hospitality expenses will include entertainment allowance of high dignitaries, etc.

12. Secret Services expenditure; will include remuneration for services rendered by persons, institutions.

13 & 14. Major Works / Minor Works : Will be classified with references on the classification of Major/Minor works in Central Public works Account Code. This will not include cost of acquisition of land and structures.

15. Machinery and equipment, tools and plants : Will include machinery, equipment, apparatus other than those required for the running of an office (Vide 4) and special tools and plants acquired for specific works.

16. Purchase of Motor Vehicles : Will include purchase of transport vehicles used for functional activities, e.g. Ambulance Vans etc. as distinct from those used for running an office.

17. Maintenance : Will record expenditure on maintenance of works, machinery and equipment (covered under items 13, 14 and 15).

18. Investment: will include purchase of shares.

19. Material and supplies: will include purchase of materials/items other than covered under 4,5,6,7,8,13,14 and 15.

20. Interest / dividend : Will include interest on loan; divident on capital investment.

21. Pensions Gratuities : Will include donations to Service Funds and contributions to contributory provident fund.

22. Depreciation: will include reduction in cost of machines, tools and buildings due to wear and tear.

23. Inter Account Transfers : Will include transfer to and from Reserve Fund etc. write back from capital to Revenue or vice versa.

24. Write off/Losses : Will include writes off of irrecoverable loans. Losses will include trading losses.

25. Suspense: includes expenditure on purchase of materials for construction works, such as cement, steel etc. subject to realisation from original work.

26. Other Charges : Such other expenditures, which are not included in this object wise list.

27. Petrol, Oil and Lubricant: will include expenditure on purchase of petrol, oil and lubricant for running of motor vehicles covered under item - 16.

28. Seminars/Conferences: will include expenditure on seminars, conferencess and meetings.

29. Payment of decreedal charges: will include expenditure on rewards and compensation allowed by the courts.

30. Rewards: will include rewards and prizes other than shown under item 29.

31. Arms and ammunitaion: will include purchase of arms and ammunitaion.

32. Purchase of land and buildings: will include cost of purchase of land and builings/structures.

33. Contribution: will include expenditure for recoupmant of loss and/or damage etc.

34. Compensation: will include expenditure to compensate loss/damage accrued to person/institution.

35. Loans and Advances: will include payment to person, institutions public undertakings subject to realisation with interest.

Primary units of standard objects of expenditure are in their turn sub-divided into detailed primary units, which are the lowest units of classification of accounts. The details of primary units are shown in the budget to facilitate the convenience of the estimating and controlling officers and of those directly interested therein.

6. Opening of new Major, Sub-Major, Minor and other Heads : The introduction of any new major, sub-major or minor head and the abolition of change of nomenclature of any of the existing heads require the approval of the comtroller General of Accounts and of the comptrolia and taelitor General of india.

The opening of sub-heads and detailed heads of account under the various major and minor heads has been entrusted to the State Government and the Finance Department is competent to issue order in consultation with the Accountant General.

7. Preparation of the Budget : The budget is prepared by the Finance Department, which for this purpose has powers to require the departments to furnish material to serve as the basis of estimates. The skeleton printed forms for the purpose of proposing the estimates are supplied by the Finance Department to each head of a department or the controlling officer before the 15th of August each year.

On the basis of the material furnished by their subordinate officers, the heads of departments prepare the estimates for each head of account with which they are concerned and forward them before prescribed date to the Finance Department and the concerned administrative department.

The departmental estimates take cognizance only what are called "Standing Sanctions". i.e. of revenue based on existing law, rules or orders and of expenditure incurred by virtue of existing rules and orders.

The Accountant General has no direct part in the preparation of the budget estimates. He, however, renders such assistance as may be required by the Finance Department. He also submit estimates under certain heads.

8. Proposals which involve a reduction or increase of revenue, otherwise than in pursunance of authorized codes, manuals or rules and proposals for new expenditure are to be submitted to Government by a prescribed date and are not to be taken into account in preparing the departmental estimates. Such proposals are first examined by the respective administrative departments and either rejected or administratively approved in consultation with the Finance Department, Financial Consultant may lead to the dropping of such new items or scaling them down.

9. The Finance Department then consolidates the estimates embodying the decisions of Government and prepares :

(i) Budget Estimate, Vol I, - Financial Statement.

(ii) Budget Estimate, Vol II - Detailed estimates of revenue receipts and public account.

(iii) Budget Estimate, Vol III - Schedule of Demands for grants and Appropriations (Summary)

(iv) Budget Estimate, Vol IV - Statement showing heads of accounts in which provision for different demands have been included and list of new expenditure.

(v) Budget Estimate, Vol V - Statement of Guarantees given by the state Govt. and allotment of Govt. land on concesional terms.

(vi) Explanetary Memorandum of Finance Secretary on the Budget.

(vii) Grantwise detailed estimates of expenditure.

Budget Estimate, Volume I: contains the "Annual Financial Statement", i.e., the statement of the estimated receipts and expenditure of the State, by the prescribed major heads of accounts. Schedule of Demands for Grants as recommended by the Governor under Article 203(3) of the Constitution of India and Appropriation relating to expenditure "Charged" upon the Consolidated Fund of the State is also given in this Volume. As the Demands are arranged department wise and not by heads of accounts, a statement is also appended for facility of linking the estimates under different heads of accounts with the demands.

Budget Estimete vol II : - The detailed estimates of revenue receipts and public Account of the State are contained in the Budget Estimate, Vol II. Budget Estimet vol III: - The estimates of expenditure from the consolidated Fund of the Statis given in the form of Demands for grants of individual departments and further details there of upto major head in respect of non-plan and plan expenditure are shown in Budget Estimate, Vol III.

(IV) Budget Esstimat Vol. IV : - Contains statement showing the Heads of Account in which provision for different Demands have been included and list of new expenditure for the next year.

Budget Estimet vol V: Guarantees given by the State Govt. and allotment of Govt. land on concesional rates are shwon in volume V.

(VI) The explanatory Memorandum on the Budget: includes a summary of the Budgetary position contained in the Memorandum of the Finance Secretary followed by detailed memoranda explaining variations under different heads between the budget and the revised estimates for the current year and the budget estimates for the next year. It cantains wage and meens estimate for the next year, statements showing the provision made for plan schemes aginst various heads of development in the revised estimate for the current year and the budget estimate for the next ear and their details under Revenue and Capital heads.

(VII) Graantwise detailed estimat of Expenditure - Contains detailed estimate of expenditure up to standard units of expenditure, major head wise detailed Explanatory Memorandum of the Extimates of expenditure, schedule of strength and pay scales etc.

12. Budget in the Legislature : It is the responsibility of the Finance Department to prepare comprehensive notes on the budget estimates and submit them to the Cabinet for their final approval.

On approval by the Council of Ministers,the documents are got printed. The governor's approval under Article 202 (1) of the Constitution is taken for presenting the demands for grants before the legislature.

The procedure relating to the Presentation of the State Budget to the Legislature, its discussion by the Legislature and the voting of demands for grants is governed by the rules in this Manual and by the provisions in -

(a) Article 202 to 207 of the Constitution, and

(b) The rules made by the Governor under Article 166(3) of the Constitution and instructions issued thereunder, and

(c) The rules of procedures and conduct of Business in the Madhya Pradesh Vidhan Sabha procedure in Financial matters (Rules 149 to 161).

The Budget Estimates are presented to the Legislature by the Finance Minister. In this Budget Speech he usually sets forth the economic achievements of the Government in relation to the development of the State and the intended approach for the ensuing financial year. In case,there are any proposals for change in taxation or for raising additional resources through other means, they are enumerated before the legislature in the Finance Ministers' speech.

The Budget is generally discussed in the Legislature for about four days with reference to the policies and programmes of the Government as contained in the Finance Minister's speech. The general discussion is intended to serve the following purposes. It enables the members of the legislature to discuss (i) revenue estimates (ii) non votable (charged) expenditure and (iii) the "ways and means programme of Government". The general discussion is wound up by the Finance Minister, who gives a reply at the end of the debate.

The individual demands for grants are moved by the respective minister and discussed in the house. In the course of this discussion cut motions are moved by the members of the Legislative Assembly, the object of which is to obtain satisfaction on elicit information from Government on any particular point arising from the estimates. The discussion on the voting of demands is arranged in accordance with the priorities allotted to various departments by the speaker in consultation with the leader of the House. If the voting is not completed on the last of the days allotted for the purpose, the Speaker applies the "Guillotine" and all the remaining demands for grants are put to vote-together without discussion.

13. Appropriation Act. : After the budget has been finally approved, with or without modification in the estimates presented by the Finance Minister, the Finance Department frames legislation for authorising expenditure from the State Consolidated Fund. This legislation is called the "Appropriation Bill" which contains a schedule showing the specific services and purposes and the limits up to which expenditure sanctioned by the Legislature can be incurred from the Fund and the expenditure charged on the Fund in two separate columns. The House is authorized by the Constitution to discuss the bill and no amendment can be move on this bill. This bill, when it receives the assent of the Governor, becomes the "Appropriation Act."

14. Vote on Account : There are occasions when, it is expendient to withdraw certain sums from and out of the Consolidated Fund of the State for the services for a part of the financial year. In such case, the Legislature is requested to sanction a Vote on Account for anticipated expenditure. The procedure for obtaining the "Vote on Account" is described in the following paragraph.

Article 206 of the Constitution provides that the Legislative Assembly of a State shall have power to sanction the withdrawal of certain sums from and out of the Consolidatd Fund of the State for the service, for a part of any financial year, pending completion of the procedure prescribed in Article 203 and 204 of the Constitution. This procedure is known as "Vote on Account". This course is resorted to on rare occasions.

15. In this Manual, unless the context otherwise requires, the following words and phrases have the meanings hereby assigned to them. Words and phrases used in this manual and not defined in this chapter, but which are defined in the Constitution of India, or in the Rules and Orders framed thereunder bear the meanings assigned to them in these definitions.

(1) "Accounts" or "Actual" of a year are the amounts of receipts and disbursements for the financial year beginning on April, 1st and ending on March, 31st following, as finally recorded in the Accountant General's books.

(2) "Administrative Approval" of a scheme, a proposal or a work is the formal acceptance thereof by the Administrative Department concerned after scrutiny and examination of the details and financial implications involved therein in consultation with the Finance Department for the purpose of incurring expenditure thereon as and when funds permit.

(3) "Administrative Department" means the Secretariat Department to which the subject under consideration is assigned for disposal by Rules of Business.

(4) "Annual Financial Statement" or "Budget" means a statement of the estimated receipts and expenditure of the State in respect of every financial year to be laid before the Legislature under Article 202 of the Constitution of India.

(5) "Appropriation Act." means the legislation passed in accordance with Article 204 of the Constitution of India to provide for expenditure out of the Consolidated fund of the State and "Appropriation Bill" means the Bill introduced for the same purpose.

(6) "Appropriation" means the amount authorized for expenditure under a major or minor head or sub-head or other unit of appropriation, or part of that amount placed at the disposal of a disbursing officer. The word is also technically used in connection with the provision made in respect of "Charged" expenditure.

(7) "Assembly" means the Legislative Assembly, Madhya Pradesh.

(8) "Budget" See "Annual Financial Statement"

(9) "Budget estimate" are the detailed estimates of receipts and expenditure for the financial year.

(10) " Financial Budget Year" means the period commencing on the Ist April of one calendar year and ending with 31st March of the next calendar year.

(11)" Consolidated Fund" is the Fund formed by all revenues received by the Government , all loans raised by it and all moneys received by it in repayment of loans. The disbursements made out of these receipts are shown on the disbursement in this part.

(12) "Contingency Fund" is the Fund established and mentioned under the provisions of Article 267(2) of the Constitution of India and is intended to enable advances being made there from for the purpose of meeting unforeseen expenditure pending authorization of such expenditure by the Legislature under Article 205 and 206 of the Constitution of India.

(13) "Constitution" means the Constitution of India.

(14) "Charged Expenditure" means such expenditure as is not subject to the vote of the Legislature and is declared to be charged on the Consolidated Fund of Madhya Pradesh under Article 202(3) of the Constitution of India.

(15) "Charged Appropriation" means sums required to meet charged expenditure as specified in the schedule to an Appropriation Act passed under Article 204 of the Constitution, during the financial year concerned, on the services and purposes covered by that "Charged Appropriation". It does not include provision for voted expenditure.

(16) "Controlling Officers" means the authority responsible for the control of receipts / expenditures declared by Government from time to time.

(17) "Demand for grant" is proposal made to Legislature on the recommendations of the Governor for appropriation of sums out of the Consolidated Fund for expenditure on a particular services not charged on the revenues of the State.

(18) "Departmental Estimate" means the estimate of receipts and expenditure submitted to Government by the head of Department or a Controlling Officer.

(19) "The Detailed Head" means the lowest accounting unit below the "Primary Unit" of standard object of expenditure under which transactions are recorded in the accounts, and is also the lowest unit by which figures are given in the budget estimates.

(20) "Disbursing Officer" Every Government servant, who draws money for disbursement of bills from the Treasury is disbursing Officer.

(21) "Estimating officer" is the officer, who is primarily responsible for preparing the estimate of receipts or expenditure.

(22) "Excess Grants" means a grant voted for a service by the Legislature to meet expenditure, which after the close of the year is found, through the Appropriation Accounts, to have been incurred in excess of the total sum voted for that service before the close of the financial year.

(23) "Expenditure charged on the Revenues" See "Charged Expenditure"

(24) "Financial Year" See Budget Year.

(25) "Grant" means the amount voted by the Legislature in respect of a demand for grant on a specific service or for specific purpose.

(26) "Head of Department" means an officer declared as such by Government.

(27) "Legislature" means the Legislature Assembly of Madhya Pradesh.

(28) Major and Minor Heads : (a) Major Head means a main unit of account for the purpose of recording and classifying the receipts and expenditure of the revenue of the State.

(b) Minor Head means a head subordinate to a Major Head or a Sub Major Head.

(29) Major and Minor Works (a) Major work means an original work, the estimated cost of which exclusive of departmental charges exceeds Rs. 1,00,000. (b) Minor works means an original work, the estimated cost of which exclusive of departmental charges does not exceed Rs. 1,00,000.

(30) "Primary Unit" or "Standard Objects of Expenditure" is a division of accounts subordinate to the sub-head of account.

(31) "Reappropriation " means the transfer of funds from one unit of appropriation under which savings are anticipated to another unit of appropriation within the same grant to meet the excess expenditure anticipated under the later unit.

(32) "Revised Estimate" is an estimate of the probable receipts or expenditure for a financial year framed in the course of that year with reference to the transaction already recorded and anticipated for the remainder of the year in the light of orders already issued or comtemplated or any other relevant facts.

(33) "Recurring Charge" is a charge, which involves a liability for expenditure beyond the financial year in which it is originally incurred.

(34) "Statement to Excess Expenditure" means the statement of excess expenditure over total final appropriation under the every grant, whether in the charged or voted sections as, certained through the Appropriation Accounts and presented to the Legislature after the close of the year to which it relates.

(35) "Sub-head" means the unit of account next subordinate to a minor head.

(36) "Sub-Major-Head" means an intermediate head of account introduced between a major head and the minor heads under it, when the minor heads are numerous and can conveniently be grounded together under such intermediate heads.

(37) "Schedule of new expenditure " is a statement of items or new expenditure proposed for inclusion in the Budget for the ensuing year.

(38) "Standing Sanctions" relate to revenues based on existing laws, rules and orders and expenditure incurred by virtue of existing laws, rules and orders.

(39) "Supplementary Grant" means a grant voted by Legislature during the course of the year to which it relates and in addition to a grant voted previously in respect of the same year and for the same item of service.

(40) "Technical Sanction" is the sanction of a competent authority to a properly detailed estimate of the cost of the work.

(41) "Voted Expenditure" means expenditure which is subject to the vote of the Assembly.

(42) "Vote of Credit" See Article 206 of the Constitution.

A. Forms and Departmental Estimates of Revenue and Expenditure.

16. As has already been stated it is the duty of the Finance Department to prepare the budget. The material for it has, however, to be furnished by the departments in the form of departmental estimates. The prescvibed printed forms for the purpose are supplied by the Finance Department to each head of a department or the controlling officer before the 15th of August each year.

The forms contain separate columns for :-

(1) Major and Minor heads primary units and the detailed heads of the estimates,

(2) actual of the previous one year,

(3) Budget estimates and Revised Estimates of the current year, and

(4) Budget estimates of the ensuing year.

Provision for charged expenditure should be clearly distinguished from provisions for voted expenditure.

The following form is used for preparation of detailed estimates of revenue and expenditure.

COMPILED REVISED ESTIMATE FOR 19 . . AND BUDGET ESTIMATE FOR 19 . . UNDER

THE HEAD . . . . .

Demand No. (Rs in Thousands)

Major Head.

(a) Major and Minor heads (Column 8) - The detailed account heads appear in this column.

(b) Actual (Column 1) - The figures should be expressed to the nearest rupees in thousents Every head of a department is bound to reconcile all differences between his figures and those of the Accountant General.

(c) Revised Estimate and Budget Estimate (Column (6) and (9))- Estimating officers estimates should be entered in these columns.

B. Instruction for preparing the forms of Departmental Estimates :

(i) G E N E R A L

17. In the preparation of the budget, the aim is to achieve as close an approximation to the probable actual, as possible. This demands the exercise of the utmost foresight both in estimating revenue and anticipating expenditure. It is, therefore, necessary that all the items of revenue or expenditure, that can be foreseen should be allowed for. Care should be taken to see that the items are provided for under proper sub- heads. If the test of accuracy is to be satisfied, not merely should all items that could have been foreseen be provided for, but also only so much and no more, should be provided for as is necessary.

This implies, that the preparation of departmental estimates is no routine matter, but one which demands the careful personal attention of the officers submitting them. One of the most important duties of the head of a department of the controlling officer, therefore, is to keep a constant watch on the progress of revenue and expenditure under his control. He should also review from time to time all sanctions of fixed establishment and recurring contingent expenditure. although, these sanctions are called "Fixed" they are not so for all time and require to be reviewed from time to time with a view to confirm, modify or revoke such sanctions. It is possible, that a charge once provided for and accepted by Government may have subsequently become unnecessary, or again an additional provision made for a number of years (e.g. for repairs to buildings), to make up expenditure during a period of financial stress may, at one stage, be no longer necessary. A periodical review of fixed sanctions will disclose such instances and facilitate close estimating. This review can be suitably carried out by maintaining register of sanctions. Sanctions to recurrent contingent expenditure should also be subjected to a similar review.

In submitting estimates, it must be borne in mind that the accounts of Government are maintained on a cash basis, i.e., they represent the actual receipts and expenditure during the year, whether they are on account past or future years or those of the current year. The estimates should therefore, take into account only such receipts and payments, as the estimating officer expects to be actually realised or made during the budget year.

It will be seen from the various dates for the submission of estimates specified in Appendix, that only the minimum time necessary has been left for the administrative and Finance Department to scrutinize and consolidate them. The preparation of the budget can neither start earlier nor finish, latter than the date fixed and it is, therefore, imperative that the whole process should be worked to a fixed time - table. All officers concerned should, therefore, scrupulously obseve the dates fixed for submission of the various estimates. For this purpose they should prepare a calendar of the returns with which they are concerned and watch carefully, that all returns are dispatched so as to reach the administrative or the Finance Department, as the case may be, punctually by the due dates. Proposals, however, desirable they may be in themselves, but which are not before the Finance Department in approved form by due dates run the risk of being omitted from the budget and for such omission, the responsibility will attach to the officer, who has failed to take action in time.

18. Estimates of receipts - The budget estimates of receipts should be based on the existing rates of taxes, duties, fees, etc. and no increase or reduction in such rates which have not been sanctioned by Government should be proposed in the budget estimates. If proposals of this kind have already been sent to Government separately, the financial effect of such proposals should be indicated in the remarks column.

In estimating an ensuing years revenue, officers frequently repeat either the revised estimates of the year, current or the actual of the one past. For obvious reasons, this is not always a satisfactory method. It is essential that estimates of revenue should be based on a consideration of all relevant date e.g. the course of receipts in previous years after allowing for any abnormal features or any extra items that may be actually realised in the ensuing year. Explanation for large variations from the past actuals should be furnished.

19. Land Revenue Estimates : Detailed rules regarding the preparation of estimates of land revenue are contained in the Madhya Pradesh Revenue Manual Volume II, Section I-II. It is only necessary to mention here that these estimates are prepared by Collectors in forms supplied by the Finance Department and are submitted by them, so as to reach the Commissioner of the Division by the 30th September. Commissioners of Divisions consolidate the estimates for the divisions and forward them to Finance Department not later than the 15th October. The Finance Department will consolidate these estimates for the whole State. In order to secure greater accuracy, the collectors will report to the Commissioners of the Division by the 15th November if any change is necessary in the estimates already submitted. The Commissioners of the Divisions should send a copy of such report to the Finance Department by the 1st December.

20. Estimates of Expenditure : In preparing the budget estimates of expenditure for the coming year, the average of the normal actual of the past three years should invariable be kept in sight, not indeed as some thing, that could be conveniently repeated, but as the basis for an intelligent anticipation which takes into account any noticeable tendency for the expenditure to rise or decline, any abnormal features during the past years, any recognizable regularity in the pitch of expenditure and any special feature known to be certain or likely to arise during the next year.

Care should also be taken that provision is made for sanctioned schemes only, and not for schemes of new expenditure, which have been submitted to the Government, but not yet sanctioned. When the discontinuance of any sanctioned expenditure requires the sanction of the Government and proposals have been submitted to the Government but not yet sanctioned, the provision should be omitted and the necessary explanation should be given in the remarks column.

21. In the case of receipts, as well as of disbursements, every estimating officer should observed strictly the rules relating to classification in the accounts and to the exhibition of recoveries of expenditure as receipts or as deductions from expenditure.

22. Pay and fixed allowances of an officer for a month become due only at the end of the month. Provision for them for the month of March should, therefore, be made in the budget estimates of the following year.

Ordinarily, provision for the new establishment should not be made in the budget earlier than 1st April or such time as the post is required to be created, e.g. beginning of an academic term.

23. Charges in England : The Chief Account Officer, High Commission in the United Kingdom will be the estimating officer for the transactions taking place in the United Kingdom. The transactions prior to 1974-75 recorded under the minor head, 'Charges in England are now classified under the relevant major, sub and detailed head of account under which they would have been classified had the transaction taken place in India.

Special Instructions relating to certain classes of expenditure.

24. The special instructions contained in the following paragraphs for certain classes of expenditure should be observed in preparing the budget estimates under them.

25. Pay of Officers and Pay of Establishment : The estimates should be framed on the basis of the expenditure likely to be incurred in the coming year on account of the officers and subordinates likely to be on duty and the actual pay likely to be drawn by them, irrespective of the sanctioned strength. In the case of establishment on progressive or time-scale of pay, provisions should also be made for increments falling due during the budget year. In the case, however, of a cadre, which includes level reserve, the estimates should provided only for such of its members as are likely to be on duty, but also for those who are likely to be on leave, but no separate provision should be made on account of leave salaries.

26. Posts held in abeyance : Posts held in abeyance should not be budgeted for.

If it is considered necessary to revive any of them in the ensuing year, proposals should be submitted, in good time for the budget, to the administrative department concerned which will pass the necessary orders in consultation with Finance Department.

27. Allowances, Honorarium etc. : All additions to pay classified as special pay should be included under 'Pay of Establishment' but all additions classified as compensatory allowances, e.g. conveyance allowance and house rent allowances, leave travel concessions, madical reimbursement etc.should be shown under the primary unit 'Salaries. A brief explanation should be given of any abnormal variation in each of the past three years. If the estimate for the coming year in any such case exceeds the average of the past three year's, actual or the provision in the current year, a fall explanation should be given.

28. Contingencies : Expenditure on contingencies is classified and spread over under the following standard units of appropriations : -

01. Wages

02. Office Expenses

03. Payment for professional and special services

04. Rent, Rates and Taxes/Royalty

05. Publications

06. Advertising, sales and publicity expenses

07. Hospitality expenses/sumptuary allowances etc.

08. Secret service expenditure

09. Maintenance

10. Motor Vehicles

11. Other charges

The estimates for this class of expenditure require careful scrutiny by the controlling officer. Abnormal charges, if any, should specified and excluded from the total in calculating the average of the three preceding years. Justifications should be given in all cases, in which it is proposed to exceed the normal average. The average of the actual of the preceding three years should not be accepted as a matter of course as a basis for framing the estimate of the ensuing year as the expenditure of previous year may include extraordinary items and the adoption of the average may lead to waste and extravagance. The details on the actuals and also if necessary the contingent registers should therefore be examined to see that the expenditure proposed is really the absolute minimum.

29. Works : The standard unit of appropriation 'Major Works'/'Minor Works' may necessary be opened for the record of expenditure on the construction and repairs of such works, as may be transferred to the administrative control of the civil departments concerned under the order of the competent authority.

In the case of new works debatable to the head 'Major Works'/Minor Works' under a departmental services head, details should be appended.

30. Covering letters : Covering letters in forwarding departmental estimates should be as brief and clear as possible, calling attention to such special points as may require the orders of the Government. Any separate explanatory memoranda and subsidiary statements, which may be necessary in order to elucidate the estimates should be sent along with them.

Proposals for additional funds which require specific sanction should be made to the administrative departments and not to the Finance Department.

31. Lump sum provision : It is probable that estimates carefully prepared in accordance with the foregoing instructions may still be too high. They should, therefore, be examined with reference to the difference between the estimate and the actual in the past three years and the proposed amount should be reduced on that basis.

Lump sum provisions should not, as a rule, be made in the budget estimates.

In some cases, however, lump sum provision are unavoidable, e.g. provision for grants to local bodies or to private managements for educational and medical institutions and the like. In such cases full explanations and justification of the provision should be given in the remarks column.

32. Rounding : The estimate under primary units will be rounded to the nearest thousand rupees, while being consolidated in the Finance Department.

33. Loans and advances by the State Government : The estimates of loans and advances, under the various functional major heads, should be sent by the concerned heads of department and budgeting officers to their administrative departments by 15th September. In cases, where the Collectors are the Budgeting Officers the estimates should be sent by them to their respective Divisional Commisioners by 15th September and the latter should after due scrutiny and modifications where necessary, forward them to the respective Administrative Departments by 25th September. The Administrative Departments should after due scrutiny forward them to the Finance Department by 10th October.

34. Estimates to be prepared on gross basis : The budget estimates should, as a rule,be prepared on a gross and not on a net basis. The gross transactions,in the case of both,receipts and charges in each department should be entered separately. Receipts should be estimated on the receipts side and the expenditure on the expenditure side. In other words. it is not permissible to deduct receipts from the charges or the charges from the receipts. There are, however, certain exceptions of this general rule of gross budgeting. Refunds of revenue, for instance,are deducted from the gross collections and the budget is prepared only for the net receipts, the reason being the refunds do not really represent the expenditure of Government but are merely repayments made out of the receipts.

35. Proposals involving "New Expenditure" and their timely submission:

The departmental estimates referred to above, should take recognizence only of what are called "standing sections" i.e., all revenue based on existing laws, rules of order and all expenditure incurred by virtue of existing laws, rules or orders. Proposals which involve a reduction or an increase in revenue, otherwise than in pursuance of authorized codes, manuals, rules or orders and proposals involving new expenditure should be submitted to Government separately by the prescribed date. If a departmental officer feels any doubt, whether particular proposal should be treated as constituting a new expenditure, the should make a reference to Government in the administrative department concerned well in advance of the prescribed date.

Proposals relating to "New expenditure" should be submitted to Government as and when ready and must not be held up for being submitted towards the last date prescribed, so that the administrative department of the Secretariat and the Finance Department may have sufficient time to examine each proposals as closely as possible and to call for such further information, as may be deemed necessary. It must be clearly understood that any proposal reaching the Finance Department after the prescribed date will not ordinarily be entertained and the responsibility for the inconvenience, which may be caused to public service on what account will attach to the officer or the administrative department concerned who or which failed to take action in time.

36. Estimate to be accompanied by explanatory budget notes : Each departmental estimates must be accompanied by a budget note by the estimating officer, prepared on half margin containing this proposal and the reasons in support of them arranged by major head, sub major head, minor head, primary units, etc. in the same order in which the estimate has been prepared. The notes should be clear and precise and should explain the variations between the proposed estimates for the forthcoming year and the figures of the budget estimate of the current year. It should also give reasons for the repetition or the omission of any item.

37. Provision for the payment of decretal amounts or awards by arbitral tribunal etc. : Expenditure on payments made in satisfaction of any judgment, decree or awarded by any court or arbitral tribunal is to be treated as charges on the Consolidated fund of the State. Provision for such expenditure should, therefore, be made under a separate detailed head "Payments in satisfaction of decree of courts, awards of arbitral tribunals etc.( Charged )" under "Other Charges". As reappropriation between charged and voted provisions is not permissible, it is necessary that the charged provision should be restricted to the absolute minimum, additional funds being arranged later, if required, through the supplementary estimates. In emergent cases advances can be obtained from the Contingency Fund to be recouped by presentation of supplementary demands at the earliest opportunity.

38. Expenditure on Development Schemes : Separate estimates should be furnished for expenditure under "Non Plan", "Plan" "Centrally Sponsored Schemes" and "Central Sector Schemes" in the prescribed form. The estimates should be supported by detailed explanatory notes. In regard to the development schemes under the Plan provision should be included in respect of such expenditure on addition to or extensions of existing institutions, establishments, etc. for which prior approval of the Planning Department have been obtained.In other words, the estimates should be got approved by the Planning Department before their inclusion in the budget estimates.

39. Schedule of posts : In support of the estimates under "pay of officers" and "pay of establishment" a schedule should be appended to the budget showing full particulars of the Gazetted Officer, e.g. designation, scale of pay,including fixed allowances, etc. that will be drawn during the budget year. In the case of pay of establishment, a similar schedule should be prepared indicating therein the sanctioned strength, scale of pay and provision required. The vacant post for which provision has been made in the budget should also be clearely indicated.

40. Committed Expenditure : Expenditure on plan schemes taken up during the plan period and which would not form part of the plan outlay in the subsequent plan period is to be regarded as committed expenditure on account of these schemes.

Classification of Development expenditure between (i) committed expenditure and (ii) the expenditure which would form part of the subsequent five year plan and the manner in which the relevant estimate should be sent to Finance Department as indicated below:

The schemes to be reckoned as schemes under the five year plan fall under the following categories :

(a) New Development schemes under revenue, capital and loan accounts.

(b) Development schemes representing additions to or extensions of developmental institutions or establishments, which already exist or which are being completed during the period of the plan nearing completion.

(c) Development schemes which are part of the five year plan but are not completedthe end of the five year plan period will spillover into the subsequent plan period. Only that portion of the expenditure, which is expected to be incurred for completion of the works or projects from the pervious plan is to be counted for the subsequent plan, whether provided in the capital or in the revenue budget.

(d) Development schemes of the previous plan pertaining to activities of repetitive character such as soil conservation, land reclamation, anit-malaria measures, survey and settlement etc, in such cases, all expenditure except that on head quarters staff is to be treated as part of the new plan.

(e) Only the expenditure on the maintenance of existing institution is to be treated as committed expenditure. All the expenditure on new institutions and expenditure on provision of buildings, equipments and additional staff for existing institutions is to form part of the new plan.

(g) All expenditure on maintenance of existing research schemes has to be treated as committed expenditure. Expenditure on additional research schemes is to be included in the new plan. All grants-in-aid, for research (existing as well as additional) are however, to be shown in the new plan.

(h) All expenditure on existing staff and on the maintenance of existing schemes, which are in the nature of offering facilities for promotion of welfare e.g. backward classes welfare should be shown in the estimates of committed expenditure. The additional expenditure on such schemes is to form of the new plan.

(i) In the case of schemes which are of capital nature but which, nevertheless; appear in the revenue budget, for example, roads, minor irrigation works, etc. all expenditure other than maintenance or ordinary repairs is to be included in the new plan.

(j) Subsidies for the maintenance of existing institutions should be shown as part of committed expenditure, while subsidies of development character to new societies and additional subsidies to the existing societies are to be included in the new plan. Loans of developmental character, whether medium or long term, are to be shown in the new plan.

(k) Expenditure on local development works is to be included in the new plan and, therefore no amounts are to be shown under these heads as committed expenditure.

(l) The amounts required for payment of grants-in-aid to various institutions should not be treated as committed expenditure. These grants are mostly in the nature of continuing activities and should for this reason, be provided in the new plan.

(m) if any additional posts, over and above the set up, have been sanctioned, it should be examined if they are to continue in the new plan under the normal budget. In respect of these posts alone, there will be committed expenditure.

(n) The amount required for the schemes on which major portion of work remains to be done should be provided in the new plan. The amount required for completion of the work in short, will not form part of committed expenditure.

(o) The amount needed for continuing the respective activities should not be treated as committed expenditure, but is to be included in the new plan.

16. In respect of scholarships provided in the plans under various heads such as tribal welfare education etc. in the previous plan the level of expenditure to be reached in the last year of the previous plan is to be treated as committed expenditure. The additional number of scholarships and corresponding provision over and above the level reached in last year of the previous plan would form part of the new plan.

41. New Service/New Instrument of Service has not been properly defined in the Constitution. No clear cut definition is available even in the large volume or literature, that has been written on our Constitution. This has resulted in a good deal of confusion amongst officers who have to sanction large amounts of expenditure day in and day out, throughout the financial year. On account of lack of clear instructions in this regard, very often it has been noticed that irregularities are committed in regard to sanctioning of expenditure particularly those that can normally brought within the ambit of a workable definition of New Service and New Instrument of Service. Sometimes, the situation becomes awkward when expenditure is incurred on a new item of expenditure without proper authority, there is no provision in the constitution for regulating this expenditure as in the case of excess expenditure incurred over grants voted by the Vidhan Sabha. An attempt is being made in this chapter to clearify certain issues pertaining to New Service/New Instrument of Service.

42. Articles 115(1) and 215(1) of the Constitution require that "When a need has arisen during the current financial year for supplementary or additional expenditure upon some New Service not comtemplated in the annual financial statement for that year" another statement showing the estimated amount of that expenditure should be laid before both the houses of Parliament/Legislative Assembly and necessary appropriation law got enacted. A part from the above reference to the New Service, the Constitution does not contain any other clearification on this subject. Even in the prindependence period the expenditure on new service had led to piquant situation as even then there was no proper laid down procedure to regularize expenditure on new services. The Government of India Act of 1919, had not visualized such a contingency and even though a working solution was arrived at to regularize such reappropriations. It still left a lurking doubt as to whether a particular item constituted a new item or new service.

43. What constitues a New Service ? The word is qualified by the phrase "not comtemplated in the annual financial statement for that year" and has to be construed accordingly. Broadly, expenditure arising out of a new policy decision not brought to the notice of the Legislature earlier including new activity or a new form of investment is regarded as an item of New Service. For this purpose certain monetary limits have been specified by the Public Accounts Committee of the Lok Sabha as well as the State Legislature. As regard New Instruments of Service, this can be considered as those item of expenditure arising out of an extension of an existing activity even if activity has been contemplated in the financial statement as a new service. Thus,for example,the setting up of a new government company is treated as a new service and large amount of investment to this company can be treated as a new instrument of service.

44. The contemplation of separate category of items of expenditure like a new service or a new instrument of service in the constitution only implies that the state legislature on the parliament as the case may be, has to be apprised of expenditure that are proposed to be incurred by the Government as a result of policy decisions on new activities, the impact of which would be on the public exchequer. This provided an opportunity to the legislature to have its say on the service by means of debates and vote on the items.

45. The existing rules and regulations concerning New Service/ New Instruments of Service have evolved out of the recommendations made by the Estimates Committee in their 20th and 55th report and the public accounts committee contained in their 11th report presented to the lok sabha. In their 20th report the estimates committee remarked : -

"It would be however desirable for a proper understanding of the Budget, if the new items of expenditure are shown separately from the standing charges and in a separate section within a demand for grant, both in part III where details are given and part II where the abstract is given instead of their being shown in the explanatory Memorandum or by thick letters in the demands for grants"

However, in the state government the items of new expenditure are being shown in the Volume IV as the number of items are usually not that every much large and also not difficult to pursue the Hon'able Members of the Legislative Assembly. The rules governing the New Service and New Instrument of Service, as far as the State Government is concerned, where in pursuance of the recommendation contained in the report of the Public Accounts Committee of the State Legislature the existing rules in force are contained in - Appendix.I

46. The question now arises as to what happens when expenditure is incurred by any department on the assumption that it is not a 'new service', but the Comtroller and Auditor General holds later that it is a 'new service'. In this conection the Audit interpretation would be that in so far as the expenditure has been authorised by an appropriation Act, such an expenditure on any 'new service' would be without any legal sanction. The question is not so much whether the money has been spent in accordance with rules but how the expenditure already incurred can be regularised, if it is justifiable in a given set of circumstances. The expenditure incurred on any new service without any authority can not be considered an excess expenditure within the meaning of Artical 205 as excess expenditure normally denotes excess expenditure over a certain limit. The expenditure can not also be dealt with, as an exceptional grant under Artical 206 as an exceptional grant does not make regularisation of an unauthorised expenditure. Our consititution also does not visualize such a situation. In this connection. It would be appropriate to quote from "parliamentary control over Finance"., A study of public accounts committee of parliament by Dr. S. Seshadri : -

"(i) Where money has actually been spent from consolidated fund on a " New Service" without the authority of law, the expenditure must be deemed to have been automatically disallowed; and

"(ii) the effect of disallowing expenditure is, in the words of the U.K. Treasury minutes of the 16th January 1921, reproduced on pages 606 and 607 of the Epitome of the reports from the committee on public accounts 1857 to 1937, that the accounting officer of the vote has an item in his expenditure for which he can obtain no discharge and what that he is in consequence out of cash to the extent of the charges disallowed. This shortage can be made good either by the recovery of the amounts expended or by a vote of parliament authorising the expenditure and so enabling the accounting officer to obtain a discharge for it"

47. It was however, the considered opinion that in such a contingency, the matter should be left to the committee to determine as to the course of action to be taken. So as it stands today there is no procedure laid down to regularise any expenditure on a new service not voted by the legislature. The committee looking to the circumstances in each case could take a serious or light view of the whole matter. It is therefore imperative that secretaries to Government and heads of departments have to be particularly careful in authorising expenditure, which even appears remotely a new item of expenditure. It would always be better to refer such cases to the Finance Department. This practice of referring cases to the Finance Department is derived from the age old rule laid down by the British Treasury way back in 1866.

48. It is now more or less established that all new items of expenditure have to receive specific approval of the Parliament/legislature. The sanctity of the procedure has also been explained. It is,of course,necessary to pointout that years of experience has shown that new items of expenditure are generally not given the case and attention they deserve before they are incorporated into the budget. New items of expenditure usually pertain to new schemes under the plan or expansion of an existing service under Non-Plan. These items have to be scrutinised from all angles so as to ensure that the purpose of the expenditure was really vital from the point of view of public. The long run effects of the proposed item of expenditure will also have to be taken into account as to whether it will be permanent liability to the Government, whether there are likely to be any returns financial or otherwise, so as to justify the burden, etc. Such a thorough examination takes time and therefore the process has to start sufficiently early in the course of a financial year. However, invariably it is noticed that proposals are not ready and these items are sent in hurry without adequate scrutiny by the departments. As time is short, the finance department also incudes them as unscrutnised items. This in effect means that even though the Assembly may vote the expenditure, the department has no authority to incur any expenditure unless the Finance Department has cleared it. This is again along standing British convention in vague in the United Kingdom and forms part of the seven rules or conventions which give the Treasury power of intervention, so as to ensure that new proposals which involve expenditure are properly discussed before commitments are entered into.

49. One of the serious drawbacks of having this arrangement of including unscrutinised estimates is that if ultimately the Finance Department is unable to sanction particular schemes on financial grounds the Department will be unable to spend the amount provided in the estimate even though it has been voted by the parliament/Legislature and may have to surrender it at the end of the year. In the context of successfull implementation of plan programmes,such a practice would be very unhealthy as it is likely to upset planned progress. Although this British convention, which is religiously being followed in India is good parliamentary practice, it may be bad for plan and cleared with Finance Department well ahead of time before they are included in the budget estimates. In view of a certain amount of uncertainty prevailing over plan size, it is useful to have a shelf of cleared new item ready for inclusion in the plan depending on the size of the plan, the department could include the new items.

50. Under rule 26(vii) (c) of the supplementary instructions under rule 13 of the business rules, the Finance department is required to examine and advise on all schemes of new expenditure for which it is proposed to make provision in the estimates and shall decline to provide in the estimate for any scheme which has not been so examined. If therefore, it is desired to provide for any new item in the budget of the ensuing year, application for sanction must be made in time to permit of receipt of sanction before the budget is prepared.

51. The detailed procedure to be followed in dealing with new expenditure, the points in the budget etc. are indicated in the following paragraphs :-

52. New expenditure, definition and scope of the item:- the term 'new expenditure' has not been precisely defined by any authority. The matter has largely been left to be regulated by experience and the evolution of a body of case law. Ordinarily,the term denotes expenditure on a 'new service'. There is also no authoritative definition of the term 'new service' in the constitution of India Article 205 (1) (a). In consultation with the state public accounts committee, however a working arrangement has been arrived at, under which the term "New Service", though undefined, has been taken as synonymous with the term "New Expenditure". According to the accepted working rule, a new service may be a new form of service or new instrument of service. The word 'service' signifying the adoption of a new policy, the provision of new facility or the alternation in the character of an existing facility. A new service represents a class of object of expenditure, which is entirely new e.g. the creation of an entirely new department or a new branch in an existing department provision for which has not been previously included in the sanctioned grant or appropriation. The term 'new instrument or service' should be understood to include an important extension of an existing service commitment or facility such as the provision of a new jail, new buildings, new roads, additions to an existing establishment grants-in-aid etc. Since, all these service are already being undertaken by Government from the strict logical point of view a new instrument of service cannot be said to be a new service irrespective of the amount of expenditure involved. But, legislative control of the expenditure of public funds, which is a fundamental requirement of the constitution, can not be excerised adequately, unless the legislature is informed clearly about the provision made in the budget for the continuance of existing services and for entirely new services or substantial extension of existing service. It is to satisfy this necessity of informing the legislature, that when the expenditure involved in a new instrument of service is substantial, that it is treated as a new service.

53. While Government in the Finance Department should always have discretion to decide in particular cases whether proposal involving substantial additional expenditure should be classified and treated as 'new expenditure', the kinds of expenditure, which will ordinarily be treated as new expenditure together with monetary limits and crteria laid down for determining what constitues 'new expenditure or 'new service' or instrument of service' is indicated in Appendix - I.

54. Proposals for new expenditure complete in all respects should be sent to the Finance Department by 15th November and 31st December in respect of Non-Plan and plan expenditure respectively, at the latast, unless, otherwise indicated in the budget programme. Any proposal received after this date will not be accepted in Finance Department except for special reason. Detailed procedure to be followed in new items of expenditure will be as under :-

(i) Proposals for new items of expenditure not to be held up until the programme date : Departments should arrange to process proposals even from say July/August every year in respect of schemes to be provided for in the following years' budget. Such an arrangement will avoid rush of work at the last moment.

To facilitate adherence to this arrangement, items of new expenditure may be divided into two categories, namely technically new ad really new. Proposals relating to really new items should be initiated and sent to the Finance Department earlier as and when they are ready throughout the year. It will give the Finance Department enough time to scrutinise the proposals adequately. If on the otherhand proposals of this category are referred to the Finance Department in large numbers very need the last date prescribed, there will inevitably be congestion and inadequate time for full scrutiny. There can be no objection, however, to proposals failing under the former category (i.e. technically new items) being referred to Finance Department some what later because such proposals do call for original or detailed scrutiny;

(ii) New items of expenditure not be included in the normal budget - New item of expenditure are sometimes found included in the normal budget, due to genuine error and some times unknowingly. It is one of the primary duties of Head of Departments as Budgeting officers to see that the budget is prepared correctly and proposals relating to new items are processed separately in accordance with the prescried procedure. Finance Officers functioning in most of the big establishments, should be able to distinguish these proposals for appropriate separate reference. They should ensure that genuine error do not occur; and administrative departments should on their part ensure that a new item is not allowed to be incorporated in the normal budget proposals.

(iii) Procedure for inclusion of new items of expenditure - Schemes should be well, through out and planned in all their aspects and no proposals for new expenditure should be sent to the Finance Department with inadequate details or incorrect estimates. Preliminaries like selection of sites, acquisition of land, drawing up of plan, putting up of building and procurement of equipment should be settled before provision is proposed for inclusion in order that time may not be lost after funds have been provided and voted money may not remain unutilised owing to lack of preliminary action;

Normally in respect of all items of local nature, such as selection or acquisition of sites, preparation of stage I estimates for construction of works etc., the preliminaries should be settled before the proposals are sent to the Finance Department and in respect of items to be obtained for a broad inquiries could be made from the quarters concerned as to when and to what extent supplies would become available and provision limited to what is likely to be spent in the year. In case of uncertainty regarding supplies or availability of staff and in cases where the completion of the local preliminaries is likely to take some time,the requisite funds should be obtained later, when it is needed, by supplementary grant or from the contingency fund. The same procedure should be followed in respect of items which require the approval of the Government of India.

(iv) Proposals for new items of expenditure should be self contained with all relevant details pertaining to each case; for example, a proposal for addition to the existing establishment, should be supported by such information, as the present volume of work in the Department/Office, the number of the existing staff and their disposition, the extra recurring or nor-recurring cost involved and the direct or indirect benefit that is likely to be derived by incurring the proposed additional expenditure. Similarly, in the case of a proposal for the construction of a building, the necessity for the building should be fully justified by giving a clear indication of the existing accommodation and the need for additional accommodation. In the same manner proposals for the purchase of a new vehicle, special types of furniture, typewriter and duplicating machines, etc., over the sanctioned scale should be properly justified by supplying the necessary information.

(v) The 'new item' proposals should contain clearly the estimates for recurring and non-recurring expenditure with full details under the different units of appropriation, such as pay of Officer, pay of establishment, allowances and Honoraria and contingencies etc.

(vi) Proposals for the construciton of buildings should be sent to the Finance Department for inclusion in the budget only when necessary preliminaries, such as the selection of sites, preparation of stage -I plans and estimates, etc., have been completed and administrative approval has been accorded. If the construction of the building is to be undertaken on acquired land, the progress of the acquisition proceedings and the time likely to be taken for their finalisation should also be indicated. Before sending such proposals to the Finance Department, the Administrative Department should ascertain from the Public Works Department the probable expenditure expected to be incurred during the budget year.

(vii) In cases where it is proposed to take up the works departmentally,it should be clearly indicated whether adequate arrangements exist in the department for the purpose.

(viii) Proposals for new schemes should be sent to the Finance Department for inclusion in the budget only when all relevant details necessary for having a sufficiently clear picture of a particular scheme have been worked out. For this purpose,the prospective schemes should be processecd throughout the year so that rush at the time of preparation of the budget is avoided.

(ix) It will be correct to assume that simply because a scheme or project had been discussed and incorporated in the State's Development plan, the scheme or project had ceased to be new for the purpose of budget provision and approval of the legislature. in all such cases the approval of the legislature to the charges and the increase in the outlay should not be taken for granted.

Note - Above instructions, purport to deal only with budgetary procedure and should not construed as enlarging the present delegation of powers. The instruction, are also not intended to curtail the right of the Finance Department to require that an item of expenditure shall be treated as new expenditure even though the criteria indicated in para 52 above are satisfied.

55. General Observations :- As already explained in para 15(32) of chapter II, the revised estimate is an estimate of the probable receipts or expenditure for a financial year, framed in the course of that year, with reference to the transactions already recorded and anticipations for the remainder of the year in the light of the orders already issued or comtemplated to be issued or any other relevant acts. It is essential, that the revised estimates should be prepared with great care, so that they may approximate, as closely as possible to the actuals, which will not be available for some months after the close of the financial year. These estimate, besides enabling the Government to arrive at the approximate closing balance of the current year (which will be the opening balance of the next year) are prima facie the best guide to the next year's estimates.

56. A careful preparation of the revised estimate by departmental officers demands a very close watch on the progress of revenue and expenditure under different budget heads as compare with the revenue and expenditure for the corresponding period of the past year, or previous years, Registers should be maintained to enable departmental officers to advice Government from time to time as to the amount of revenue that is likely to be realised or the amount of expenditure that is likely to be incurred during the remaining months of the current year.

57. A revised estimate is based on : -

The revised estimates need not be furnished under detailed heads except under the unit of appropriations salaries, office expenses, machinery and equipments, tools and plant, motor vehicle etc. It will suffice, if the estimate are furnished under each of the units of appropriation.

58. Methods for framing the revised estimate :- The revised estimates are generally based on the actuals of the first five months of the year and will generally be framed in one of the following ways:-

(i) by adding to the actuals of the first five months of the current year, those of the last seven months of the previous year, or

(ii) by assuming that the revised estimate for the current year will bear the same proportion to the actuals of the first five months as the actuals in the previous year borne to those of the first five months of that year.

The heads of departments and other estimating officer should use their discretion and adopt one or another of the above methods or any other suitable method for each particular case in the lights of the actual trend of revenue or expenditure during the previous year's due allowance being made for any abnormal feature in those years and for factors which may modify the realization of original expectations. It would always be of advantage to base the forecast on a careful study of the figures of three years immediately preceding, rather than those of single year.

59. Explanations :- Explanations of all important variations in revised estimate as compared with budget estimate should invariably be given. The explanation should be precise and informative; and vaguely worded phrases such as "decrease in receipts was due to smaller receipts obtained" or "increase in expenditure was due to larger expenditure on certain items" should be avoided. The reasons for decrease in revenue and increase in expenditure should be stated clearly.

60. Revised estimate is no authority for expenditure :- The revised estimate do not authorize any expenditure. If allowance is made in them for additional expenditure, it is necessary to apply separately for the additional appropriation required, unless this has already been sanctioned. Similarly, a reduction in any provision of funds in the revised estimate does not obviate the necessity for formal surrender of any amount provided in the Budget Estimates, which is not likely to be spent.

61. Finance Department's responsibility for preparing the budget :- Under the rule made by the Government under Article 166 (2) and (3) of the constitution and the instructions issued thereunder (i.e. rule 26(vii) of the supplementary instructions under rule 13 of the Business Rules, the finance department has been charged with the responsibility to prepare a statement of estimated revenue and expenditure, to be laid before the legislature each year. Although the material is supplied by the Heads of Departments and other estimating officers; the actual preparation of the budget and the estimates falls upon the Finance Department and it is solely the business and responsibility of the Finance Department to settle the estimates of receipts and disbursements. The work of preparation of the budget is regularized by the Budget Programme (Appendix II)

62. Scrutiny of the departmental estimates : - On receipt of the departmental estimates,the Finance Department will scrutinise the estimates, item by item, with due regard to the explanations furnished by the estimating officers.

63. In respect of the estimates of receipts,the finance department will take into account any special information affecting the estimates for the forthcoming year, which it may possess and which has not already been taken into account by the estimating officer.

64. In respect of the estimates of disbursements,the finance department will direct the close scrutiny to the items relating to fluctuating and non-recurring charges. It is only in rare instances that it should be necessary for the finance department to make any modification in the estimates of recurring charges proper; it will nevertheless particularly examine the estimates under such items as "Pay of Officer" and "Pay of Establishment", and if necessary modify them in respect of adjustment necessary on account of probable savings on the basis of actuals of previous years. The Finance Department will scrutinise the estimates of flctuating charges, item by item, and will exercise any increases, which are not adequatley or satisfactorily explained. It will further scrutinize items in respect of which no increase is proposed with the object of effecting any legitimate reduction, which can be made. It will similarly scrutinize the estimates of non-recurring charges, exercising any amounts, which were not covered by sanction and eliminating or reducing the estimates for the forth coming year, where there is no reasonable certainty, that the amount estimated will be spent. It will also scrutinize and make such corrections as are necessary in the classification of receipts and disbusements (i) under the various major heads, minor heads and primary units of appropriation and (ii) under -

(a) votable and charged;

(b) revenue and capital;

(c) plan and non-plan

65. Enquiries by finance department to be attended to promptly :- In the course of the examination of the estimates, the finance department may find that in respect of particular items further explanations or clarifications, etc. are necessary before the estimate can be settled. The necessity of such further information being supplied to it, with the least possible delay needs no emphasis. The Finance Department will normally address their enquiries to the estimating officers. The required information must be furnished to the Finance Department within the time alloted for the purpose, failing which the Finance Department will finalize the estimate at its own discretion and the responsibility for any incorrectness of the estimate will ultimately devolve on the officers concerned.

66. Compilation of Detailed Estimates by Finance Department :- As a result of its scrutiny of each departmental estimates the Finance Department will adopt figures for each item included in the estimate and will cause the estimate so adopted to be compiled in the form it appears in the Detailed Estimate. The Finance Department may, if it considers necessary, send after its scrutiny, any departmental estimate to the secretary of the administrative department concerned, either for information or to enable him to clear up any doubtful point.

67. Further scrutiny and submission of the estimates to the council of minister . When all the departmental estimates have been settled and detailed estimate are complete in all respects, the Finance Department will re-examine the estimate as a whole and will make such changes as may be found to be necessary due, for example, to over all unsatisfactory financial position or modification of the contemplated loan programme or any other financial factor affecting the estimates. A note by the Finance Secretary, based on the figures in the consolidated estimate, together with the schedule of new expenditure and the connected explanatory notes, shall then be placed by the Finance Department before the council of Ministers ordinarily in the Second week of January. The following material is circulated to the council of Ministers :-

(i) Finance Secretary's note to the Council of ministers on the budget estimate.

(ii) Statement of Revenue Receipts and Expenditure and Disbursements.

(iii) Statement of new expenditure with precis-Non-Plan.

(iv) Statement of new expenditure with precis-plan.

The council may then consider questions of policy arising from the budget, such as fresh taxation, flotation of loans in the market and select, with reference to the funds available the new items which are to be included in the budget. The amounts for items thus selected shall be added under the appropriate demands for grants in the detailed estimates to be presented to the Legislature. Other decisions taken by the Government affecting those estimate will also be incorporated there in. The Budget is thus made ready for presentation to the Vidhan Sabha.

68. Last stage modification :- The Finance Department may at any stage before the budget is presented to the Legislature make such modification in the estimate as may be necessitated by the emergency or the discovery factors disturbing the estimates so far framed. Such action is incumbent on the Finance Department in the fulfillment of its responsibility to present the estimate as correctly as possible.

69. Details of the Budget Literature - The Budget Literature, which is supplied to the Legislature at present, consists of the following documents, namely :-

70. Procedure for presentation to and disposal of Budget by the Legislature. The procedure for the presentation of the Budget to the Legislature and for its disposal is regulated by rules 149 to 161 of the Rules of Procedure and Conduct of Business of the Madhya Pradesh Vidhan Sabha. The relevant rules as in force at present are reproducted in Appendix III.

71. Presentation of the Budget to the Legislature - The Finance Department will present the budget to the Legislature with a speech of Finance Minister explaining the salient feature of the Budget and the financial position of Government. At the same time copies of the speech and of the Detailed Budget and Explanatory Memorandum will be supplied to the Member's of the Legislature. Copies will also be sent to the heads of departments and controlling officer.

72. Appropriation Act.- After the Budget is finally passed by the Legislature, the Appropriation Bill, which will be introduced by the Finance Minister in the Assembly to provide for the appropriation out of the consolidated fund of the state of all moneys required to meet-

(a) the grants voted by the Legislative Assembly.

(b) the expenditure charged on the consolidated fund of the state.

The Bill, when passed and assented to by the Governor is published in the Government Gazette as the Madhya Pradesh Appropriation Act. The amounts specified in the schedule appended to the Act sets the limit under each grant or appropriation up to which the executive can incur the expenditure.

73. Communication of Budget grants by Finance Department - As soon as detailed estimates and grants have been finally passed by the Legislature in accordance with procedure laid down in Articles 202 to 204 of the Constitution, Finance Department will communicate to all Controlling Officers in such form as may be convenient, the allotments placed at their disposal for expenditure during the budget year under the various Grants and Heads of Account. Copies letter communicating the grants will also be forwarded to the Administrative Departments concerned.

74. Distribution by Heads of Departments :- The work relating to communication and distribution of grants by the controlling authorities to disbursing officers subordinate, to them, should be completed without avoidable delay and in any case not later than the end of April in each financial year. In making the distribution, the grants voted by the Legislature and the appropriations made to meet "charged" expenditure should be kept distinct and should be dealt with separately. Distribution is not necessary in the case of primary units of appropriation for which the controlling authority wishes to retain the entire appropriation in his own hands and watch the expenditure centrally for the State, as a whole.

75. The controlling Officers, may distribute the whole of the allotment at their disposal under a primary unit among the disbursing officers concerned, who are subordinate to them in such manner as they may deem fit, or they may keep a portion of the grant as an undistributed reserve in their own hands. They may distribute the appropriation for a primary unit as a whole, or the Primary unit may be broken up into a number of secondary units each of which will cover either one or number of detailed Heads of Accounts and the appropriation for any of them, wholly or in part, may be placed at the disposal of one or more disbursing officers. It must be remembered that the grant for a primary unit can be increased or decreased only by a formal order of re-appropriation by a competent authority authorizing transfer of funds from or to another unit and the sum total of all allotment made by the controlling officer (including his own reserve) from any primary unit, should not exceed the amount of the unit to the portion there of, placed at his disposal.He must similarly distribute any increases or reductions subsequently made in the grant of any part or it by competent authority, whether the alternation is due to supplementary grant, a reduction or as reappropriation.

76. In making the distribution and in all subsequent orders or correspondence dealing with grants, reappropriations,(e.g. re-distribution of grants, re-appropriations of grant and with drawals and supplementary grants, etc.), the classification and nomenclature of each item as shown in the printed budget, including the serial number of the grant, the major and minor head of account and the primary and secondary unit of appropriation must be indicated.

77. At times deductions on account of probable saving may be made as separate units under major or minor heads, when past experience shows that such savings are likely to accrue, but it is not possible to indicate, where they will be affected. In such cases the Controlling Officer should make appropriate cuts under the several primary units so as to keep the amount distributed within the total. No re-appropriation will be permitted from a head in which alump sum cut has been made for probable savings, until savings sufficient to cover that cut have been surrendered from the gross grant.

78. It should carefully be borne in mind that whenever cuts are made in the budget estimates, whether in specific terms or as lump sums for probable saving, the local authorities must always make every effort to keep on expenditure within the allotment before coming up with a demand for a supplementary grant.

79. Occasionally minus entries appears in the Budget Estimate other than those made for probable savings. These are on account of credits, such as recoveries from other Government Departments etc. which are under the accounts rules adjusted by deduction on the expenditure side or charges carried out to other heads. In such cases the deduct entries are not taken in the account and a vote is obtained for and appropriation audit is conducted against the Gross Grant.

80. The Controlling authority will maintain a register of grants and appropriations in which he will note the original grants, their distribution amongst subordinate officers and modifications made therein from time to time.

81. Expenditure may be of three kinds:-

82. Sanction, once given by competent authority remains valid until -

The act of appropriation may be taken to occur at the moment the Appropriation Act is passed by the Legislature and to have effect on 1st April each year. It follows that the provision for any expenditure is operative only up to March, 31st every year.

83. No expenditure can be incurred till sanction has been obtaind and no sanction can be given till funds have been arranged for. In the case of permanently sanctioned expenditure, or expenditure sanctioned for a term, the question of obtaining sanction cannot arise because the sanction already exists, and continues in the absence of a definite order to the contrary.

84. When grants have been communicated and distributed, the officers to whom allotments have been made under particular categories of appropriation, have subject to any general or special order issued by competent authority, full powers to incur sanctioned expenditure falling under those categories; provided that -

85. An appropriation is intended to cover all charges, including all liabilities of past years due to be paid during the year or to be adjusted in the accounts of the year. It is operative until the close of the financial year, when any unspent balance lapses and is thus not available for utilizations in the year are treated as pertaining to the following year. After the close of the financial year on March, 31st, all the actual transactions of the year are treated as pertaining to the following year, but bonafide transfer entries pertaining to the accounts of the year are permissible till the accounts of the year are closed.

86. No appropriation is needed for recoveries of expenditure, which are treated as receipts, both initially and finally and are not required by rule to be taken in reduction of charges against grants. Similarly, no appropriation is required for payments classified as refunds of revenue, which appear as deduction under the revenue heads of account concerned.

87. An appropriation or re-appropriation within a grant can be sanctioned by the competent authority at any time, within his powers.

88. In order to enable the Finance Department to discharge the responsibility imposed on it for watching the State Government balances, Accountant General will furnish a statement of actual of receipts and outgoing of each month by the 20th of the following month, and such other information, as may be required regarding the progress of actuals in such form and on such date, as may be settled mutually from time to time. The Accountant General will also inform the controlling authority concerned immediately on the first appearance of any excessive proportionate outlay under any grant (and under any primary unit of appropriation if so requested).

89. The periodical returns, which the Accountant General has to submit under paragraph 88 to the authorities responsible for watching the progress of actuals as compared with the Budget, should be despatched punctually on the dates prescribed, or if any delay is anticipated, the authorities concerned should be informed accordingly.

It must be clearly understood that the responsibility for making the proper use of the periodical returns rests with the authorities receiving them,and they should not expect the Accountant General to draw their special attention to the special features of any case dealt with in the return. The Accountant General will however endeavour to render such assistance to the authorities concerned.

90. Control over Expenditure - to secure complete control of expenditure, it is necessary -

(i) to watch it as it occurs, and

(ii) to compare it constantly with the grant which it is met.

The object of such control is to see that expenditure is restricted to the sanctioned allotment.

91. As indicated in paragraph 73,the Finance Department will communicate to all controlling officers, the allotments placed at their disposal for expenditure during the budget year under the various grants and Heads of account. The authority administering this allotment is known as the controlling officer and he is responsible for watching the progress of expenditure on public services under its control and for keeping the expenditure within the sanctioned allotment. To ensure that this control over such expenditure is effective and real and that the controlling officer is in a position, from month to month, to estimate the likelihood of savings and excesses over the sanctioned allotments, the following procedure should be observed by all concerned : -

All anticipated savings should be surrendered to Government immediately, if they are foreseen without waiting till the end of the year, unless they are required to meet excess under some other unit or units which are definitely foreseen at the time. No saving should be held in reserve for possible future excesses.

92. It is contrary to the interest of the State, that money be spent hastily or in an ill considered manner, merely because it is available or that the lapse of a grant should be avoided. Any grant, that cannot be profitably utilized should be surrendered. The existence of likely savings should not be seized as an opportunity for introducing fresh items of expenditure which might wait till next year. A rush of expenditure, particularly in the closing months of the financial year will ordinarily be regarded as breach of financial regularity.

93. Expenditure for which no provision has been made in the original budget estimate of the current financial year should be rarely, if ever, be incurred after appropriate sanction.

94. It may however, be found that an excess is likely owing to either (1) an unforeseen emergency or (2)