CHAPTER III

PREPARATION AND SUBMISSION OF DEPARTMENTAL ESTIMATES :

GENERAL RULES AND DIRECTIONS

16. Accuracy of estimates and responsibility therefor - Under the rules made by the Governor for the convenient transaction of the business of the State Government and the instructions issued thereunder, the Finance Department is responsible for the preparation of the annual budget for which it obtains material from the various departmental officers, etc., and the departments of the secretariat. But the Finance Department is not and cannot be, responsible for the correctness of the material supplied to it. If the material supplied by the departmental officers is defective, the estimates will also be defective and the responsibility then reverts to the officers who supplied the material. It is, therefore, essential that preparation of the departmental estimates should receive the closest personal attention of the estimating officers. The estimates should be framed after a careful and thorough consideration of all items of expenditure and of all sources of income and of every factor likely to affect the actual results. Every care should be taken to ensure that the estimates are as accurate as possible. As Government accounts are maintained in general on a cash basis, the estimates should take into account only such receipts and payments (including those in respect of the arrears of past years) as the estimating officer expects to be actually realised or made during the budget year.

17. 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 receipt 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 to 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 that the refunds do not really represent the expenditure of the Government but are merely repayments made out of the receipts. The receipts on capital account are also taken in reduction of expenditure and not shown on the receipt side. For example, in the case of capital outlay incurred on Government Trading Schemes, such as food grains, the amounts received from sale are taken in reduction of expenditure. There are certain cases in which a service is undertaken by one Government on behalf of another Government or an outside body subject to the recovery of the cost of the service. In such cases the cost of the service is provided in the budget of the Government Department undertaking the service as expenditure under the appropriate head and the relative recovery is taken in reduction of the gross expenditure provided under the relevant head.

Note - All credits and recoveries are, however, excluded from the demands for grants. For the purpose of obtaining the vote of the Legislature on the supply and of authorising the withdrawals of money from the Consolidated Fund, the gross expenditure is invariably taken into account.

18. Rounding - The estimates under each lowest unit should be rounded off to the nearest Rs. 1000. Ordinarily, provisions amounting to Rs. 500 and above will be rounded to Rs. 1000 and those below Rs. 500 omitted except where this has the effect of leaving no provision at all in which case a sum of Rs. 1000 should be provided. This is, however, intended only to simplify budgeting by avoiding meticulous calculations. The sanctions to be accorded after the passing of the budget will be for the actual amounts and not in accordance with rounded figures.

19. Channels and dates for transmission of estimates to Finance Department - The Heads of Departments and other estimating officers should prepare the estimates for each head of account with which they are concerned on the basis of the material obtained by them from subordinate officers and forward these to the Finance Department through the Accountant General by the prescribed dates. Simultaneously they should submit copies to the appropriate administrative departments and also to the Finance Department of the Secretariat. The administrative departments will scrutinise these estimates and make available their comments to the Finance Department which examines them on receipt of the estimates from the Accountant General. The Accountant General furnishes the past actual, offers his comments, if any, and renders such assistance as may be reasonably asked for by the Finance Department. He also frames the estimates in respect of certain heads of account and furnishes these to the Finance Department. The administrative departments of the Secretariat also frame and furnish to the Finance Department estimates relating to certain heads. It is of the utmost importance that the duly scrutinised estimates are submitted without fail by the prescribed dates ; in fact the endeavour should be to submit them a few days earlier so as to enable a proper scrutiny by all the concerned authorities. Delay in this respect may upset the entire budget programme of the Finance Department and may involve a possibility of any item not being adequately provided for or being omitted altogether. (see Appendix VI)

20. Proposals involving 'new expenditure' and their timely submission - The departmental estimates referred to above should take cognisance only of what are called 'standing sanctions,' i.e. all revenue based on existing laws, rules or orders 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 authorised codes, Manuals, Rules or orders and proposals involving 'new expenditure' (See Chapter VIII) should be submitted to the Government separately by  prescribed date. If a departmental officer feels any doubt whether a particular proposal should be treated as constituting 'new expenditure', he should make a reference to the Government in the administrative department concerned well in advance of the prescribed date. (see Appendix VI)

Proposals relating to 'new expenditure' should be submitted to the Government as and when ready and must not be held up for being submitted towards the last date prescribed, so that the administrative departments of the Secretariat and the Finance Department may have sufficient time to examine each proposal 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 the public service on that account will attach to the officer or the administrative department concerned who or which failed to take action in time.

21. Classification of receipts and expenditure in the departmental estimates to conform to the prescribed heads of account - The list of major and minor heads of account of State receipts and disbursements, as prescribed by the Controller General of Accounts, Department of Expenditure, Ministry of Finance, Government of India on the advice of the Comptroller and Auditor General of India in terms of Article 150 of the Constitution of India should be used for the classification of heads of account. The introduction of any new major and / or minor head, as well as the abolition or a change in the nomenclature of any of the existing heads, require the approval of that authority and cannot be carried out until such approval has been obtained. The sub heads, detailed heads and primary units of appropriation are, however, variable according to convenience and as such the exact units will appear every year in the State Budget under “Detailed Estimates of Expenditure”. The detailed classification of the receipt heads is also shown therein. In the matter of accounting and for control of expenditure the nomenclature of the budget heads must be followed. Even if the budget provision has originally been made under an incorrect head, the corresponding expenditure should be brought to account against that unless there be strong reasons for a contrary course, e.g. when such accounting would be contrary to law. All such cases of budget provision having been made under incorrect heads should, however, be brought to the notice of the Finance Department as early as possible so that in future the charge may be budgeted for under the correct head.

Note 1 - While submitting his annual budget estimate, the estimating officer may, where absolutely necessary, add a sub head/detailed head not provided for in the previous year's budget. But while doing so he must prominently bring it to the notice of the Finance Department to enable them to decide whether the proposed new sub head /detailed head should be introduced or the provision made within any of the existing sub head/detailed head. No new primary unit of appropriation can be opened without the prior sanction of the Finance Department.

Note 2 - The opening of a sub–head or a detailed head will be sanctioned by the Finance Department under intimation to the Accountant General.

22. Estimates to be accompanied by explanatory notes – The estimates of the current year must not be accepted blindly as a basis for framing those of the forthcoming year. It is tempting to take for granted the figures of the current year but the process, however, leads to waste and extravagance. It may result in the reappearance year after year of expenditure that has long become irrelevant. The need for every item, therefore, must be first fully scrutinized before it is accepted and entered. The preparation of the estimates for the forthcoming year affords a convenient opportunity for reviewing the schemes. The mere fact, that these are sanctioned, is not in itself adequate justification for presuming that the current year’s provision should be repeated, as a matter of course.

Each departmental estimate must be accompanied by a note by the estimating officer, containing his proposals and the reasons in support of them, arranged by major heads, sub-major heads, minor heads, sub heads etc, in the same order in which the estimate has been prepared. The note should be clear and precise and should explain the variations between the proposed estimates for the forthcoming year and the figures of the budget estimates of the current year. It should also give reasons for the repetition or the omission of any item. One copy of the estimate and the budget note should be sent direct to the administrative department concerned and the Finance Department at the same time as the original is sent to the Accountant General.

23. Corrections to estimates and time limits for their submission - Corrections, if any, to the estimates should be sent direct to the Finance Department by demi-official letter to the Budget Officer with a copy to the administrative department within one month from the date of submission of the estimates and in any case not later than the 5th December.

24. Action to be taken by the Accountant General - On receipt of the departmental estimates, the Accountant General will scrutinize and compile them into a self contained budget for each major head of account in Form B.M.-1. He will also fill in the following figures in the budget form :

(a) Final grant for the current year.

(b) Actuals for the first six months of the previous year.

(c) Actuals for the last six months of the previous year.

(d) Actuals for the first six months of the current year.

In the same form he will give his own comments, criticism and suggestions, if any, in regard to the proposed estimates and will then send that form in original to the Finance Department.

In reviewing or checking the estimates he is expected to take into account all circumstances which are likely to affect the receipts and expenditure of the department concerned, such as transfer adjustments with other Governments and Departments as well as transfer entries between different heads of account which it is usual to make in the accounts of the year to which the estimates relate, e.g. (1) Commuted value of pensions, leave salaries, etc., payable to or recoverable from other Governments or departments, (2) Contributions recoverable for Railway Police, (3) Overpayments and advances of the previous years recoverable during the budget year, (4) Transactions relating to expenditure and receipts from other Government, (5) Distribution of the cost of the Public Works Establishment and Tools and Plant and (6) Annual transfer entries.