CHAPTER XIX

MISCELLANEOUS

203. All Heads of Departments and other controlling and disbursing officers, as well as the officers of the administrative departments in the Secretariat who have to deal with budgets and the sanctioning of expenditure, are expected to make themselves thoroughly familiar with the rules contained in this Manual. Adequate knowledge of the important financial and accounting rules contained in the various Financial Handbooks and in the various Departmental Codes and Manuals is also necessary for them. Ignorance of rules is never accepted as a plea for absolving an officer from the responsibility devolved on him in financial matters.

204. The need for effective control and strict economy in expenditure has repeatedly been emphasised in various Government Orders issued from time to time. In spite of this, cases often come to notice in which it is revealed that some waste of public money has taken place. In relation to certain official transactions, the amounts wasted may be small sums. For example, lights and fans may be left turned on unnecessarily; slower and costlier means of communication might have been used where quicker and cheaper ones would serve the purpose. In other cases the amounts wasted may be very large sums, e.g., when tools and plant or equipment are ordered without sufficient care and are later on found to be unsuitable for the purpose; stores and materials are stocked very much in excess of requirements and deteriorate due to lack of care or passage of time. At times, the execution of large works is taken up without proper approved designs or estimates and even without availability of land resulting in wasteful expenditure.

The employment of unnecessarily large staff in Government offices, failure to enforce reasonable standards of work and outturn, failure to take proper care of Government property, failure to ensure that the State gets its full money's worth when purchases are made on its behalf of goods or services, are some of the other forms of wastefulness which often come to notice. It is the duty of every public servant to strive to the utmost of his capacity to eliminate all unnecessary or infructuous expenditure. 

It is needless to add that any drive for economy in public expenditure can be successful only if the large majority of public servants, and in particular, the senior officers in charge of the important spending departments, participate in the drive and co-operate with the Government to the fullest possible extent. The Heads of Departments and other senior officers can do much by precept and example, by supervision and by control to make their subordinates truly economy minded.

205. It must be added here that the mere observance of rules and regulations will not result in all the economy that is possible. The observance of the rules and regulations will certainly eliminate many losses which would otherwise have occurred; and to that extent Government money will undoubtedly be saved. But rules and regulations are in general designed only to delimit the sphere of any particular type of expenditure and to prevent malpractices. Within that delimitation or restriction, however, there is always considerable scope for the exercise of discretion, specially in regard to the extent of expenditure, on the part of the spending officer. This discretion, if properly exercised, ensures that Government money is spent in the most economical manner possible. If the discretion is improperly or carelessly exercised, the rules will merely ensure that the expenditure is not technically irregular. They cannot ensure that the expenditure has been as economical as possible. To put this in other words, spending officers must not only act in strict accordance with the various rules and regulations but also apply those rules and regulations in a spirit of devotion to the interests of the State. The rules should be administered not just mechanically but in an intelligent manner so that the intention behind the rules is fully realised. Spending officers should constantly remind themselves of the fact that every public officer is expected to exercise the same vigilance in respect of expenditure incurred from public moneys as a person of ordinary prudence would exercise in respect of expenditure of his own money. The best way of ensuring economy in public expenditure is for every officer to always keep this principle in the forefront of his mind.

206. A related question to which a reference must also be made is the elimination of certain kinds of expenditure. It may be that a particular existing scheme or service is being administered with due regard to economy. But it may be possible either to give up the scheme altogether (because it has outlived its utility or has not come up to expectations or changed circumstances have made its continuance unnecessary), to amalgamate it with some other allied scheme or service, or at least to modify it in such a manner that the expenditure incurred on it is appreciably reduced.

            It is also necessary that the projects / schemes should be prioritized and such projects / schemes taken up which are financially and economically viable and have higher returns. There is also a need to avoid thin spreading of resources and multiplicity of schemes with similar objectives.

207. Expenditure on contingencies has to be incurred with utmost care. Attempts are sometimes made, in the closing weeks of the financial year, to use up the full provision for contingencies by making purchases which are either unnecessary or of no real urgency. This practice must stop and no purchase whatsoever of furniture and office equipment, etc, for use in office or in touring should be allowed after February 15 in any financial year.

            The supervisory and inspecting officers in the course of their visit or inspections of their subordinate offices must make a point of checking the details of contingent expenditure and satisfying themselves that the above instructions have not been infringed, that no expenditure has been incurred on avoidable items and that in respect of items which are necessary, no lavishness has been indulged in. If any case comes to notice in which Government instructions have not been observed, the question of taking suitable disciplinary action against the officials at fault should be examined in accordance with proper procedure.

Pro forma Accounts for commercial undertakings

208. As far as possible pro forma accounts should be maintained in respect of all schemes and undertakings of Government which have been declared as "commercial" in such details as may be prescribed by Government in consultation with the Accountant General, and the latest known profit and loss position of each such scheme or undertaking should be indicated when proposals for provision of funds for expenditure are submitted to Government.

Other miscellaneous provisions

209. The Finance Department will maintain a list of official and of non-official institutions and individuals to whom copies of the budget literature are to be supplied free of cost or on payment. Copies will be supplied to them as soon as they are released for issue.

210. A calendar showing the more important dates of the budget programme is given in Appendix VI.

211. Zero-base budgeting : Under the conventional system of budgeting, the on-going schemes are rarely put to serious test. Provisions are generally made for the on-going schemes year after year without any scrutiny regarding the basic need to continue the schemes. Adjustments are usually made only for changes in prices and rates, as also new expenditure on expansions and new starts.

            In order that on-going programmes and schemes and the provision of funds for them are critically reviewed periodically, the Government introduced the system of Zero-base budgeting under which the expenditure on even the on-going activities has to be justified. The concept encompasses both non-development and development expenditure. Zero-base budgeting requires identification and sharpening of objectives, examination of various alternative ways of achieving those objectives, selecting the best alternative through cost-benefit and cost-effectiveness analysis, prioritization of objectives and programmes, switching of resources from programmes with lower priority to those with higher priority, and identification and elimination of programmes which have outlived their utility. The objective of Zero-base budgeting is not just to cut the expenditure but to make a more purposive allocation of resources to various programmes.

            While reviewing various schemes, the following points should also be kept in view -

(a)     Details of income and expenditure on various services provided by the Government may be prepared and revision of fees and user charges etc. considered periodically.

(b)     Review of the cost of collection of revenue should be done vis-a-vis revenue collected with a view to ensuring that the collection of revenue is cost-effective.

(c)     Consequent on the availability of improved versions of office devices staff norms should be revised as a part of regular exercise.

(d)     Grant-in-aid and subsidies are provided by the State Government under various schemes. Such assistances as have outlived their utility should be discontinued.

(e)     Work procedure should be simplified as also the forms of various returns and their number reduced wherever possible.

(f)      Wherever possible, work should be outsourced instead of engaging staff on contract.

(g)     Disposal of surplus and un-serviceable stock and stores (including tools and plant) should be done under time bound programme.

212. Guidelines for Formulation and Appraisal of Schemes / projects : Rigorous project formulation and appraisal have a major bearing on the relevance and impact of projects as well as on their timely implementation. Additional time and effort spent at the project formulation and appraisal stage would result in qualitative improvement in terms of ultimate project impact.

            The following guidelines are laid down for formulation and appraisal of Government funded schemes/projects, covering all sectors and departments :

(i)      Project identification : Feasibility report : The project preparation should commence with the preparation of a Feasibility Report (FR) by the Administrative Department. The project will be considered for 'in-principle' approval by the Planning Department and the Finance Department for inclusion in the Plan based on the FR. The FR should focus on analysis of the existing situation, nature and magnitude of the problems to be addressed, need and justification for the project in the context of government priorities, alternative strategies, initial environmental and social impact analysis, preliminary site investigations, stake holder commitment and risk factors. The FR should establish whether the project is conceptually sound and feasible and enable a decision to be taken regarding inclusion in the Plan and preparation of a Detailed Project Report (DPR). The FR should present a rough estimate of the project cost. Consultation with stakeholders should be held to ensure involvement of stakeholders in the project concept and design.

(ii)     Preparation of DPR : The administrative department should prepare the DPR for the project/scheme after obtaining 'in-principle' approval of the Planning Department. The various stakeholders in the project should continue to be associated while preparing the DPR. The services of experts/professional bodies may be hired for preparation of the DPR, if considered necessary. The DPR must address all issues related to the justification, financing and implementation of the project/scheme. A generic structure of the DPR is at Annexure-A. The Terms of Reference (TOR) for preparation of the DPR should cover all aspects of the generic DPR structure. In addition, sector/project specific aspects should be incorporated in the TOR as required. The requirements of the Expenditure Finance Committee (EFC) / Public Investment Board  (PIB) format may also be kept in view.

(iii)    Inter-Departmental consultations : The final DPR should be circulated along with draft EFC/PIB Memo to the Finance Department, Planning Department and any other concerned departments for seeking comments before official level appraisal. Techno economic clearance should also be obtained from State and Central Government agencies, wherever required. Thereafter, the EFC/PIB memo along with appraisal note/comments of the relevant departments and Planning Department should be placed before EFC/PIB for consideration.

(iv)    Applicability : These guidelines will apply to all schemes / projects, including social sector schemes / projects, costing Rs.5 crores and above or such limit as may be prescribed by the Government from time to time. In sectors where a number of sub-projects are taken up under a scheme, this limit will apply to the umbrella project under which the sub-projects are included.

(v)     Identical process for public sector projects requiring budgetary support or entailing contingent liability on Government : The process for seeking approval would be identical both for new public sector projects requiring budgetary support, as well as those entailing contingent liability on Government.

(vi)    Evaluation : Evaluation arrangements for the project, whether concurrent, mid-term and/or post-project, should be spelt out in the DPR. It may be noted that continuation of projects/schemes from one Plan period to another will not be permissible without an independent, in-depth evaluation. Evaluation work may be outsourced to reputed institutions, if required.

 

(vii) Time and Cost over-run :

                  (1) Designs of all functional, non-residential and residential buildings should be standardized.

                  (2) At least eighty percent of the budget allotted for capital works to a department shall be utilized on ongoing projects/ schemes. Not more than twenty percent of the budget allotted shall be available for taking up new projects/ schemes/ works.

                  (3) New capital works shall not be launched without first ensuring availability of adequate funds. In order to prevent cost escalation, and ensure timely returns from the bigger projects, priority should be accorded to the completion of ongoing projects rather than launching new projects. Departments should provide forty percent of the estimated cost in the first year, forty percent in the second year and the remaining twenty percent in the third year. In case of longer duration or shorter duration projects, suitable phasing may be done with the prior consent of the Finance Department.

                  (4) Before commencing construction work, the department concerned shall ensure execution of proper Agreement / Memorandum of Understanding with the work agency.

                  (5) The departments and the work agencies will ensure that no additions and alterations in the approved design, drawings and estimates are done without the prior written orders of the             competent authority. With a view to obviating any possibility of time-and-cost over-run and substandard quality of work, the departmental officers concerned shall exercise close supervision on the work agencies and ensure that :

(i)   the work progresses as per time schedule without compromising with the quality thereof;

(ii)   funds are released as per physical progress of the work.

                  (6) The instructions given in (5) above shall apply mutatis mutandis in respect of the capital works financed by way of government grant-in-aid.

                  (7) The Principal Secretaries / Secretaries of the departments concerned shall ensure monthly      review of all incomplete projects, and in respect of the projects where the cost over-run and/or         time over-run have/ has exceeded ten percent of the approved limit, send reports  to the Planning Department. The Planning Department will compile reports received from all the departments and submit a report to the Chief Secretary every quarter. A check-list for determining the responsibility for the time and cost over-runs is at Annexure-B.

         Provided that any individual case may be submitted by the Chief Secretary to the Chief Minister which he deems necessary.

(viii)    These guidelines will not supersede any specific dispensation approved for a department by the Government.

(ix)     The register of buildings is a record of Government property. It should be brought up-to-date by the local officer when there is a change in capital value. The inspecting officers / audit officers during their inspection will see to it that the aforesaid register is properly maintained and kept up-to-date.