GFR 2017 — General Principles & Budgeting

Core Principle/Rule: Every officer incurring or authorizing expenditure from public money must observe high financial propriety and the same vigilance that a person of ordinary prudence would exercise with their own money.

Key Facts:

• Expenditure should not be prima facie more than the occasion demands.
• No authority should sanction expenditure by an order that directly or indirectly benefits its own advantage.
• Public money should not benefit a particular person or section unless the claim is enforceable in a court of law or the expenditure follows a recognized policy or custom.
• Allowances such as travel or daily allowance must be regulated so they are not, on the whole, a source of profit to the recipient.

Core Principle/Rule: GFR requires strict separation between expenditure creating permanent assets and expenditure funding day-to-day government operations.

Key Facts:

• Capital Expenditure: Incurred to create or acquire concrete assets of a permanent or semi-permanent nature, such as land, buildings, or heavy machinery. It also covers enhancement of existing assets that substantially increases lifespan or utility.
• Revenue Expenditure: Normal running of departments and maintenance of services—such as salaries, stationery, electricity bills, and routine repairs.
• The ₹1 Lakh Threshold: Items of significant value, generally exceeding ₹1,00,000, with a life of more than one year are treated as capital assets.

Core Principle/Rule: Budget estimates must reflect accurate and realistic departmental needs. Once funds are voted by Parliament or a Legislature, transfers between heads are subject to strict legislative boundaries.

Key Facts:

• Budget Estimates: Prepared by the Chief Accounting Authority, typically the Secretary of the Ministry or Department, and submitted to the Ministry of Finance.
• Re-appropriation (Rule 72): Transfer of funds from one primary unit of appropriation to another within a grant.
• Strict Prohibitions: Without prior Parliamentary approval, re-appropriation cannot be used:

• From a capital head to a revenue head, or vice versa.
• From voted expenditure to charged expenditure.
• To fund a “New Service” not previously approved in the budget.

Core Principle/Rule: Any loss or shortage of public funds, departmental revenue, stores, or property must be aggressively and immediately escalated, regardless of its perceived minor nature.

Key Facts:

• Immediate Reporting: Any loss due to defalcation, fraud, or negligence must be reported immediately to the next higher authority, the Statutory Audit Officer, and the Principal Accounts Officer.
• Exception for Petty Losses: Losses up to ₹10,000 need not be reported to the higher authority or Audit Officer unless systemic flaws or serious negligence or fraud are involved.
• Police Investigation: If a loss is suspected to result from a criminal offence, it must be reported to Police immediately.