CHAPTER XVIII
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Public Account of the State
195. All revenues received by the Government of a State, all loans raised by that Government by the issue of treasury bills, loans or ways and means advances and all moneys received by the Government in Consolidated Fund of the State and provision is made in the Appropriation Bill passed under Article 204 of the Constitution for the appropriation out of the Consolidated Fund of all money required to meet the grants made by the Assembly and the expenditure charged on the above Fund. All other public money received by or on behalf of the Government of a State is credited to the Public Account of that State, and disbursements from that account, outside the Consolidated Fund of the State, do not require any appropriation of funds by the Legislature. The details of Receipts and Payments of Public account are shown in the vol.-II of Budget literature.
196.The main division of the public account of this State is -
(i) Small Savings, Provident Fund etc.(Major head 8001 to 8012)
(ii) Reserve fund (Major head 8115 to 8235)
(iii) Deposit and Advance (Major head 8336 to 8554)
(iv) Suspense & Miscellaneous (Major head 8656 to 8680)
(v) Remittances (Major head 8781 to 8797)
(vi)Cash Balances (Major head 8999)
(cf. List of Major and Minor heads of Account of Union and states issued by the Ministry of finance Department of Expenditure Controller General of Accounts)
The first three divisions deal with receipts and payment in respect of which Government becomes liable to repay the moneys received or has a claim to recover the amounts paid together with repayments of the former and recoveries of the latter. These are the transactions in respect of which the Government acts as a banker, receiving the amounts which it afterwards repays and paying out of the amounts which it subsequently recovers, e.g., deposits of Local Funds, Provident Funds of Government employees and departmental advances, etc. The other division comprises merely adjusting head under which appear remittances between treasuries and transfers, between different accounting circles. All initial debits or credits are cleared eventually by adjustment under final heads.
The Public Account transactions appear in the State Budget under the following heads :
I. Small Saving, Provident Fund etc.
- (1) 8005 - State Provident fund
- (2) 8011 - Insurance and Pension funds
J - Reserve Funds
a - Reserve Fund bearing interest
(1) 8115 - Depreciation / Renewal reserve fund
(2) 8121 - General and other Reserve fund
b - Reserve fund not bearing interest
(1) 8222 - Sinking Fund
(2) 8223 - Famine Relief fund
(3) 8225 - Roads & Bridge fund
(4) 8226 - Description / Renewal fund
(5) 8229 - Development & Welfare fund
(6) 8235 - General and Other Reserve Fund
K - Deposit and Advances
a - Deposit bearing Interest
(1) 8336 - Civil Deposit
(2) 8338 - Local Fund Deposit
(3) 8342 - Other Deposit
b - Deposit not bearing interest
(1) 8443 - Civil Deposit
(2) 8448 - Local fund Deposit
(3) 8449 - Other Deposit
c - Advances
(1) 8550 - Civil Advances
L - Suspense & Miscellaneous
b - Suspense
(1) 8658 - Suspense Accounts
c - Other Accounts
(1) 8670 - Cheques & Bills
(2) 8671 - Departmental Balance
(3) 8672 - Permanent cash Interest
(4) 8673 - Cash Balance Investment Account
(5) 8674 - Security Deposit made by Govt.
(6) 8675 - Deposit with Reserve Bank
d - Account with Foreign Countries
(1) 8679 - Account with other countries
e - Miscellaneous
(1) 8680 - Miscellaneous Govt. Account
M - Remittances
a - Money order and other remittances
(1) 8782 - Cash Remittances and adjustment between offices rendering accounts to the same account office.
b - Inter Govt. Adjustment Account.
(1) 8786 - Adjustment Account between Central and State Govt.
(2) 8793 - Inter State Suspense .
I - Small Saving, Provident - Fund etc.
197. The term ‘Saving and fund’ is used to describe a number of interest bearing organisations of Government in respect of funds deposited with them. The various Provident Funds for Government employees and the State Government Insurance Fund are classified under this head. Government pay interest on the sums deposited in them. Provision for the annual charge on account of interest creditable to the account of the deposits is, however, made under head "2049- Interest Payments" .
J - Reserve Fund
a- RESERVE FUND BEARING INTREST
Depreciation Reserve Fund Irrigation (U. P.)
198. Transactions pertaining to the Depreciation Reserve Fund of the schemes in the Irrigation Department are recorded under this head. This fund is intended to provide a reserve sufficient to meet the cost of renewals and replacements of plant and machinery , etc. , as and when required , to keep the irrigation schemes in sufficient working order . Provision for depreciation is made under the Grant relating to expenditure on Irrigation Works met from Revenue and the expenditure on renewals and replacements is initially booked under that Grant but subsequently transferred to the accounts of this Fund and the equivalent amount is taken in reduction of expenditure under the revenue expenditure heads concerned. Interest From State revenues is allowed on the un invested balance of the Fund and is credited to the relevant revenue receipt head and the interest earned on investments is also credited to that receipt head.
b- Reserve Fund not bearing interest
199.This consists of following major head :
(A) 8222 Sinking Funds.
(B) 8223 Famine Relief Funds
(C) 8225 Roads & Bridge Fund.
(D) 8226 Depreciation / Renewal fund
(E) 8229 Development and Welfare fund
(F) 8235 General and other Reserve fund
8222 Sinking Funds
Provision for amortisation of open market loans is governed by the terms of notification of each loan. It is generally obligatory for the government, under the terms of the prospectus, to provide for a Sinking Fund (Depreciation) from current revenues to be utilised for purchasing the securities of the loan for cancellation . The annual contribution to the Sinking Fund (Depreciation) is calculated at a certain percentage of the nominal value of the loan concerned. It is also compulsory to make such additional annual contributions to a Sinking Fund towards the liquidation of the open market loan as the Government may decide from the amortisation of the Government of India loans repayable in one instalment. Another Sinking Fund has been constituted for redemption on maturity, of Zamindari Abolition Compensation Bonds Stocks Certificates. The amounts allotted to the Sinking Funds are credited to the head "Deposits and Advances – Deposits not bearing interest – Sinking Funds by charge to the revenue head "2048-appropriation for Reduction or Avoidance of Debt".
Sinking Funds created for depreciation of loans are used in purchasing securities of the loans for cancellation, if available in the market and provision, equal to the annual contribution from revenue plus the amounts, if any, left unutilised in cancelling securities in the previous year, are made in the State budget on the disbursement side of the head "Sinking Funds". On actual cancellation of the securities the nominal value is debited to the head "Permanent Debt" by per contra credit to the head, "L- Suspense & Miscellaneous- Government Account ".
Amounts at credit of sinking funds, created for liquidation of open market loans on their maturity, are generally invested in Government Securities and the interest realised on securities is credited to the sinking funds concerned. The amount so invested is debited to the head "Sinking Fund Investment Account".
There are a number of Reserve Funds, fed by contributions from the Consolidated Fund of the State, which have been created for certain purposes. The notable ones at present are:
i. The U.P. Famine Relief Fund.
ii. The U.P. Zamindari Abolition Fund.
iii. Revenue Reserve Fund.
iv. The U.P. Road Fund.
v. Depreciation Reserve Funds of Government commercial concerns.
(i)The U.P. Famine Relief Fund
The U.P. famine Relief Fund, which was established under the U.P. famine Relief Fund Act. 1936, to replace the Famine Relief Fund, is mean for expenditure on (1) the relief of serious famine, and (2) the relief of distress of a serious nature arising from draughts, floods and other natural calamities. The balance at credit of the Famine Relief Fund was transferred to the newly constituted Fund and invested in securities of the Central Government. The Fund is fed from assignments made to it from State revenues from time to time. Such assignments are charged on the Consolidated Fund of the State and debited to the revenue head "2245-Relief on account of natural calamities" by credit to the Fund in the deposit section of the accounts. Expenditure on Famine relief measures is initially charged to the revenue head mentioned above but subsequently adjusted by debit to the accounts of the Fund and credit to the revenue receipt head "0250-Other Social Services, 800- other receipts Transfer from famine relief fund".
(ii) The U.P. Zamindari Abolition Fund
The Zamindari Abolition Fund was created in 1949 with an initial transfer of revenue amounting to rupees one crore. The deposits made by the tenants for the acquisition of bhumidhari rights under the U.P. Agriculture Tenants ( Acquisition of Privileges ) Act. 1949, were credited to the Fund. Since the abolition of Zamindari the deposits made by sirdars for acquisition of bhumidhar rights under the U.P.
Zamindari Abolition and Land Reforms Act. 1950, are being credited to the Fund. The moneys at the credit of the Fund are invested from time to time and the interest accruing on such investments is also credited to the Fund. Withdrawals from this Fund are made for payment of compensations and rehabilitation's grants to ex-zamindars and tenure-holders.
(iii) Revenue Reserve Fund
A Revenue Reserve Fund has been instituted since 1941-42 for the purpose of receiving a portion of the revenue surplus which the accounts for any year may disclose. The primary object of the Fund was to provide a reserve for expenditure on post-war development of the State. The Fund is now used, where necessary, to cover revenue deficit in any year arising from increased developmental activities or any other reasons.
(iv)The U.P. Road Fund
This Fund is fed from receipts under the U.P. Motor Vehicles (Taxation) Act and has been created to provide a reserve for expenditure on construction, maintenance and improvement of State roads and on payment of grants to local bodies for improvement of their roads. The actual expenditure met from this Fund in various departments is booked initially under the service heads concerned and ultimately transferred to the Fund. Due to amendment Constitution (74&76) the local bodies have Constitutional status, therefore sanction is through State Finance Commission, as devolution from State Tax Receipt.
K- Deposits and Advances
This division consists of (i) current accounts of Local Funds and other local authorities who are permitted to bank with Government treasuries. (ii) transactions relating mainly to sums deposited with the Government in the daily course of public business by or on behalf of the members of the public, such as security deposits of contractors, personal deposits, deposits made in Revenue Courts on or in connection with the revenue administration, sums received in advance from Municipal Boards and other bodies financially independent of Government, for payment of compensation for land acquired for such bodies, and (iii) transactions, connected with funds accumulated from contributions made by Govt., Semi Government and autonomous bodies.
a. DEPOSIT BEARING INTEREST
The transactions recorded under this sector is concerned with deposits of autonomous bodies which have been declared as Local Fund will be recorded under a distinct Sub-Head. Under Major Head 8338-Deposit Local Fund & there may be
101-Deposits for Municipal Corporation
102-Deposit for State Transport Corporation
103-Deposit for State Housing Boards
104-Deposit for other Autonomous Bodies
Under Minor Head 104- Deposits of other Autonomous Bodies, Sub Heads-Provident Fund of Primary Teacher, Secondary Teacher, Higher Education etc. are opened.
b-.DEPOSIT not bearing Interest
200.The transactions recorded under this group relate to deposits of different courts like revenue court, civil courts, criminal courts, personal ledger deposits of Government Departments etc. under head 8443-Civil Deposit. In U.P. the Funds like Panchayat Samiti Funds, Village Panchayat Funds, Zilla Parihsad Funds, Town Area Funds etc. are included under Major Head 8448-Deposit of local Fund. Some of the deposit concerned with compensation etc. of Municipalities etc. are also classified under Major Head 8443-Civil Deposit and its Minor Head 117- Deposit for work done for public bodies or private individual.
L - Suspense & miscellaneous
201. under this head, those items of payments or receipts which for insufficient information or other reasons cannot be accounted for directly under proper heads of account: that is, this head is intended for temporary accommodation of transactions affecting the balances of the State, pending final adjustments on receipt of debits and credits. Transaction on behalf of Central Government is also accounted under this head "8658- Suspense Account - 112- Tax deduction at Source.
M-Remittances
202. Cash remittances between treasuries themselves departmental accounts and transactions of Public Works Officers with treasuries and other officers of the Civil Department including cheques issued, are recorded under this head.
N-CASH BALANCES
The amount invested out of the cash balances are booked under cash balance head. The examples are:_
101-Cash in Treasuries
102-Deposit with Reserve Fund
103-Deposit with Other Bank
104-Remittances in Transit-local
105-Remittances in Transit-Foreign
