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(a) Budget – The Finance Ministry places before the Parliament under Article 112(1) of
the Constitution an Annual Financial Statement giving the estimated receipts and
expenditure of the Central Government for the ensuing financial year. This statement,
also called the 'Budget', is prepared usually on the first working day of February. The
statement not only includes the estimated receipts and expenditure for the ensuing
financial year but also contains revised provisions for the current year besides actuals
for the previous year. The Budget presented before Parliament is based on the Revised
Estimates/Budget Estimates submitted by various individual offices duly vetted and
consolidated by the Heads of Departments/Ministries.

(b) Vote on Account – As the passing of the Budget by both the Houses of Parliament
may take some time, the Finance Ministry may obtain 'A Vote on Account' to cover
expenditure for the first one month or such longer period as may be necessary generally
in proportion to the annual Budget. This will, however, be utilized only to meet normal
expenditure of the departments, and not for any New ‘Service’.

(c) Distribution of Grants – After the Budget is passed, the Finance Ministry
communicates to the various Ministries/Departments figures of Revised Grants for the
current year as also the Budget Grants for the next financial year, which in turn, will be
communicated to the various offices/units.

(d) Expenditure on new service – No expenditure shall be incurred during a financial

year on a 'New Service' not included in the Annual Budget without obtaining a
supplementary grant.

(e) Excess over sanctioned grant not permissible – No expenditure should be incurred
in excess of the total grant sanctioned by Parliament. If any excess is found necessary,
supplementary grant or appropriation or an advance from the Contingency Fund should
be obtained.

(f) Budget grant to be utilized only during the year – Any grant or appropriation
sanctioned for a financial year should be utilized only during the year including clearing
off of liabilities for the previous years. Any unspent balance will not be available for
utilization in the next year and thus lapses at the end of the year.

(g) Re-appropriation – Re-appropriation of funds from one primary unit to another

primary unit within a grant may be sanctioned by the Department/Administrators/Head
Of Departments before the close of financial year. However, there are various
instructions under Rule 10 of DFPRs restricting such reappropriation, e.g., re-
appropriation not permissible between 'charged' expenditure and 'voted'
expenditure, revenue section to capital section & vice versa or Major Works and other
items of expenditure, etc.
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(h) Surrender of Savings: Any anticipated saving noticed by the departments should be
immediately surrendered to the Government without waiting for the close of the year.
Such savings should not be utilized to introduce fresh item of expenditure, which may
wait till next year. However, such savings can be kept for adjustment by re-
appropriation against excesses found necessary under other items of essential
expenditure.

(i) Form of Budget Estimates and Sub-Head: The form in which the Budget Estimates are
to be prepared and the sub-heads under which provisions for expenditure are to be
made should be as prescribed by the Finance Ministry and no change is permissible.

(j) Advance from Contingency Fund: If any excess over the sanctioned grant is found
unavoidable or expenditure on a new service not provided in the Budget Estimates
becomes necessary and, it there is no time to obtain supplementary grant, an advance
from the Contingency Fund set up under Article-267 (1) of the Constitution shall be
obtained before incurring the expenditure.

(k) Acceptance of Revised Estimates: The figures as accepted by the Ministry of Finance
against Revised Estimates are communicated to the offices by the Heads of
Departments well before budget as decided by MoF after pre-budget discussions. The
expenditure for the remaining part of the year should be so adjusted as to be within the
accepted provisions. If in any case it is found that the accepted provision is not sufficient
to meet the essential items of expenditure the matter should be taken up with the Head
of Department immediately for possible re-appropriation within their powers.

(l) Final Estimates: The offices will be required to submit the Final Estimates along with
the Monthly Statement of Expenditure of February to be submitted in March. The
excesses or savings over the accepted Revised Estimates will be indicated in this
statement with full justification. While no additional provision could be granted by the
Finance Ministry, the Head of Department may provide additional funds needed by any
office by re-appropriation of savings from other units to the extend available. The final
expenditure to be incurred by the units during March will be only after the additional
funds are provided by re-appropriation. It should be ensured that there are absolutely
no variations between the accepted Revised Estimates (plus additional provision by re-
appropriation, or minus provision shows as surrendered in the Final Estimates) and the
actual final expenditure up to the end of March. Hence the Final Estimates included in
the statement for February should be carefully assessed and accurately prepared. There
could normally be no excesses, as the PAO will not entertain any claim in excess of the
provision. Non-utilization of the available provisions by any office is also seriously
viewed, as this would have deprived of some other needy unit from utilizing the same.

(m) No expenditure incurred from the Consolidated and Contingency Funds of India on
or after 1st April of a financial year, under the provisions of Articles 114 to 116 and
267(1) of the Constitution, will be protected by law unless authorised by an
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Appropriation Act passed in accordance with the provisions of Article 114. All
disbursements from the Consolidated Fund during a financial year, which are not
authorised by the Annual Appropriation Act passed by the Legislature before the close
of the year, will, therefore, be challenged by Audit as unauthorised expenditure, until
regularized by an Appropriation Act.

Note:- In cases where payment of a bill/claim would lead to excess over the provision
under any unit of appropriation, the payment may be made by the Pay and Accounts
Office only on receipt of an assurance in writing from the Ministry/Head of Department
controlling the grant that the expenditure involved is not on a New Service or New
Instrument of Service; that necessary funds to accommodate the expenditure will be
provided for in time by issue of re-appropriation order etc. that a note to the effect has
been kept for further action, and that the Grant as a whole (i.e. separately under
Revenue and Capital Sections) is not likely to be exceeded. This applies in respect of any
new item of expenditure for which provision does not exist in the Budget (as distinct
from expenditure on "NEW SERVICE" or "New Instrument of Service" not provided in
the Budget) as well as in cases where the existing provision is not sufficient to cover the
payments.
If such a contingency for inevitable payment of a bill arises towards the close of
financial year and the expenditure under the grant as a whole is likely to be exceeded,
the orders of the Financial Advisor on behalf of the Chief Accounting Authority will have
to be sought. In case of the additional required funds being made available merely by
re-allocation (and not by reappropriation) of savings, if any under the same sub-head of
appropriation - the related claim will be passed for payment only after additional funds
therefore are allocated in writing by the controlling officer.
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CHAPTER 11
APPROPRIATION ACCOUNTS (CENTRAL CIVIL)
Appropriation Accounts contain information regarding re-appropriation of the
sanctioned provision from one unit of appropriation to another, savings and excess of
expenditure if any against these appropriations as well as the supplementary grants.
The appropriation account is an aid for the Parliament and the Public Accounts
Committee to ascertain the performance of Government against the budgeted
provisions.

11.1.2 If any expenditure in a financial year is incurred in excess of the amounts of voted
grants or charged appropriations, the circumstances leading to it will be disclosed
through these accounts. It is disclosed separately under the revenue and capital sections
to enable the Parliament to regularize it or take other suitable action. The regularization
of excess expenditure for the year is made through ‘Additional Grants’ submitted to
Parliament under Article 115 of the Constitution after receiving the recommendations of
the Public Accounts Committee.
Note: The Public Accounts Committee of the third Lok Sabha (in the year 1965-66) made
an important recommendation that excess expenditure over the grant in a year caused
exclusively due to an omission to account for such expenditure in an earlier year, does
not require regularization by Parliament under Article 115 of the Constitution of India, if
the grant/appropriation had actually remained unutilized in that year.

11.2 SIGNING OF THE HEADWISE APPROPRIATION ACCOUNTS BY THE CHIEF

ACCOUNTING AUTHORITY
11.2.1 The Secretary of each Ministry/Department acts as the Chief Accounting
Authority under the departmentalized system of accounting and is finally responsible to
approve and sign the Head wise Appropriation Accounts of the grants/appropriations,
administered by his Ministry/Department. The Financial Adviser/Pr. Chief
Controller/Chief Controller/Controller assists him in the preparation of these accounts.

11.2.2 The following Grants or Appropriations are exceptions in this regard:

Grants or Appropriations relating to are prepared by and signed by
(i) Chandigarh Accountant General (A&E), Punjab, Chandigarh.

(ii) Dadra and Nagar Haveli Accountant General (A&E), Gujarat, Ahmedabad.

(iii) Audit Director General of Audit, Central Revenues, New Delhi.

Dy. Comptroller & Auditor General of India.
(iv) Staff, Household and Allowances of President PAO, President’s Secretariat.
Secretary to the President.
(v) Lok Sabha PAO, Lok Sabha Secretariat.
Secretary General, Lok Sabha.
(vi) Rajya Sabha PAO, Rajya Sabha Secretariat.
Secretary General, Rajya Sabha.
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(vii) Secretariat of the Vice-President Pr.AO, M/o Personnel, Public Grievances &
Pensions. Secretary to the Vice-President.
(viii) Union Public Service Commission Pr.AO, M/o PPG&P . Chairman, UPSC.
(ix) Supreme Court of India Pr.AO, M/o Law & Justice
Registrar General, Supreme Court of India
(x) Election Commission of India PAO, Election Commission
Dy.Election Commissioner
(xi) Andaman & Nicobar Islands Director of Budget & Accounts, A&N Admn..
Chief Secretary, Andaman & Nicobar Admn
(xii) Daman & Diu Director of Accounts, Daman & Diu Administration.
Administrator, Daman & Diu Administration.
(xiii) Lakshadweep Secretary (Pay & Accounts) UT of Lakshadweep.
Administrator, Lakshadweep Administration.

11.3 FORM FOR THE PREPARATION OF HEADWISE APPROPRIATION ACCOUNTS ALONG

WITH OTHER ANCILLARY STATEMENTS AND ACCREDITED AUDIT OFFICERS
11.3.1 Each Principal Accounts Office shall prepare Head wise Appropriation Accounts
for each grant/appropriation of the Ministry/Department in the prescribed form, strictly
in accordance with the given nomenclature/lettering up to sub-head level. i.e 11 digit
code.

1 The Appropriation Accounts are prepared in two stages for expediting audit
scrutiny:

Stage - I : Grant Statement of Head wise Appropriation Accounts indicating:

In Col.1 Sub Heads with appropriation/ provision with Original (O),
Supplementary (S) and the Surrender or Re-appropriations (R) for charged/voted
appropriations and grants.
In Col.2 net effect of Original, Supplementary & Re-appropriations. As
surrendered amounts are accounted under ‘R’, the surrendered amounts as accepted by
Min. of Finance are shown by opening the head “Surrenders/Withdrawals within
Grant/Appropriation”.
Explanations for the variation denoted by ‘R’ should also be included in Column1 e.g.
saving/excess was mainly due to...............................”
.
Stage-II - Head wise Appropriation Accounts indicating:
In Col.3
The figures of actual expenditure.
In Col.4
The variations of (+) Excess or (-) Savings between the figures of Columns 2 and 3. The
reasons for variation in Col.4 will also be given in Column 4, for example, saving/excess
was due to ........................................”.
2. The Budget Wing of the concerned Ministry/Department shall verify the (Stage-I)
Grant Statement before it is issued under the signatures of Pr.CCA/CCA/CA etc. The
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Principal Accounts Office will furnish one copy of this Grant Statement to the Principal
Audit Officer i.e. Office of the Director General of Audit, Central Revenues(DGACR), New
Delhi, three copies to the accredited Audit Officer and two copies to CGA, as per the
annual time table issued each year by the Controller General of Accounts.

Stage I: Grant Statement will be accompanied by the following certificates and

statements also:
(a) the statement is complete and contains all the Re-appropriation/Surrender Orders
issued in
respect of the particular grant/appropriation during the financial year, and that (b) all
Surrender Orders have been accepted by the Ministry of Finance vide its Audit Order
No(s)............. dated ............
(ii) Attested copies of all Re-appropriation and Surrender Orders issued during the
financial year and taken into account for preparing the Grant Statement.
(iii) Statement of funds re-appropriated to and from different sub-heads
(iv) Statement of Recoveries adjusted in reduction of expenditure.
(v) Statement showing the distribution of Supplementary Demands for Grants up to sub-
head level both for Gross and Deduct recoveries, as furnished by the Administrative
Ministries/Departments.
(vi) Certificate to the effect that there is no/are case(s) that attract the provisions of
‘New Service or New Instrument of Service’
(vii) Certificate to the effect that “Increase of budget provision by Rs. five crore and
above under a
sub-head has been made with the approval of Secretary Expenditure”.

3. (Statge II) Headwise Appropriation Accounts will be accompanied by the

following certificates and statements also:
(a) “Certified to the best of my knowledge and belief that all expenditure included in the
Head wise Appropriation Accounts: Union Government (Civil): for the year ............... has
been sanctioned by the competent authority (except for the cases mentioned in the
Appendix).
(b) Statement showing Reconciliation of expenditure figures included in the Head wise
Appropriation Accounts and the Statement of Central Transactions.
(i) Certified that Rs.............................(ths.) shown above agree with the expenditure
figures shown in the Statement of Central Transactions for the year ..................
furnished to Controller General of Accounts.
(ii) Certified that the expenditure figures included in the Head wise Appropriation
Accounts stand
reconciled and accepted by the concerned Heads of Departments / Controlling
Authorities.
(c) Statement showing sub-head wise Reconciliation of figures in the Head wise
Appropriation Accounts as well as Statement of Recoveries adjusted in accounts in
reduction of expenditure. (d) Statement showing the “Amounts met from Advances out
of Contingency Fund of India” but remaining un-recouped at the end of the year. If there
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is no case of any such advance remaining un-recouped, a Nil statement shall be
furnished.
(e) Account(s) of Earmarked Fund(s) containing the brief description of the Fund, its
accounting operation, the year’s receipts and payments along with opening and closing
balances.
(i) “Certified that the earmarked funds included in the Union Government (Civil)
Appropriation Accounts for the year ....................... are eligible for inclusion and have
the prior concurrence of the C&AG of India”.
(ii) “Certified that there is/are no fund(s) which is/are eligible for inclusion in the Union
Govt. Appropriation Accounts (Civil) for the year .............”. (Deleting whichever is not
applicable.)
(f) If the expenditure has exceeded the sanctioned provision or appropriation in any
segment, viz.
Revenue-Voted, Revenue-Charged, Capital-Voted, or Capital-Charged of the grant or
appropriation, a certificate shall be furnished to the effect that the expenditure has not
exceeded due to misclassification/erroneous adjustment in the accounts, with the
actual figures of excess amount in units also shown.
(g) Certified that all the expenditure incurred during ............... relevant to
grant/appropriation No............. has been included in the Appropriation Account for the
year.................., and no amount/amounts pertaining to it has/have been left unadjusted
under any suspense/remittance heads for want of paid vouchers etc.
( h) Reasons for variations between figures of total grant or appropriation in Column I
(Original +
Supplementary) if any, and actual expenditure in Column 3 under various sub-heads will
be obtained by the Pr. Accounts Office from the Budget Wing etc. of the
Ministry/Department and incorporated in the Head wise Appropriation Accounts.

11.4.1 After the Appropriation Account of each grant/appropriation pertaining to the

Ministry/Department is audited and “No Comments” certificate is issued by the Audit
Officer, the finalized Account would be put up on file to the Secretary, for his approval.
This shall be put up through the Financial Adviser of the Ministry, bringing to notice any
important variations, points or
features arising out of the audit scrutiny.

11.4.2 The copies of the finalized Account will be furnished for condensation at this
stage as under :
b. To the Pr.Audit Officer (DGACR), 2 copies; and
c. To the Controller General of Accounts, 2 copies.

11.5 NORMS FOR RECORDING REASONS FOR VARIATIONS AND THEIR PRESENTATION
11.5.1 The sub-heads for which reasons for variations of savings and excesses are
required to be
included in the Head wise Appropriation Accounts, will be selected on the following laid
down working principles:
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(a) If the variation in a sub-head exceeds Rs.500.00 lakhs:
This includes all variations irrespective of the percentage under both savings and
excesses, against the sanctioned provision of Original or Supplementary
grants/appropriations or both taken together.
(b) If the variation in a sub-head does not exceed Rs.500.00 lakhs:
(i) Where variation is an excess - This includes all cases where the excess exceeds either
10% of
the total sanctioned provision or Rs.250.00 lakhs, whichever is higher. The total
sanctioned provision in this clause means Original provision if there is no supplementary
provision, Supplementary provision if there is no Original provision, and the Original and
Supplementary provision taken together, if both of them exist.
(ii) Where the variation is a saving - This includes all cases where the savings exceed 10%
of the original provision or Rs.250.00 lakhs whichever is higher, if there is no
supplementary provision in that sub-head. If there is a supplementary provision in a
sub-head either with or without any original provision, all cases in which the savings
exceed 10% of the supplementary provision or Rs.100.00 lakhs, whichever is higher, will
be included.
(c) If the Grant/Appropriation as a whole has been exceeded - This includes all cases
where excess has occurred in any of the four segments as a whole viz. Revenue-Voted,
Capital-Voted, Revenue- Charged and Capital-Charged. In such instances only the sub-
heads that involve an excess of over Rs.25.00 lakh each, may be picked up. If none of
the individual sub-heads involve an excess of over Rs.25.00 lakh, the sub-heads that
mainly account for the overall excess may be included. The criteria laid down in (a) and
(b)(i) will also be followed for the purpose.

Note: For the purpose of this para, variation implies the variations under column 1
(reappropriation including surrender element only) and column 4 taken together.

11.5.3 The Public Accounts Committee (10th Lok Sabha, 1990-91) in its 60th Report vide
paras 1.22 and 1.24 had observed that savings of Rs.100.00 crores or above are
indicative of defective budgeting as well as shortfall in performance in a Grant or
Appropriation. It has therefore been decided by the Public Accounts Committee, that
each year a detailed Explanatory Note in respect of savings of Rs.100 crores or above
shall be furnished by the respective Ministry/Department, to the Committee.

Note: Explanatory Note for savings of Rs.100.00 crores or more for all excess
expenditure may be submitted to audit for vetting, with a copy to the Controller General
of Accounts by the concerned Ministries/Departments. It should be submitted along
with the Head wise Appropriation Accounts (of this Stage), to enable the Controller
General of Accounts to send it along with the condensed accounts. This will facilitate
both checking of facts and figures of the Notes as well as prevent delays in submission
of the detailed explanatory notes to PAC.
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