Delegation of Financial

Power Rules 1978

~Rakesh C. Sajjan
Purpose of Financial Management

To prevent and detect errors and irregularities

To guard against loss and wastage of public

money and stores

To apply prescribed systemic checks effectively

 Introduction
 Financial control over public exchequer includes well defined and
well laid down procedures regarding collection of revenue for
public exchequer and incurring of expenditure from public funds.

 General Financial Rules, 2017 help in this matter

 General Financial Rules (GFRs) are a compendium of general

provisions to be followed by all offices of Government of India
while dealing with matters of a financial nature.
 Introduction
 General Financial Rules were first issued in 1947 and were in the
form of executive instructions. These were subsequently modified
and issued as General Financial Rules, 1963, 2005 and 2017

 The General Financial Rules, 2017 are supplemented by the

Delegation of Financial Powers Rules, 1978, which lay down the
financial powers of different functionaries for incurring expenditure
of public funds for better and effective control and monitoring of
Government spending out of the allotted funds.
 DFPR, 1978
 All powers to incur expenditure out of public funds (Consolidated
Fund of India) vest with the Government in the Ministry of Finance.
 The structure of governance in India and the area of governance is
so vast that it is not possible for the Ministry of Finance to authorize all
the expenditure of government of India.
 The Delegation of Financial Powers Rules, 1978 is the compendium
containing all the orders delegating powers to authorities other than
the Ministry of Finance.
 These Rules came in to force with effect from the 1st August, 1978
repealing the Delegation of Financial Powers Rules, 1958. The Rules
have been amended from time-to-time since their publication in the
Gazette of India, dated the 22nd July, 1978.
DFPR, 1978

 President has the powers under Rule 2 of these rules:

 to relax all or any provisions of these rules in relation to any
authority;
 delegate to any authority powers in addition to the powers
delegated under these rules;
 reduce the powers delegated to any authority to the
extent specified in the order;
 impose conditions in addition to those specified by these
rules ;and
 for specified reasons withdraw from any authority all/any
of the powers delegated under these rules.
 Definitions
 Head of Dept - means an authority/person specified in Schedule I and
includes any such authority or person as the concerned department in
the Central Government may, by order, specify, as a Head of the
Department. He/she should not be lower than that of a Deputy Secretary
to Government of India.

 Head of Office - means a Gazetted Officer declared as such under

Rule 14 of these rules (Rule 14 specifies that Department of the
Central Government, Administrators and Heads of Departments
shall have power to declare any Gazetted Officer subordinate to
them as Head of an Office for the purpose of these rules, and no
more than one Gazetted Officer shall be declared as Head of
Office in respect of the same office/establishment)
 Definitions
 ‘Recurring expenditure' means the expenditure which is incurred at
periodical intervals.

 Contingent expenditure means all incidental and other expenditure

including expenditure on stores, which is incurred for the management of
an office, for the working of technical establishment such as a laboratory,
workshop, industrial installation, store-depot, office expenses and the like
but does not include any expenditure which has been specifically
classified as falling under some other head of expenditure, such as
"Works", "Tools and Plan";

 General limitations on power to sanction expenditure No expenditure

shall be incurred from the public revenue except on legitimate objects of
public expenditure, and that a Subordinate Authority may exercise the
power to sanction expenditure subject to any general/special order,
direction/stipulation which the authority delegating or re- delegating
such power may issue/prescribe from time to time.
 Definitions

 "miscellaneous expenditure" means all expenditure other than

expenditure falling under the category of pay and allowances of
Government servants, leave salary pensions, Contingencies,
grants-in-aid, contributions, works, tools and plant and the like.

 Primary Unit of Appropriation: A grant or Appropriation for

expenditure is distributed by sub-heads or standard objects.
Primary unit of appropriation can be Salary, Wages, Office
Expense, Travel Expense, Dearness Allowance etc(Rule 8)

 Reappropriation: Means transfer of funds from one primary unit of

appropriation to another.
 DFPR, 1978
 The financial powers not specifically delegated to any authority (known as
Residuary Financial Powers) vest in the Finance Ministry. (Vide Rules 4 and 5).

 Expenditure against a sanction shall be incurred only when funds to meet the
expenditure/liability are made available by valid Appropriation/Re-
appropriation.

 Demand for Grants or Appropriation for charged Expenditure are presented

to Parliament on behalf of appropriate Ministry. Only once the demands
have been voted and the Appropriation Act passed, the amounts so
authorised become available to ministry.(Rule 7)

 Allotment of Funds(Rule 9): Ministry on whose behalf a grant or appropriation

for charged expenditure is authorised by parliament shall distribute the
sanctioned funds, where necessary, among the controlling and disbursing
officers subordinate to it.
Appropriation and Re-appropriation (Rule 10)
 No funds will be appropriated/ re- appropriated to meet
expenditure which has not been sanctioned by an authority
competent to sanction it.
 Funds provided for charged expenditure shall not be
appropriated/re-appropriated to meet votable expenditure
and vice versa.
 Prior approval of the Parliament for expenditure from the
Consolidated Fund is required, for setting up a new
undertaking/taking up a new activity by an existing
departmental undertaking and involving Capital Expenditure
 Funds shall not be appropriated /re-appropriated to meet
expenditure on a new service/new instrument of service not
contemplated in the budget as approved by Parliament.
 DFPR, 1978
 In the case of Grant-in aid to statutory and other public/private
institutions under Revenue Expenditure, the prior approval of the
Parliament for meeting the expenditure out of the Consolidated
Fund of India is required
 Rule 11 to 13 deals with powers of subordinate authorities relating
to creation of posts and abolition of posts.
 Rule 11 provides that no post shall be created in the Secretariat
office/department of the Central Government unless the
scale/rate of pay on which the post is created has been approved
by the President.
 Abolition of posts is covered under Rule 12, which states that a
subordinate authority may sanction the abolition of post which it is
competent to create.
 Powers of subordinate authorities
 The powers vested in the departments of the Central
Government/Administrators and Heads of Departments in
relation to creation of permanent posts, temporary posts,
Appropriation and re-appropriation, incurring of contingent or
miscellaneous expenditure, write off of losses are specified in
Schedules II to VII of these Rules
 However, no powers can be delegated to any subordinate
authority in respect of:
(a) Creation of posts;
(b) Write off of losses; and
(c) Re-appropriation of funds exceeding 10 percent of the
original budget provision for either of the primary units of
appropriation/sub head.
 Powers of subordinate authorities
 Rule 16 provides that a Head of Office may have power to
authorize a Gazetted Officers serving under him to incur
contingent/miscellaneous expenditure on his behalf subject to
restrictions as may be laid down by him.

 The Administrator/Head of the Department shall, however,

continue to be responsible for the correctness, regularity and
propriety of the decisions taken by the Gazetted Officer to
whom powers have been delegated.

 The rules provide that the powers cannot be delegated to a

Non-Gazetted Officer.(Rule-13)
 Government property both movable and immovable is not to be
insured and no expenditure has to be incurred/liability undertaken in
connection with the insurance of such property without the previous
consent of the Finance Ministry. Motor vehicles owned by the Central
Government used for purposes not connected with any commercial
enterprise, are exempt from compulsory insurance against thirds party
risk by virtue of sub-section (2) of Section 94 of the Motor Vehicle Act,
1939. Such vehicles shall not therefore be insured. (Vide Rule 15).

 Exception, however, are:

 Insurance of materials and equipments received on loan/as aid
from Foreign Governments/ International/Other Organizations; if
terms of contract /agreements entered into with them demand so.
 Where for booking of goods by rail/road, an enhanced risk rate is
provided, additional charges above
 DFPR, 1978
 A Department of the Central Government/an Administrator/or any other
subordinate authority, to whom powers may be delegated by or under special
order of the President, may waive the recovery of an amount disallowed by an
Audit Officer/ Accounts Officer, or otherwise found to have been overpaid to a
Government servant subject to specified conditions. Rule 17 specifies the principles
for remission of disallowances by audit and writing off of overpayments made to
government servants.
 A Department of the Central Government may sanction expenditure on any
scheme/ project, the total outlay on which does not exceed ` one crore fifty lakhs,
(the limit includes the entire cost of the scheme upto the date of completion, both
recurring/ non-recurring), cost of the works, even where the provision for such work
is made in a demand under the control of another Department, if the scheme has
been approved by the Finance Ministry
 Further approval of the Finance Ministry shall not be required to sanction excess
expenditure over the original estimates of a sanctioned scheme up to ten per cent
or ` five crores whichever is less (in the case of plan scheme),and ten percent or `
three crores whichever is less (in the case of non-plan scheme).
 DFPR, 1978
 The enhanced powers are, however, to be exercised subject to the approval
of the schemes of specified costs by the prescribed authorities. (Rule 18)

 Government of India's decision 4(A)3 below Rule 18 specifies that the increase
in the cost will be approved by the Administrative Ministry/Department in
consultation with the Budget Division of Ministry of Finance( Planning
Commission dissolved w.e.f 01.01.2015)

 A Department with Integrated Finance Scheme can sanction Non-plan

expenditure on schemes costing less than Rs.300 crores, with specified financial
limit by the prescribed authority but no Non-plan post would be created under
this power.(GID 4(B) below Rule 18)

 Ministries/Departments of the Central Government may issue expenditure

sanction in respect of Major Works costing up to `5 lakhs without consulting the
Ministry of Finance.
 DFPR, 1978
 Power to Release Funds The Departments of the Central Government have
powers to release funds for investment as equity capital of statutory
corporations/ companies wholly owned by the Central Government, within
the allotment in the Budget/Appropriation/Re-appropriation of funds or
advance sanctioned for the purpose from the Contingency Fund. (Rule 19)

 Grants and Loans Rule 20 prescribes the principles as regards powers to

sanction grants-in-aid including scholarships and loans

 Indents, Contracts and Purchases A department of the Central Government

shall have full powers to sanction expenditure for purchase and execution of
contracts including agreements or contracts for technical collaboration or
consultancy services subject to the: (i) Power of GFR-2017 (ii) Delegation of
financial powers in the DFP Rules, 1978; (iii) Purchasing powers delegated from
time-to-time to the indenting departments for making purchases.
 DFPR, 1978
 Delegation to Secretary of Department concerned is as under vide
GIMOF Notification no. 1(11)/E.II (A)/03 dated 16.09.2003-(Rule-21(b)
 a. open / Limited tender contracts upto rupees twenty crores.
 b. Negotiated /Single Tender or Proprietary contracts upto rupees
five crores.
 c. Agreements or contracts for technical collaboration and
consultancy services upto rupees two crores.
 Contracts or purchases exceeding these values in categories above
require approval of the Minister in charge of the Department.
DFPR, Delegation of Financial Powers in
IA&AD
 Under Article 148(5) of the Constitution of India, the conditions
of service of persons serving in the Indian Audit and Accounts
Department and the administrative powers of the Comptroller
and Auditor General shall be such as may be prescribed by
rules made by the President after consultation with the
Comptroller and Auditor General.

 MSO (Admin) Vol II contain information w.r.t delegated

powers within the IA&AD
THANK YOU