CHAPTER VIII
Print
New Expenditure
58. Under the rules and instructions issued by the Governor under Article 166 (2) and (3) of the Constitution, the Finance Department is required to examine and advise on all schemes of new expenditure for which it is proposed to make provision in the Budget and is empowered to decline to make provision for any scheme which has not been so examined.
59. There is no authoritative definition of the term "new service" occurring in the Constitution [cf. Article 205 (1) (a)]. 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 term "new expenditure". It is also not possible to define rigidly the term "new expenditure" and in actual practice based on convention it bears a wide interpretation. Broadly speaking, expenditure involved on a new scheme, in the adoption of a new policy, provision of a new facility, or any substantial alternation in character or extent of an existing facility, will normally be treated as constituting "new expenditure". In some cases, increase in expenditure, other than increase due to normal growth or rise in the price of commodities, on the extension or development of an existing scheme or facility, is also, where it is appreciable, treated as "new expenditure".
For the purpose of general guidance, some examples of "new expenditure" are given below.
(i) Increases, etc., in staff -
(a) creation of posts, whether as addition to the existing cadres or otherwise, unless(such posts form part of schemes falling under item (iv) and (v) below);
(b) Delete
(c) revival of posts which were retrenched with the cognizance of the Legislature.
(ii) Delete
(iii) Revision of existing scales or rates of pay involving additional recurring liability.
(iv) Starting of new schemes or undertakings.
(v) Starting of additional schemes or undertakings similar to strengthening, reorganisation, modernisation extension to those already existing if the initial total cost as prescribed by Finance Department from time to time involved exceeds Rs. 1 lac recurring or Rs. 4 lac non-recurring.
(vi) Replacement of an existing permanent service/goods by another, like replacement of vehicles, plant or machinery etc. above Rs 50,000 .
(vii) New scholarships, stipends, etc. involving additional liability.
(viii) Grants-in-aid to new institutions or in excess of the approved scales.
(ix) Any permanent increase in the allotment for contingent expenditure above one lac.
(x) Remission of loans not covered by existing rules and orders regulating such remissions.
(xi) Any loans or investment in Public Undertakings for local bodies, institutions and private bodies, etc., except where such loans are covered by the existing rules or standing orders.
(xii) All major works and also those minor works the cost of which cannot be met from the existing reserves for such works.
(xiii) Purchase of tools and plant, except where the cost is met from the provision for a sanctioned project or from a duly constituted Depreciation Reserve Fund.
(xiv) Purchase of equipment and furniture where the cost exceeds Rs. One lac in any one case.
(xv) Transfer of Government assets of a Government undertaking proposed to be converted into a State owned private limited company to such company.
60. To enable a proper and detailed examination being carried by Government, all proposals and schemes for 'new expenditure' should be submitted by the Heads of Department or estimating officers concerned to the administrative departments concerned of the Secretariat, through the usual channels, as soon as they are ready and should not be held up for being submitted towards the last date which is October 15. The administrative departments will examine them thoroughly, both from the administrative and financial aspects, and recommend to the Finance Department only such of them as are not only administratively sound but also are really essential and urgent. The proposals should reach the Finance Department in sufficient time and, in no case, later than November 30, complete in all respects, to enable it to carry out proper examination and obtain such further information as may be considered necessary by it. The proposals or schemes which the administrative departments may have themselves to formulate must also be referred to the Finance Department very early. November 30 is the last date after which the Finance Department will be at liberty to decline to accept any proposals, whatever may be the reason for delay.
61. Every proposal or scheme involving new expenditure must be explained as fully and concisely as possible and its financial implications, both immediate and ultimate, as also the physical target clearly brought out. It should also be explained and shown distinctly whether the proposal forms a part of the development programme included in the Five Year Plan and if so yearly allocation and ceiling fixed under the Plan should be specified. The estimates of cost should show the recurring and the non-recurring expenditure separately, by the major and minor heads, sub-heads, primary units and detailed heads of account. In the case of recurring expenditure and of non-recurring expenditure proposed to be spread over a series of years, the estimates for each year should be given. If any assistance in the shape of loans, grants, contributions or donations or any other receipts or recoveries are expected, details thereof for each year should be given and the heads of account to which they will be creditable or taken in reduction of expenditure indicated.
62. In framing the estimates of cost, the date from which a new scheme likely to be introduced and whether it will be introduce in full from the beginning or by stages must be carefully considered. Account should be taken of any administrative or other difficulties likely to be encountered and the time likely to be taken in the various sanctioning processes. In brief, only so much should be provided in the estimates as will actually be spent in a particular year. In the case of schemes to be taken up by stages or under a phased programme, the different stages and the expenditure expected to be incurred and the income anticipated, if any, at each stage should be indicated.
63. Schemes relating to engineering projects or works must be accompanied by preliminary plans and approximate estimates. In the case of buildings, the number and dimensions of the various types of rooms proposed to be constructed and the basis for providing accommodation should be clearly explained. The Finance Department may decline to make provision in the budget for any project or work for which the administrative approval of the competent authority has not been obtained. The total estimated cost of the project, the time likely to be required for its completion and the expenditure to be incurred each year (quarterly basis) should be stated in every case after consulting the agency to whom the execution of the project is to be entrusted. It has to be borne in mind that even after provision has been made in the budget on the basis of preliminary plans and approximate estimates, time is required for preparing detailed plans and estimates and according necessary sanctions, inviting tenders and settling contracts. In many cases land has to be acquired under the Land Acquisition Act which takes time. Sometimes seasonal conditions and scarcity of Labour or of building materials in the market also delay the start or the progress of a work. All relevant factors should be carefully taken into account. If as a result of the construction of new buildings any of the existing buildings are likely to be rendered surplus, it should be indicated how they are proposed to be utilised.
65. Proposals for starting of new undertakings, or of additional undertakings similar to those already existing, should give full financial and other details as well as the justification. In the case of the latter, the pattern and average cost of existing undertakings should be mentioned for comparison.
66. Proposals relating to sanction of loans or grants-in-aid to local bodies and other non-Government institutions, corporations, private parties and individuals, etc., should not be submitted to Government until the admissibility of the loan or the grant-in-aid applied for in each case has been fully examined with reference to any existing rules or orders or approved schemes. If the loan or the grant-in-aid applied for is for a new scheme or for expansion of an existing scheme, it is necessary to satisfy that full details have been worked out and have received the approval of the competent authority. Proper assessment of the latest financial position of the party concerned is absolutely necessary to determine whether (i) Government aid is really called for; (ii) the balance of the expenditure, if any, can be met by the party concerned from its own resources ; and (iii) there is likely to be any difficulty effecting recovery of the loan proposed to be granted and the interest thereon. The terms and conditions to be attached to the proposed loan or grant-in-aid should be clearly mentioned.
67. Proposals for the permanent increase in the allotment under ' Contingent expenditure should be supported by details of the various recurring items and the expenditure actually on each during the past three years.
68. In all cases in which purchase of articles from outside India is involved, the name of the foreign country and the currency in which payment will be made should be stated, it being also indicated whether or not supplies have been assured when required in the event of firm orders being placed.
69.In the case of a proposal which does not involve new expenditure in excess of Rs. 1 lac if recurring or Rs. 4 lac if non-recurring, no explanatory note need be prepared for the Finance Department. After the Finance Department has examined the proposal and raised no objection to it, the administrative department will prepare a schedule of new expenditure in Form B.M. 5 and send it to the Finance Department for being taken over. In all other cases draft explanatory notes should be prepared in such form or manner as may be prescribed by the Finance Department. A statement in Form B.M. 5 should also be appended to each such note.
No reference should ordinarily be made in the explanatory notes to official correspondence .Each note should be signed by an officer of the department concerned not below the rank of Joint Secretary .
70. In order to enable the Finance Department to check up the schedule of new expenditure and to avoid a inadvertent omissions, the administrative departments will maintain a list of the each item which have been examined and passed by the Finance Department, a separate list being maintained, with the various items arranged in order of priority, for each Demand for Grant/Charged Appropriation. A copy of each of these lists must be furnished to the Finance Department within a week after the last date prescribed, for accepting items of new expenditure (See para. 60) has expired.
71. The instructions contained in the preceding paragraphs should be borne in mind also while dealing with proposals for new expenditure arising in the course of the current year for which provision is required to be made through supplementary estimates.
72. It must be carefully understood that the acceptance by the Finance Department of a proposal, item, or scheme of new expenditure does not constitute any authority for the incurring of any liability in connection therewith until necessary provision has been included in the Appropriation Act and the competent authority has sanctioned the incurring of the expenditure in each case.
