Report of the CAG on

Union Government Accounts 2016-17

4: APPROPRIATION ACCOUNTS: COMMENTS ON ACCOUNTS

4.1 Introduction
Constitutional provisions relating to financial matters, Delegation of Financial
Powers Rules (DFPRs) 1978, General Financial Rules, 2005(GFRs) and other
standing instructions issued by the Ministry of Finance, are the guiding
principles for sound financial management of government finances and
expenditure incurred from government accounts.
Audit finding arising from scrutiny of the Appropriation Accounts are brought
out in this chapter.

4.2 Breach of Article 114(3) of the Constitution of India- Expenditure

incurred on interest on refunds of taxes by the CBDT
Article 114(3) of the Constitution stipulates that no money shall be withdrawn
from the Consolidated Fund of India (CFI) except under appropriation made by
law. Payment of interest on refunds of excess tax is a charge on the
Consolidated Fund and is, therefore, payable only after having been authorised
under due appropriation made by law. Rule 8 of the DFPRs, 1978, describes
‘Interest’ as the primary unit of appropriation for classification of interest
expenditure.
The Central Board of Direct Taxes (CBDT) in the Department of Revenue
classifies interest on refunds of excess tax as reduction in revenue. Successive
CAG’s Audit Reports on Union Government Accounts as well as CAG’s
Reports on Direct Taxes have commented on this incorrect practice. However,
no corrective action has been taken by the Department.
The Public Accounts Committee (PAC) in their 66th Report (15th Lok Sabha
2012-13) had observed that there was no valid ground as to why the Department
could not make broad estimates of expenditure on interest liability on tax
refunds based on past trends. The Department had admitted that in terms of
Article 266 of the Constitution, it had no legal authority to withdraw the
‘interest’ on excess tax collected/refunds without recourse to appropriation
passed by the Parliament. The Committee reminded the Department that Article
114(3) of the Constitution clearly mandates that no money shall be withdrawn
from the Consolidated Fund of India except under ‘Appropriation’ made by the
Legislature.
In their follow-up Report (96th Report of 15th Lok Sabha 2013-14), the PAC
reiterated their earlier recommendation that the Ministry of Finance devise a
procedure in conformity with the Constitutional provisions and the Financial
Rules so that interest payments on tax refunds are shown in the Annual
Financial Statement and Demand for Grants and receive Parliamentary approval
as ordained by the Constitution.

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Comments on Accounts

As in the past, no budget provision for interest on refunds was made in the
Budget Estimates for the financial year 2016-17 and expenditure on interest on
refunds amounting to ` 2,598 crore was incurred by the Department in
contravention of provisions of the Constitution and in disregard of the
recommendations of the PAC. Expenditure of ` 58,537 crore on interest
payments had been incurred over a period of last nine years without obtaining
approval of the Parliament through necessary appropriation, as detailed in
Table 4.1 below.
Table 4.1: Expenditure on interest on refunds of taxes
(` in crore)
Year Expenditure on interest on refunds
2008-09 5,778
2009-10 6,876
2010-11 10,499
2011-12 6,486
2012-13 6,666
2013-14 6,598
2014-15 5,332
2015-16 7,704
2016-17 2,598
Total 58,537
The Department stated (January 2017) that on the basis of opinion of the
Attorney General holding the current practice of treating interest on refund as
reduction of revenue and with the approval of the Ministry of Finance,
recommendations of the PAC were not accepted.
Audit observed that the PAC had considered the opinion rendered by the Ld.
Attorney General and of the Ministry of Law & Justice and Ministry of Finance
and had reiterated in its 96th Report (15th Lok Sabha) that “the Department of
Revenue has no option but to seek ex ante or ex post facto Parliamentary
approval for interest payments on tax refunds”. The Government should devise
an appropriate head of accounts for provisioning and reporting expenditure of
interest on tax refund. PAC had observed that an opinion ultimately is an
opinion and it is for the Committee to decide what the correct procedure is.
4.3 Failure to obtain legislative approval for augmenting provision
4.3.1 Augmentation of provision to object head ‘31-Grants-in-aid-General’
In accordance with instructions issued by the Ministry of Finance in May 2006
relating to financial limits to be observed in determining cases relating to New
Service (NS)/New Instrument of Service (NIS), augmentation of provision by
way of re-appropriation to the object head ‘Grants-in-aid’ to any body or
authority from the Consolidated Fund of India in all cases can be made only
with the prior approval of the Parliament.
Scrutiny of Appropriation Accounts along with Consolidated Abstract/e-lekha
data revealed that expenditure aggregating ` 7.37 crore was incurred during the

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financial year 2016-17 by augmenting of provision under object head ‘31-

Grants-in-aid-General’ to various bodies/authorities without obtaining prior
approval of the Parliament thereby attracting the limitations of NS/NIS as
detailed below.
Table 4.2: Augmentation of provision to object head ‘Grants-in-aid-General’
BE* NE* SA* SA under TA* TE* Excess over
Sl.
Head of Account NE* TA
No.
(` in crore)
Grant No. 16- Department of Consumer Affairs
1. 2852.80.101.04.00.31 0.90 0.10 0.00 0.00 1.00 1.18 0.18
Setting up of Gold
Hallmarking/ Assaying
Centres in India

While accepting the audit observation, the Department stated (September 2017) that the overall expenditure in the grant
was within the available provision. The observation had been noted for future and due care would be taken in future to
avoid such excess of expenditure.
Grant No.20-Ministry of Defence (Misc)
2. 3054.02.800.01.00.31 7.00 - - - 7.00 7.03 0.03
Bhutan Compensatory
Allowances (BRO)
3. 3054.02.800.02.00.31 22.84 - - - 22.84 22.89 0.05
Road Works (BRO)
The Ministry accepted and stated (October 2017) that the excess expenditure was less than five per cent. The reply is not
tenable as any augmentation of provision to this object head requires prior approval of the Parliament.
Grant No. 28- Ministry of External Affairs
4. 2061.00.800.11.02.31 0.05 0.00 0.00 0.00 0.05 0.07 0.02
Indian Society of
International Law
The Ministry stated (August 2017) that the expenditure of ` 1.83 lakh was incorrectly booked under the said head of
accounts and the O/o CGA has been requested for rectification of misclassification through Journal Entry.
Grant No. 52 Department of Higher Education
5. 2203.00.796.40.04.31 0.00 0.00 0.00 0.00 0.00 0.06 0.06
National Initiative for
Technology Transfer
(Tribal Sub plan
Component)
The Department stated (August 2017) that after taking a token supplementary of this scheme, augmentation of the funds
was made through re-appropriation.
The reply is not acceptable as the token supplementary grant was obtained for the said scheme under the general component
and not the Tribal Sub-Plan component.
Grant No.58- Ministry of Micro, Small and Medium Enterprises
6. 2851.00.105.15.03.31 8.00 0.90 0.00 0.00 8.90 8.93 0.03
Development of Khadi,
Village and Coir Industries
Reply was awaited (October 2017)
Grant No. 83- Department of Empowerment of Persons with Disabilities
7. 2235.02.101.01.09.31 (Non- 4.35 0.00 1.67 0.00 6.02 6.19 0.17
Plan)
Expansion and Improvement
of National Institutes for the
Blind, Deaf, Mentally
Retarted and the
Orthopaedically
Handicapped- Schemes for
funding to National Institutes

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 Appropriation Accounts:
Comments on Accounts

BE* NE* SA* SA under TA* TE* Excess over

Sl.
Head of Account NE* TA
No.
(` in crore)
8. 2235.02.101.10.16.31 (Plan) 30.32 4.50 0.00 0.00 34.82 34.91 0.09
Other Schemes-Deendayal
Disabled Rehabilitation
Scheme
Reply was awaited (October 2017)
Grant No. 85- Ministry of Statistics and Programme Implementation
9. 3454.02.204.19.05.31 0.00 0.00 25.00 0.00 25.00 31.74 6.74
Capacity Development
(Capacity Development of
CSO and Institutional
Development & Capacity
Building)-Support for
Statistical Strengthening.
The Ministry stated (August 2017) that the said head of account was augmented by obtaining a token supplementary of
` 1.00 lakh. Subsequently ` 25.00 crore was re-appropriated to ‘3454.02.204.19.05.31’ for meeting initial requirements.
Further, ` 6.74 crore were also re-appropriated, as demanded by concerned Division, from Major head 2552 of same
scheme and from ‘Economic Census’ a sub scheme with the approval of the Competent Authority. Therefore, the total
amount available under the said head of accounts was ` 31.74 crore. The Ministry reiterated the same reply in October
2017.
The reply is not acceptable as re-appropriation from non-functional Major Head 2552 to the functional head should be
done for the same scheme. In this case, provision of ` 5.00 crore under scheme ‘Statistics-Capacity Development
(Capacity Development of NSSO-Grants-in-aid to the states for carrying out Central NSS Sample work in North-Eastern
Region) - Support for Statistical strengthening’ was re-appropriated to a different scheme i.e. ‘Capacity Development
(Capacity Development of CSO and Institutional Development & Capacity Building) - Support for Statistical
Strengthening.
Total 7.37
* BE= Budget Estimates, NE= Provision for development of North Eastern Region under
MH 2552/4552/6552, SA= authorisation/approval of Parliament obtained through Supplementary
Demand for grants, TA = Total authorisation, TE= Total expenditure (as per classified abstract/e-lekha
data dump)

4.3.2 Augmentation of provision to object head ‘35-Grants for creation of

Capital Assets’
Ministry of Finance vide its OM dated 12 February 2010 introduced a new
object head ‘35-Grants for creation of Capital Assets’ with effect from the
financial year 2009-10 with the objective of uniquely depicting the expenditure
on grants for creation of capital assets at the level of primary unit of
appropriation. The Ministry clarified vide its OM dated 21 May 2012 that
augmentation of provision to object head through re-appropriation requires
prior approval of Parliament through Supplementary Demands for Grants.
Scrutiny revealed that funds aggregating to ` 6.01 crore were augmented in
violation of the extant provision without prior approval of Parliament to the
object head ‘35-Grants for creation of Capital Assets’, attracting limitations of
NS/NIS.

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Table 4.3: Augmentation of provision to object head ‘Grants for creation of Capital Assets’
SA under Excess
Sl. BE* NE* SA* TA* TE*
Head of Account NE* over TA
No.
(` in crore)
Grant No.12- Department of Industrial Policy and Promotion
1. 2852-80-800-26-00-35 38.07 31.98 50.00 0.00 120.05 120.07 0.02
Project based support to
Autonomous Institutions
The Department stated (September 2017) that the provision for North East was ` 32.00 crore and not ` 31.98 crore. (Grant-
in-aid-General: ` 0.01 crore, Grants for creation of Capital Assets: ` 31.98 crore and Grants-in-aid-Salaries: ` 0.01 crore).
Therefore, there was no excess.
The reply is not acceptable as the observation is regarding augmentation under the object head 35-Grants for creation of
Capital Assets for which the budget provision under 2552.00.147 08.00.35 was ` 31.98 crore.

Grant No. 42- Department of Health and Family Welfare

2. 2211.00.800.20.00.35 0.00 25.00 0.00 0.00 25.00 27.54 2.54
Forward Linkages to
NRHM
The Department stated (October 2017) that amount of ` 27.54 crore was re-appropriated from Major head-2552 to the
functional head of accounts-2211.00.800.20.00.35. Excess of ` 2.54 crore was met by way of re-appropriation of savings
from lump-sum provision as a whole under the Grant for the benefit of Scheme/Programme for NER, as per delegation of
power in terms of Department of Expenditure’s order dated 12 June 2001.
The reply is not acceptable as augmentation of provision to ‘object head-35’ attracts limitation of NS/NIS and hence prior
approval of the Parliament should have been obtained in terms of Ministry of Finance’s O.M issued in May 2006.
Grant No. 52-Department of Higher Education
3. 2203.00.796.08.03.35 0.75 0.00 0.00 0.00 0.75 1.50 0.75
Indian Institute of
Technology Hyderabad
(EAP) (Tribal Sub plan
Component)
The Department stated (August 2017) that after taking a token supplementary of this scheme, augmentation of the funds was
made through re-appropriation.
The reply is not acceptable as the token supplementary grant was obtained for the said scheme under the general component
and not the Tribal Sup Plan component.
Grant No. 83- Department of Empowerment of Persons with Disabilities
4. 2235.02.101.01.09.35 11.00 0.00 0.00 11.00 12.62 1.62
(Plan)
Expansion and
Improvement of National
Institutes for the Blind,
Deaf, Mentally Retarded
and the Orthopaedically
Handicapped- Schemes for
funding to National
Institutes
5. 2235.02.796.03.04.35 4.52 0.00 0.00 4.52 5.60 1.08
(Plan)
Social Welfare-Welfare of
Handicapped-National
Institute for Disabled
Reply was awaited (October 2017)
Total 6.01
* BE= Budget Estimates, NE= Provision for development of North Eastern Region under MH
2552/4552/6552, SA= authorisation/approval of Parliament obtained through Supplementary Demand for
grants, TA = Total authorisation, TE= Total expenditure (as per Classified abstract/e-lekha data dump)

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4.3.3 Augmentation of provision to object head ‘36-Grants-in-aid-

Salaries’
Ministry of Finance vide its OM dated 7 June 2011 introduced a new object
head ‘36- Grants-in-aid-Salaries’ with effect from 01 April 2011 with the
objective of uniquely depicting the expenditure on grants-in-aid for payment of
salaries. The Ministry clarified vide its OM dated 21 May 2012 that
augmentation of provision under the object head through re-appropriation
requires prior approval of the Parliament through Supplementary Demands for
Grants.
Scrutiny of Appropriation Accounts along with Statement of Grant
Transaction/e-lekha data for the year 2016-17 revealed that in Grant No.83
pertaining to the Department of Empowerment of Persons with Disabilities,
excess expenditure aggregating to ` 2.48 crore was incurred during the financial
year 2016-17 by augmenting the provision under the object head ‘36-Grants-
in-aid- salaries’ without the approval of the Parliament in violation of the extant
order.
Table 4.4 : Augmentation of provision to object head ‘Grants-in-aid Salaries’
BE* NE* SA* SA under TA* TE* Excess
Sl.
Head of Account NE* over TA
No.
` in crore)
(`
Grant No. 83- Department of Empowerment of Persons with Disabilities
1. 2235.02.101.01.09.36 29.92 0.00 0.00 0.00 29.92 32.40 2.48
(Plan)
Expansion and
Improvement of
National Institutes for
the Blind, Deaf,
Mentally Retarded and
the Orthopedically
Handicapped-
Schemes for funding to
National Institutes
Reply was awaited (October 2017)
Total 2.48
* BE= Budget Estimates, NE= Provision for development of North Eastern Region under MH
2552/4552/6552, SA= authorisation/approval of Parliament obtained through Supplementary Demand for
grants, TA = Total authorisation, TE= Total expenditure

4.3.4 Augmentation of provision to object head ‘33-Subsidies’

In accordance with instructions issued by the Ministry of Finance in May 2006
for augmentation of provision in the existing appropriation under the object
head ‘subsidies’ through re-appropriation, prior approval of the Parliament is
required if the additionality is more than 10 per cent of the existing
appropriation already voted by the Parliament or ` 10 crore whichever is less.
The Ministry had clarified on 21 May 2012 that all cases for augmentation of
funds (either through re-appropriation of funds or additionality) under the
object head ‘Subsidies’ require prior approval of the Parliament through the
supplementary demands for grants, without any exemption.

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Scrutiny of Appropriation Accounts along with e-lekha data revealed that funds
aggregating to ` 3,230.60 crore across four grants were incurred during the
financial year 2016-17 by augmenting the provision under the object head ‘33-
Subsidies’ without obtaining prior approval of the Parliament as depicted in
Table 4.5 below.
Table 4.5 : Augmentation of provision to object head ‘Subsidies’
BE* NE* SA* SA under TA* TE* Excess
Sl.
Head of Account NE* over TA
No.
(` in crore)
Grant No. 7- Department of Fertilizers
1. 2852.03.101.06.03.33 11000.00 0.00 0.00 0.00 11000.00 11256.59 256.59
Payment of Imported Urea
Subsidies
The Ministry stated (August 2017) that the reason for excess was unexpected receipt of proposals and huge carryover liability.
Ministry added (September 2017) that recovery of ` 4,100.00 crore on account of sale of imported Urea had been added under
Major Head-2401 erroneously. The budgetary allocation in DDG 2016-17 in respect of imported urea subsidy was `15,100.00
crore including recovery of ` 4,100.00 crore. However, in order to match the figures of DDG with DG, allocation in respect
of imported urea subsidy was changed from ` 15,100.00 crore to ` 11,000.00 crore.
The reply is not acceptable as the figure of original budget provision as per DDG was ` 15,100.00 crore for which a
corrigendum dated 31 March 2017 was issued by the Ministry stating Budget provision as ` 11,000.00 crore and any
augmentation of provision under the object head ‘Subsidies’ requires prior approval of the Parliament.

Grant No. 12-Department of Industrial Policy and Promotion (DIPP)

2. 2885.02.101.15.03.33 0.01 0.00 0.00 0.00# 0.01 41.05 41.04
Central Interest Subsidy
Scheme
3. 2885.02.101.15.04.33 0.01 0.00 0.00 0.00 0.01 6.55 6.54
‘Comprehensive Insurance
Scheme’
4. 2885.02.101.15.08.33 0.01 0.00 0.00 0.00 0.01 122.41 122.40
‘Capital Investment Subsidy’
5. 2885.02.101.15.02.33 0.01 0.00 0.00 0.00 0.01 18.84 18.83
Freight Subsidy
#
A provision of ` 234.97 crore was made under 2552.00.238.09-IndustrialDevelopment of backward and remote Area.
However, scheme wise break up under non-functional head corresponding to functional head had not been provided as
required in terms of Budget Division OM No. F.2 (66)-B(CDN)/2001 dated 14 September 2005.
Department stated (September 2017) that the DDG 2016-17 clearly showed that there were four token provisions of ` 1 lakh
each for four components of the subsidies and a lumpsum provision of ` 188.81crore which was intended to be split among
four components of NEIPP subsidies.
The original DDG did not show the break-up of the NEIPP subsidy provision but that is the essence of the budgetary scheme
of lumpsum provision for the benefit of NE region. If the Departments know beforehand all the details at the Budget stage,
there would be no need to have lumpsum provisions. It is a beneficial budgetary practice to provide flexibility to the department
to disburse different types of subsidies to industrial units depending upon claims lodged, verified and found eligible under the
scheme.
The reply is not tenable as it does not conform to the budget circular 2016-17. Para 3.2.3 of the budget circular 2016-17 issued
by the Ministry of Finance stipulates that budget provisions towards projects/scheme for development of North Eastern Region
and Sikkim have, hitherto, been provided as ‘lump sum’ under the Major Head ‘2552-North Eastern Region’ for eventual re-
appropriation to appropriate functional heads of expenditure. However, such lump sum provision should be disintegrated upto
object head level, corresponding to different functional major/sub-major/minor heads, indicating the details, in the Detailed
Demands for Grants and provided for under the Major Head ‘2552-North Eastern Region’ for eventual re-appropriation.
However, in the instant case the lump sum provisions have not been disintegrated upto object head level, corresponding to
different functional major/sub-major/minor heads, indicating the details, in the Detailed Demands for Grants for eventual re-
appropriation. It was observed in Audit that the above mechanism was adopted by the Ministry during 2010-11 and 2011-12.
Grant No.14-Department of Telecommunications
6. 3275.00.103.01.01.33 0.00 0.00 2830.06 0.00 2830.06 5600.00 2769.94
Compensation to Service
Provider-Bharat Net

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Comments on Accounts

BE* NE* SA* SA under TA* TE* Excess

Sl.
Head of Account NE* over TA
No.
(` in crore)
7. 3275.00.103.01.02.33 0.00 0.00 1620.68 0.00 1620.68 1625.94 5.26
Compensation to Service
Provider-Universal Service
Obligation Fund
The Department stated (August 2017) that amount of ` 1,000 crore, ` 1,000 crore and ` 552.14 crore was sanctioned by the
Parliament in the first, second and third batch of Supplementary Demands for Grants respectively. Further, ` 2,460.86 crore
was re-appropriated to 3275.00.103.01.01.33-Bharat. As supplementary grant was passed by the Parliament there does not
seems to be any need to take token supplementary grant for new detailed head 3275.00.103.01.01-Bharat-Net.
The reply is not tenable as any augmentation of provision under the object Head ‘Subsidies’ requires prior approval of the
Parliament before any re-appropriation from savings in terms of Ministry of Finance OM dated 21 May 2012.

Grant No. 66- Ministry of Petroleum & Natural Gas

8. 2802.80.102.12.00.33 7094.21 0.00 1676.49 0.00 8770.70 8780.70 10.00
Other Subsidy payable
including NE Region
The Ministry stated (August 2017) that amount of ` 10.00 crore was provided by way of re-appropriation order as there was
utilisable savings in another head. Ministry added (October 2017) that this provision for seeking prior approval of the
Parliament has been noted for compliance in future.
Total 3230.60
* BE= Budget Estimates, NE= Provision for development of North Eastern Region under MH
2552/4552/6552, SA= authorisation/approval of Parliament obtained through Supplementary Demand for
grants, TA = Total authorisation, TE= Total expenditure

4.3.5 Augmentation of provision to object heads ‘53-Major Works’

The Ministry of Finance with reference to OM dated 25 May 2006 regarding
‘Guidelines on financial limits relating to New Service/New Instrument of
Service (NS/NIS)’ clarified (21 May 2012) that in regard to the cases of NS/NIS
on augmentation under the object head ‘53-Major Works’ all cases relating to
augmentation of funds above ` 2.50 crore or above 10 per cent of the
appropriation already voted, would require prior approval of the Parliament,
irrespective of the fact that the augmentation is for new works or for the existing
works.
Scrutiny of Appropriation Accounts of Grant No. 48 pertaining to the Police
revealed that funds aggregating to ` 9.31 crore were augmented during the
financial year 2016-17 without obtaining prior approval of Parliament, thereby
attracting the limitations of New Service/New Instrument Service as detailed in
Table 4.6 below.

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Table 4.6: Augmentation of provision to object head ‘Major Works’

SA under Excess
Sl. BE* NE* SA* TA* TE*
Head of Account NE* over TA
No.
(` in crore)
Grant No. 48- Police
1. 4055.00.216.01.02.53 59.00 0.00 0.00 0.00 59.00 68.31 9.31
National Intelligence Grid-
Office Building
The Ministry stated (August 2017) that prior approval of the Parliament for additional expenditure under object
head ‘Office Building’ of ` 224.87 crore was obtained in the Second Batch of Supplementary Demands for
Grants, which also included the additional requirement of (National Intelligence Grid) NATGRID. The re-
appropriation orders were, then, issued with the approval of the Secretary (Expenditure). However, when the
supplementary was distributed among the various heads of account, the entry for NATGRID was inadvertently
left out.
The reply is not acceptable as the object head ‘Major Work’ attracted limitations of NS/NIS and each item of
expenditure has a separate budget line. Hence, specific approval should have been obtained from the Parliament
for each item of expenditure.
Total 9.31
* BE= Budget Estimates, NE= Provision for development of North Eastern Region under MH
2552/4552/6552, SA= authorisation/approval of Parliament obtained through Supplementary Demand
for grants, TA = Total authorisation, TE= Total expenditure (as per Classified abstract/e-lekha data
dump)

4.4 Incorrect classification of expenditure under Revenue account

instead of Capital account and vice-versa
Article 112(2) of the Constitution stipulates that the Annual Financial Statement
shall distinguish expenditure on revenue account from other expenditure. The
principles for classifying the expenditure on Revenue account and Capital
account should accordingly be adhered to.
4.4.1 Misclassification of capital expenditure as revenue expenditure
Rule 8 of the Delegation of Financial Powers Rules, 1978, categorizes the
object class six for acquisition of Capital Assets and other Capital Expenditure,
wherein the object heads viz. 51 to 56 and 60 are grouped. These object heads1
pertain to booking of expenditure of capital nature and therefore should
correspond with capital major heads only.
Audit scrutiny of Head-wise Appropriation Accounts along with e-lekha data
for the year 2016-17 revealed cases where these object heads were used with
revenue major heads as shown in Table 4.7 below, resulting in overstatement
of revenue expenditure by ` 27.87 crore and understatement of capital
expenditure to that extent.

1
Refer to Annexure 4.1 for details and description of object heads.

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Comments on Accounts

Table 4.7: Misclassification of expenditure of capital nature as revenue

expenditure
Major Object
Expenditure Reply of the
Sl. No. Description of Grant Head Head
` in crore)
(` Department/Ministry
(Revenue) (Capital)
1. 4-Department of 2852 51/52/60 14.04 Reply was awaited
Atomic Energy (October 2017)
2. 3401 51/52 11.94 Reply was awaited
(October 2017)
3. 14-Department of 3275 51 0.08 The Department accepted
Telecommunications and stated (September
2017) that all the heads
required to be shifted from
capital to revenue and
vice-versa are available in
the DDG-2017-18 except
on object head-‘51-Motor
Vehicle’ in Capital section
for which matter was
being taken up with
Budget Division, Ministry
of Finance for opening of
new object head.
4. 58-Ministry of Micro, 2851 51/52 1.75 The Ministry stated
Small and Medium (August 2017) that the
Enterprises administrative division
had been asked to submit a
proposal for opening of
corresponding heads to
enable booking of
expenditure under the
Capital Section instead of
Revenue section from the
financial year 2017-18.
5. 85- Ministry of 3454 52 0.06 While accepting the
Statistics and observation, the Ministry
Programme stated (August 2017) that
Implementation necessary instructions had
already been issued to
concerned divisions and
action would be taken to
obtain correct budget
provision in DDG 2017-18
through Supplementary
demand and re-
appropriation.
Total 27.87
Expenditure figures source: Consolidated abstracts.

4.4.2 Misclassification of revenue expenditure as capital expenditure

Rule 8 of the Delegation of Financial Powers Rules, 1978 (DFPRs), categorizes
the object heads falling in other than object class six as revenue in nature.
Accordingly, these object heads should ordinarily not correspond with the
capital major heads.

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Audit scrutiny of Head-wise Appropriation Accounts along with Consolidated

Abstract/e-lekha data for the year 2016-17 revealed that object heads of revenue
nature were incorrectly operated with capital major heads in some cases. These
misclassifications resulted in understatement of revenue expenditure by
` 152.54 crore and overstatement of capital expenditure to that extent as
depicted in Table 4.8 below.
Table 4.8: Misclassification of revenue expenditure as capital expenditure
Major Object Expendit
Sl. Description of
Head Head ure Reply of the Department/Ministry
No. Grant
(Capital) (Revenue) ` in crore)
(`
1. 4-Department of 4861 27 51.18 Reply was awaited (October 2017).
2. Atomic Energy 5401 27 1.79
3. 14-Department of 5275 11/13/28 2.43 The Department accepted and stated
Telecommunications (September 2017) that necessary
provisions was being made in the
remaining head to the extent funds are
available and for other heads technical
supplementary would be obtained in
second batch of Supplementary Grant
2017-18. Further, instructions have
been issued to the concerned units not
to incur any further expenditure under
the objected heads. Necessary
corrections would be carried out in the
DDG-2018-19.
4. 20-Ministry of 4076 50/43 20.98 Office of CGDA replied (August
Defence(Misc) 2017) that before rationalization,
expenditure was booked under Capital
Section and consequent upon
rationalization, same was being
booked under object head ‘50-Other
Charges’ and ‘43-Suspense’ in the
Capital section.
The Ministry also accepted the
irregularities which were due to
rationalization of grant. It also
contended that creation of 15 digit
code on account of merger had the
approval of O/o DGA (DS).
The reply is not tenable as the budget
provision was required to be obtained
in the revenue section after the
rationalization of grant.

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Comments on Accounts

Major Object Expendit

Sl. Description of
Head Head ure Reply of the Department/Ministry
No. Grant
(Capital) (Revenue) ` in crore)
(`
5. 74-Ministry of Road 5054 11/13/20 10.01 Ministry stated (September 2017) that
Transport and (i) to implement this scheme a number
Highways of project implementation units
have been opened in NER by the
Ministry. For this purpose,
additional staff, accommodation,
office furniture, other office
equipment were required and it was
not possible to accommodate the
corresponding expenditure with the
funds available under the
Secretariat head of the Ministry.
(ii) To facilitate inspection by the
officers of the Ministry so as to
ensure quality of implementation a
portion of the 3 per cent of the
contingencies i.e. 0.2 per cent was
retained for this purpose
(iii)Office expenses
5054.01.337.04.99.13–sub-head
01.99.50–Information Technology
under major head 5054 was opened
for making expenditure on
procurement of IT related hardware
and software for National
Highways office/division/RO
The reply of the Ministry is not
acceptable as Rule 8 of the Delegation
of Financial Powers stipulate that
object heads falling under class 6 shall
be for acquisition of capital assets and
other capital expenditure whereas the
object heads 11-DTA, 13-OE and 20-
Other Administrative Expenses falls
under the object class 2 i.e.
Administrative Expenses, hence
should have been used under revenue
major heads.
6. 80- Ministry of 5051 50 0.75 The Ministry stated (September 2017)
Shipping 5052 13 5.40 that action had been initiated to rectify
misclassification of revenue
expenditure and to open a new budget
head.
7. 89-Ministry of Tribal 4225 35 60.00 While accepting the observation, the
Affairs Ministry stated (August 2017) that
during the current financial year 2017-
18, necessary rectification had been
made and the capital grant of `60.00
crore had been provisioned under
object head ‘54- Investment’.
Total 152.54

4.4.3 Other cases of Misclassification

Rule 79 of General Financial Rules, 2005 stipulates that charges on
maintenance, repair, upkeep and working expenses, which are required to
maintain the assets in a running order, as also all other expenses incurred for

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the day to day running of the organisation, including establishment and

administrative expenses shall be classified as revenue expenditure.
Audit scrutiny of Head-wise Appropriation Accounts along with e-lekha data
for the year 2016-17 revealed a number of cases, where expenditure of revenue
nature was classified as capital expenditure or vice-versa, resulting in
overstatement/understatement of revenue expenditure as depicted in Table 4.9
below.
Table 4.9: Misclassification between different sections of the grant
Sl. Amount Reply of the
Grant Audit Observation
No. (` in crore) Department/Ministry
Misclassification of revenue expenditure as capital expenditure
1. 11- Department 38.77 Grants-in-aid of `38.77 crore The department stated (August,
of Commerce released to various Board, 2017) that ASIDE Scheme had
Authorities and Autonomous been discontinued w.e.f 01 April
Bodies under the scheme 2017. The erstwhile ASIDE
‘Assistance to States for scheme was being implemented
Developing Export Infrastructure from 2002-03 to 2016-17, the
and Allied Activities’ (ASIDE) funds for ASIDE were allocated
was booked in Capital head of under Capital Major Head 5453
account 5453.80.800.12.01.53- and utilized accordingly.
‘Major works’. The reply of the Department
needs to be seen in the context
The correct object head should that the observation is on yearly
have been ‘35-Grants for creation appropriation accounts and not
of capital assets’ in the Revenue on scheme as such.
section of the grant.
2. 18-Ministry of 3.74 An expenditure of `3.74 crore The Ministry stated (September
Corporate towards renovation of the hired 2017) that the audit observation
Affairs space was booked under the head had been noted and necessary
of account action had been initiated.
‘5475.00.800.09.00.53’ (Major
works) in the capital section of the
grant. As the items of works
carried out had not resulted in
creation of assets of permanent
nature, the booking should have
been done under object head ‘27-
Minor Works’ in the revenue
section of the grant.
3. 20-Ministry of 2031.71 An expenditure of ` 2031.71 crore The reply was awaited (October
Defence (Misc) incurred by Border Road 2017).
Organisation (BRO) on account of
road maintenance other than
National Highways, security cover
and air-lift charges was incorrectly
booked under object head ‘53-
Major Works’ in the capital section
(5054.02.337.03.00.53). The items
of expenditure being of revenue
nature should have been booked
under appropriate object head(s) in
the revenue section of the grant.

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Comments on Accounts

Sl. Amount Reply of the

Grant Audit Observation
No. (` in crore) Department/Ministry
4. 84-Department 0.19 An expenditure of ` 19.42 lakh The reply was awaited (October
of Space towards procurement of back chair, 2017).
table, sofa, computer table was
incorrectly booked by PAO,
ISTRAC under the object head
‘52-Machinery & Equipment’
instead of object head ‘13-Office
Expenses’.
5. 0.11 An expenditure of `11.26 lakh
towards spectrum charges for S-
Band Doppler Weather Radar
(DWR) was incorrectly booked by
PAO ISTRAC under the object
head ‘52–Machinery & Equipment’
under capital section instead of
object head ‘30–Other Contractual
Services’ in the Revenue Section.
6. 0.28 An expenditure of `28.47 lakh
towards communication link
charges was incorrectly booked by
PAO ISTRAC under the object
head ‘52 – Machinery and
Equipment’ in the capital section
instead of booking it under object
head ‘30–Other Contractual
Services’ in the Revenue Section.
7. 0.78 An expenditure of `78.22 lakh
towards the procurement of
projector and screen was
incorrectly booked by PAO
ISTRAC under the object head
‘52 – Machinery and Equipment’ in
the capital section instead of
booking it under object head ‘13–
Office Expenses’ in the Revenue
Section.
8. 0.35 An expenditure of `35.33 lakh
84-Department towards warranty extension for
of Space Electronics of Cesium Beam
Frequency Standards was
incorrectly booked by PAO
ISTRAC under the object head ‘52
– Machinery and Equipment’ in the
Capital section instead of booking
it under object head ‘27–Minor
Works’ in the Revenue Section.

9. 0.11 An expenditure of `10.88 lakh

towards procurement of desktop
computers was incorrectly booked
by PAO ISTRAC under the object
head ‘52 – Machinery and
Equipment’ in the Capital section
instead of booking it under object
head ‘13– Office Expenses’ in the
Revenue Section.

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Sl. Amount Reply of the

Grant Audit Observation
No. (` in crore) Department/Ministry
10. 0.32 An expenditure of `32.04 lakh
towards, supply, installation and
commissioning of CCTV storage
was incorrectly booked by PAO
ISTRAC under the object head ‘52
– Machinery and Equipment’ in the
Capital section instead of booking
it under object head ‘13– Office The reply was awaited (October
Expenses’ in the revenue section. 2017)

11. 0.22 An expenditure of `21.60 lakh

towards payment of Annual
Maintenance Charges of
NX/Ideas/TC/View/Solid Edge
Software was incorrectly booked
84-Department by PAO ISAC (Centre) under the
of Space object head ‘52 – Machinery and
Equipment’ in the Capital section
which should have been booked
under ‘27– Minor Works’ in the
revenue section.

12. 0.13 An expenditure of `13.23 lakh

towards Annual Maintenance
Charges of Electronic Design
Automation Tools was incorrectly
booked by PAO ISAC (Project)
under the object head ‘52 –
Machinery and Equipment’ in the
Capital section’ which should have
been booked under ‘27– Minor
Works’ in the revenue section.
13 0.15 An expenditure of `14.58 lakh
towards Warranty payment of
Cortex-CRT-XL Equipment for the
period of six months was
incorrectly booked by PAO ISAC
(Project) under the object head ‘60
– Other Capital Expenditure’ in the
capital section instead of booking
it under object head ‘27– Minor
Works’ in the revenue section.
Revenue expenditure understated by ` 2,076.86 crore.

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Comments on Accounts

Sl. Amount Reply of the

Grant Audit Observation
No. (` in crore) Department/Ministry
Misclassification of Capital expenditure as Revenue expenditure
1. 20-Ministry of 17.71 An expenditure of `17.71 crore O/o CGDA stated (August 2017)
Defence (Misc) pertaining to Centrally Adjusted that proper classification would
APS items was incorrectly booked be done from FY 2017-18.
by BRO under object head ‘01-
Salaries’ in the revenue section
instead of booking the same under
appropriate object in the capital
section of the grant.
2. 56- Ministry of 425.35 An amount of `425.35 crore While accepting the observation,
Law and Justice incurred on account of purchase of the Legislative Department,
EVMs was booked under object Ministry of Law and Justice,
head ‘28-Professional Service’ in stated (September 2017) the
the revenue section of the grant Ministry of Finance had taken a
instead of booking it under object decision to book the said amount
head ‘52-Machinery and under capital section during the
Equipment’ in the capital section pre-budget meeting, held on 20
of the grant. October 2016, for the year
2017-18 onwards.
3. 61-Ministry of 0.68 The Ministry had authorized an The Ministry stated (August
New and amount of `67.87 lakh to CPWD, 2017) that the amount of `67.87
Renewable M/o Urban Development for lakh could not be adjusted/
Energy activities related to construction ofbooked to the capital head due to
‘Atal Akshay Urja Bhawan’ and technical issues in PFMS.
booked the same under object head The reply is not tenable as the
‘13-Office Expenses’ in the Ministry did not propose any
revenue section instead of booking Journal/ Transfer Entry for
it under object head ‘53-Major rectification of error in the
Works’ in the capital section of the accounts.
grant.
4. 272.10 An expenditure of ` 272.10 crore
on account of mission consumables
was incorrectly booked under the
object head ‘21-Supplies and
Materials’(Major Head-3402) in
the revenue section instead of
object head ‘60-Other Capital
84-Department of Expenditure’ in the capital section Reply was awaited (October
Space as per the extant orders. 2017).
5. 5.00 An expenditure of ` 5.00 crore on
account of mission consumables
was incorrectly booked under the
object head ‘50-Other Charges’
(Major Head-3402) in the revenue
section instead of object head ‘60-
Other Capital Expenditure’ in the
capital section as per the extant
orders.
6. 0.47 An expenditure of `47.15 lakh
towards procurement of Air
Boosting System was incorrectly
booked by PAO ISAC (Centre)
under the object head ‘21 –
Supplies and Materials’ in the
revenue section instead of object
head ‘52–Machinery & Equipment’
in the capital section.

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Sl. Amount Reply of the

Grant Audit Observation
No. (` in crore) Department/Ministry
7. 87-Ministry of 3.00 An expenditure of `3.00 crore for Reply was awaited (October
Textiles construction of office building for 2017).
Marketing and Service Extension
Centre and craft museum, Jaipur,
functioning under the office of the
Development Commissioner
(Handicraft) which is an attached
office of the Ministry of Textiles,
was booked under the object head
‘35-Grants for creation of Capital
Assets’ in the revenue section
instead of booking it under object
head
‘53-Major Works’ in the capital
section.
Revenue expenditure overstated by ` 724.31 crore.

Impact of misclassification:
The impact of incorrect classification of revenue expenditure as capital
expenditure and vice- versa was understatement of revenue expenditure by
` 2,229.40 crore and overstatement of revenue expenditure by ` 752.18 crore.
The overall impact on the government expenditure was understatement of
revenue expenditure by ` 1,477.22 crore. Correspondingly revenue deficit of
the financial year 2016-17 was understated by an equivalent amount of
` 1,477.22 crore.

4.5 Other cases of misclassification

4.5.1 Non-operation of object head ‘Grants-in-aid-Salaries’
The Ministry of Finance vide its OM dated 7 June 2011 introduced a new object
head ‘36- Grants-in-aid-Salaries’ with effect from 01 April 2011 under object
class-4 below Rule 8 of Delegation of Financial Powers Rules 1978.
Scrutiny of Appropriation Accounts of Grant No.96 pertaining to Ministry of
Water Resources, River Development & Ganga Rejuvenation for the year 2016-
17 revealed that the object head ‘36-Grants-in-aid-Salaries’ was not operated.
The Ministry had released grants amounting to ` 64.18 crore and ` 31.56 crore
to National Water Development Agency (NWDA) and National Institute of
Hydrology (NIH) respectively under the object head ‘31-Grants-in-aid-
General’ during the year 2016-17. As amounts of ` 54.51 crore and ` 22.20
crore, had been utilized for the purpose of salaries by NWDA and NIH
respectively, the Ministry should have segregated the grants under object head
‘31’ and ‘36’ as required under extant rules.
Ministry stated (July/August 2017) that the observation has been noted for
future compliance.

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4.5.2 Misclassification within Object heads under the same section of the
grant
Rule 8 of the Delegation of Financial Powers Rules, 1978 prescribes standard
primary units of appropriation with the descriptions/definitions for the purpose
of classification of expenditure. List of object heads and description of
expenditure to be booked thereunder are given in Annexure-4.1.
Scrutiny revealed that funds aggregating ` 549.49 crore were misclassified
between the primary units of appropriation i.e. object heads, as detailed in
Table 4.10 below.
Table 4.10: Misclassification within object heads in the same section of grant
Major/Object
S. Grant No. & Amount
head Audit Observation Reply/rebuttal
No. Name ` in crore)
(`
debited
1. 6-Department 0.34 2852/31 An expenditure amounting to The Ministry noted (August
of Chemicals ` 0.34 crore (`0.22 crore + `0.12 2017) the audit observation
and for future compliance.
crore) towards payment of fee to
Petrochemicals
M/s Grant Thornton India Pvt.
Limited –Programme Manager for
devising operational guidelines
for the Scheme for setting up of
Plastic Park, was booked under the
object head ‘31-Grants-in-aid-
General’ instead of booking it
under object head ‘28-
Professional Services’.
2. 15- Ministry of 1.10 2852/31 Out of the total budget allocation The Ministry stated that
Electronics & of `110.30 crore under ‘Grants-in-aid-Salaries’ are
Information 2852.07.202.85.16.31- (Digital earmarked for only those
Technology India Programme-R&D in organizations/ institutions
Information Technology/ which receive recurring
Electronics/ CCBT-Grants-in-aid- grants.
General) released to IT Research As far as non-recurring
Academy (ITRA), an amount of grants is concerned, the
`1.10 crore was used by ITRA for grants is released either as
payment of salaries to its Grants-in aid-General or
employees. Grants for creation of Capital
The grants utilized for the purpose assets for implementation of
of payment of salaries should have various projects.
been correctly classified by the The reply is not tenable as
Ministry under object head ‘36- object head ‘36 Grant-in-aid-
Grants-in-aid-Salaries’. Salaries’ is specifically
meant for classification of
grant in aid for payment of
salaries and any payment
towards salaries should have
been classified under object
head-36.

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Major/Object
S. Grant No. & Amount
head Audit Observation Reply/rebuttal
No. Name ` in crore)
(`
debited
3. 15- Ministry of 0.53 3451/13 An amount of ` 53.05 lakh was Reply was awaited (October
Electronics & sanctioned for payment of 2017).
Information electricity charges for National
Technology Informatics Centre (NIC),
Bangalore. This also included
electricity charges for the NIC,
Data Centre/National Knowledge
Network (NKN) and Network
Centre. The expenditure was
booked under object head ‘13-
Office Expenses’
(3451.00.091.13.01.13).
NKN is a separate scheme of the
Ministry and is implemented by
National Informatics Centre
Services Incorporation
(NICSI)/NIC through grants-in-
aid given by the Ministry. Thus,
the booking of expenditure for
electricity charges of NKN under
object head 13-Office expenses by
NIC was not in order.
4. 0.42 2852/13,50 The expenditure of `0.42 crore The Ministry stated that the
3451/50 incurred on account of payment audit comment has been
for legal services availed by the noted for future compliance.
Ministry was incorrectly booked However, it is noteworthy
under Object heads ‘13-Office that sometimes a few cases
Expenses’ and ‘50- Other crop in when it is neither
Charges’ instead of object head possible to open appropriate
‘28-Professional services’. heads nor delay the
payment/release of fund.
Keeping in view the
exigencies, funds from
similar object heads or
“Other Charges” are
exceptionally used.
5. 0.01 2852/50 An amount of ` 1.15 lakh was The Ministry stated that
disbursed to a private company payments made to the private
and was incorrectly booked under company were in lieu of
object head ‘50-Other Charges’ in obtaining international
the revenue section. patent. It is one type of fees
As the financial support given to that has been reimbursed and
applicants was a reimbursement to therefore, grants-in-aid may
obtain international patent and not be released for this
Patent is an intangible capital purpose. The observations of
asset. Hence, this expenditure the audit report will,
should have been correctly however, be complied with
classified under object head in future.
‘35-Grants for creation of Capital
Assets.’

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Comments on Accounts

Major/Object
S. Grant No. & Amount
head Audit Observation Reply/rebuttal
No. Name ` in crore)
(`
debited
6. 16-Department 7.99 3475/52 The Department made centralized The Department stated
of Consumer purchases of machinery & (September 2017) that prior
Affairs equipment to States/UTs and to 2007-08, funds for
booked the expenditure strengthening of weight &
amounting to Measures Infrastructure were
` 7.99 crore incorrectly under the released by the Department
object head ‘52-Machinery & of State/UTs as Grants-in-aid
Equipment’ in the revenue section under the revenue Major
of the Grant instead of booking it Heads- 2552 and 3602, so
under object head ‘35 –Grants for that the State/UTs can
creation of Capital Assets’. procure the Machinery &
Equipment themselves. But
later Department decided to
centralize the scheme and
supply machinery &
equipment to state/UTs
directly. Accordingly funds
were required to be provided
under “Machinery and
Equipment” in the Capital
side under the head- 4552
and 5475.
As Machinery procured
would be the property of the
states and UT Governments,
the expenditure will be
revenue expenditure in the
Centre’s book and Capital
Expenditure in States/UTs
books. Hence, the
department made the
provision for Machinery &
Equipment under Revenue
head 3475 instead of capital
head.
However, steps are being
taken for appropriate
budgetary corrections.
7. 20-Ministry of 266.11 5054/53 An expenditure of ` 266.11 crore O/o CGDA stated (August
Defence(Misc) (Code Head- incurred on Category ‘A’- 2017) that object head ‘53-
069/04) Stores/Equipment, which was Major Works’ was opened
required to be booked under object with the approval of O/o
‘52- Machinery & Equipment’, DGA (DS).
was incorrectly booked by BRO The reply is not acceptable as
under object head ‘53-Major the approval for object head
Works’ in the capital section of the ‘53-Major Works’ had been
grant. given with specific condition
that Category ‘A’-Stores &
Equipment, should not be
classified under object head
‘53’.
8. 9.33 2076/21 An expenditure of ` 9.33 crore While accepting the
(Code Head- was incorrectly booked under observation, O/o CGDA
366/00) object head ‘21-Supplies and stated (August 2017) that
Material’ instead of object head discrepancies would be
‘13-Office Expenses’. rectified and object head ‘13-
Office Expenses’ would be
used in DDG 2017-18.

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Major/Object
S. Grant No. & Amount
head Audit Observation Reply/rebuttal
No. Name ` in crore)
(`
debited
9. 44 - 1.07 2852/31 An expenditure of ` 1.07 crore The Department stated
Department of was released to Science (August 2017) that the fund
Heavy Industry Engineering & Technological of ` 1.07 crore was released
Upliftment (SETU) Foundation to SETU Foundation as a
under the Scheme “Enhancement first installment of the total
of Competitiveness in the Indian project cost of ` 27.81 crore
Capital Goods Sector” for setting and most of the expenditure
up Common Engineering was of general kind/purpose.
Facilities Centre. The expenditure It, further, stated that in the
was booked in accounts under the financial year 2017-18, the
object head ‘31-Grants-in-aid- funds under the scheme have
General’ instead of booking it been kept under the head
under the object head ‘35-Grant Grants-in-aid for creation of
for Creation of Capital Assets’. capital assets.
However, there was
misclassification within the
object head during
2016-17.
10. 44 - 7.18 2852/31 Grant-in-aid of `7.18 crore The Department stated
Department of released to Non-ferrous Materials (August 2017) that the
Heavy Industry Technology Development Centre observation had been noted
was utilized for Capital for future compliance.
equipment and was booked in
accounts under the object head
’31-Grant-in-aid General’ instead
of correctly classifying under
Object Head ‘35-Grants for
creation of capital assets’.
11. 21.10 2852/31 Grants-in-aid of `21.10 crore The Department stated
released to Himachal Road (August 2017) that the
Transport Corporation for observation had been noted
purchase of 25 Electric Buses for future compliance.
under FAME India Scheme was
booked in accounts under the
object head ‘31-Grants-in-aid-
General’ instead of correctly
classifying it under the object head
‘35-Grant for Creation of Capital
Assets’.

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Comments on Accounts

Major/Object
S. Grant No. & Amount
head Audit Observation Reply/rebuttal
No. Name ` in crore)
(`
debited
12. 57- Supreme 0.94 2014/33 An expenditure amounting to It was stated (September
Court of India `94.41 lakh related to salary of 2017) that the Budget of
canteen staff was provisioned and Supreme Court Registry is
booked under object head-‘33- divided into two heads (1)
Subsidies’ instead of booking it Salaries (2) Non-Salary.
under object head ‘01- Salaries. Non-Salary is further divided
into eight sub-heads out of
which “Supreme Court
Departmental Canteen” is
one of them. Till the year
2003-04, it was shown as
“subsidies” and from the
financial year 2004-05, the
expenditure, pertaining to
the employees of the
Departmental Canteen, was
booked under ‘Supreme
Court Departmental Canteen/
Departmental Canteen’. This
Registry has been getting the
Budget Grant for ‘Supreme
Court Departmental
Canteen’ under the Non-
Salary Head till date.
Therefore, the amount had
been booked accordingly.
The reply is not acceptable as
the provisioning and booking
of the salary of canteen staff
should be done under object
head ‘01-Salaries’ as per
DFPRs.
13. 58 - Ministry 39.04 2851/31 The Ministry stated (August
Grants-in-aid of ` 39.04 crore,
of Micro, 2017) that the proposal for
released to Khadi and village
Small and opening of separate budget
Industries Commission (KVIC)
Medium head under the object head
under the scheme ‘Interest
Enterprises ‘33-Subsidies’ would be
Subsidy Eligibility Certificate’
submitted in the 2nd batch of
(ISEC) for the purpose of meeting
Supplementary Demand for
any interest charged by banks over
Grants 2017-18 and after
the interest paid by the Khadi
approval from Ministry of
institutions, was booked in
Finance, the funds released
accounts under the object head
under ISEC under the Object
‘31-Grants-in-aid-General’
Head ‘31-Grants-in-aid-
instead of classifying the amount
General’ would be
correctly under the object head ‘33
transferred to the Object
– Subsidies’.
Head ‘33-Subsidies’

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Major/Object
S. Grant No. & Amount
head Audit Observation Reply/rebuttal
No. Name ` in crore)
(`
debited
14. 58 - Ministry 3.00 2851/31 Grants-in-aid of ` 3.00 crore The Ministry stated (August
of Micro, released to National Small 2017) that expenditure was
Small and Industries Corporation Ltd. for booked under Object Head
Medium procurement of machines 31-Grants in aid General in
Enterprises equipment for modernization of view of the decision taken in
training facilities at its Training the meeting chaired by
Centers was booked under the Secretary according to
Object Head ‘31-Grants- in-aid- which, since the
General’ instead of correctly infrastructure projects
classifying under the Object Head including equipment for
‘35-Grants for creation of capital training etc. aim at creating
assets’. facilities, which are utilised
by all the categories of
beneficiaries like General,
SC, ST and Others, the
requirement of funds could
be apportioned in the ratio of
budget allocation under the
above categories.
The reply is not acceptable.
As per sanction orders, the
expenditure is of capital
nature and therefore should
have been booked under the
Object Head ‘35-Grants for
creation of Capital Assets’
15. 4.98 2851/32 An expenditure of `4.98 crore The Ministry stated (August
incurred on International Co- 2017) that the administrative
operation Scheme was booked in division has opened new
accounts under the Object Head object head ‘31 Grants-in-
‘32-Contributions’. As the aid-General’ for booking of
expenditure was incurred in the expenditure from the
form of grants to organizations, financial year 2017-18.
registered societies etc., for
general/specific purpose, it should
have been correctly classified
under the object head ‘31-Grants-
in-aid-General’.
16. 66-Petroleum 100.00 2802/31 Grants-in-aid of `100.00 crore The Ministry stated
& Natural Gas released to Rajiv Gandhi Institute (September 2017) that there
of Petroleum Technology for was no deliberate
capital expenditure was booked misclassification within
under the object head ‘31-Grants- object head and necessary
in-aid- General’ instead of corrective action has been
classifying the expenditure duly undertaken.
correctly under the object head Ministry added (October
‘35-Grants for creation of Capital 2017) that necessary action
Assets’. has been initiated to define
the object head as 35- Grants
for creation of Capital
Assets.

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Comments on Accounts

Major/Object
S. Grant No. & Amount
head Audit Observation Reply/rebuttal
No. Name ` in crore)
(`
debited
17. 68- Ministry of 15.00 2801/31 Grants-in-aid of `15.00 crore The Ministry stated (August
Power released to National Power 2017) that the
Training Institute (NPTI) for misclassification of object
setting up of new Power Training head within the same section
Institutes at Shivpuri, Madhya of the grant in respect of
Pradesh and at Alappuzha, Kerala NPTI had been corrected in
was booked under the object head Detailed Demands for Grants
’31-Grants-in-aid-General’ for 2017-18.
instead of classifying correctly
under the object head `35-Grants
for creation of capital assets’.
18. 74- Ministry of 7.64 3054/50 An amount of ` 7.64 crore i.e. The Ministry stated
Road Transport `6.98 crore released to Indian (September 2017) that as
and Highways Academy of Highway there was no Object Head for
Engineering for the work of ’28-Professional Services’
“Traffic Performance Evaluation under the said detailed head,
and Optimization of Highways in the payment was made under
Delhi using simulation analysis” ’50-Other charges’.
and a payment of ` 0.66 crore to
M/s Telecommunications However, for the Financial
Consultants India Ltd. (TCIL) Year 2018-19 and onwards, a
towards 70 per cent payment for new object head ‘28-
preparation of Detailed Project Professional services’ is
Report(DPR) for all three solar proposed to be opened.
powered toll plazas, had been
classified under the object head
‘50-Other Charges’ instead of
correctly classifying this
expenditure under the object head
‘28-Professional services’.
19. 84- 0.50 5402/60 An expenditure of ` 50.33 lakh The reply was awaited
Department of towards the procurement of Power (October 2017).
Space Edge Server was incorrectly
booked by PAO ISTRAC under
the object head “60 – Other
Capital Expenditure” instead of
object head ‘52– Machinery &
Equipment’ in the capital section.
20. 0.22 5402/60 An expenditure of ` 22.47 lakh
towards the Supply, Installation,
Testing and Commissioning of
NEMO-AM Ground Station
Equipment was incorrectly
booked by PAO-ISTRAC under
the object head ‘60 – Other Capital
Expenditure’ instead of booking it
under ‘52– Machinery &
Equipment’ in the Capital Section.
21. 2.02 5402/60 An expenditure of ` 2.02 crore
towards the procurement of 256
Channel Vibration Data
Acquisition System was
incorrectly booked by PAO ISAC
(Project) under the object head
‘60–Other Capital Expenditure’
instead of ‘52– Machinery &
Equipment’ in the Capital Section.

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Major/Object
S. Grant No. & Amount
head Audit Observation Reply/rebuttal
No. Name ` in crore)
(`
debited
22. 84- 0.31 5402/60 An expenditure of `31.05 lakh The reply was awaited
Department of towards procurement of portable (October 2017).
Space X-Ray inspection system) was
incorrectly booked by PAO ISAC
(Project) under the object head
‘60– Other Capital Expenditure’
which should have been correctly
booked under ‘52 – Machinery
and Equipment’ in the Capital
Section.
23. 0.37 5402/52 An expenditure of ` 36.80 lakh
towards procurement of
Electronic components i.e. EPGA
development kit (space
consumables) was incorrectly
booked by PAO ISAC (Project)
under the object head ‘52 –
Machinery and Equipment’ which
should have been correctly booked
under ‘60– Other Capital
Expenditure’ in the Capital
Section.
24. 0.76 5402/60 An expenditure of ` 75.91 lakh
towards procurement of Flying
Probe Test System was
incorrectly booked by PAO ISAC
(Project) under the object head
‘60– Other Capital Expenditure’
which should have been correctly
booked under ‘52- Machinery &
Equipment’ in the Capital Section.
25. 0.39 5402/53 An expenditure of ` 39.20 lakh
towards supply, installation,
testing and commissioning of
online parallel redundant UPS was
incorrectly booked by PAO
ISTRAC under the object head
‘53–Major Work’ which should
have been correctly booked under
‘52 – Machinery & Equipment’ in
the Capital Section.
26. 1.00 3402/50 PAO, ISRO HQ released an
amount of `1.00 crore to NARL
under Atmospheric Science
Programme to enable smooth
continuation of ASP Projects was
incorrectly booked under the
object head ‘50-Other Charges’
instead of object head ‘31-Grants-
in-aid-General’.
27. 0.20 3402/50 An expenditure of ` 20 lakh
incurred towards maintenance of
DWR System was incorrectly
booked under ‘50 other charges’
instead of object head ‘27- Minor
works’

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Major/Object
S. Grant No. & Amount
head Audit Observation Reply/rebuttal
No. Name ` in crore)
(`
debited
28. 84- 0.10 3402/21 An expenditure of ` 10.34 lakh The reply was awaited
Department of incurred towards calibration of RF (October 2017).
Space equipment was incorrectly
booked under ‘21-Supplies and
Materials’ instead of object head
‘30-Other Contractual Services’.
29. 0.11 3402/20 An expenditure of ` 11.10 lakh
paid toward maintenance/
caretaking of ISAC Guest House
(Manpower contract) was booked
under object head ‘20-Other
Administrative Expenses’ instead
of object head ‘28-Professional
Services’.
30. 16.31 8009/50 An amount of ` 16.31 crore was
incurred by PAO ISAC(C)
towards payment of final
settlement of Provident Funds for
the year 2016-17 and booked
under ‘50-Other Charges’ instead
of object head ‘04-Pensionary
Charges’.
31. 0.12 3402/30 An expenditure of ` 11.82 lakh
incurred towards payment of
contract drivers was incorrectly
booked under ‘30-Other
Contractual Services’ instead of
object head ‘28- Professional
Services’.
32. 0.15 3402/50 Grants-in-aid to the tune of ` 15
lakh released to North Eastern
Space Application Centre,
Shillong under EOAM Program
was incorrectly booked under
object head ‘50-Other Charges’
instead of object head ‘31- Grants-
in-aid General’.
33. 0.58 3402/50 An expenditure of ` 58.35 lakh
towards payment of Printing,
Sorting and Packaging of
confidential documents/question
papers, was incorrectly booked
under ‘50-Other Charges’ instead
of the object head ‘16-
Publications’.
34. 0.14 3402/50 An expenditure of ` 13.56 lakh
towards transportation of
confidential documents for ICRB
Recruitment, was incorrectly
booked under ‘50-Other Charges’
instead of the object head ‘16-
Publications’.
35. 1.70 3402/50 An expenditure of ` 169.74 lakh
was incurred towards
comprehensive annual
maintenance charges for SANFS
solution which was to be booked
under object head ‘27- Minor
works’ was incorrectly booked
under ‘50- Other Charges’.

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Major/Object
S. Grant No. & Amount
head Audit Observation Reply/rebuttal
No. Name ` in crore)
(`
debited
36. 84- 0.35 3402/50 An expenditure of ` 35.00 lakh The reply was awaited
Department of was incurred towards operation (October 2017).
Space and maintenance of DWR was
incorrectly booked under ‘50
Other Charges’ instead of object
head ‘27-Minor Works’
37. 0.16 3402/50 An expenditure of ` 16.12 lakh
was incurred towards
comprehensive annual
maintenance charges for Netapp
Storage Solution was incorrectly
booked under ‘50-Other Charges’
instead of object head ‘27-Minor
Works’.
38. 0.17 3402/50 An expenditure of ` 16.77 lakh
towards comprehensive annual
maintenance charges for Network
Security Devices was incorrectly
booked under ‘50- Other Charges’
instead of object head ‘27-Minor
Works’.
39. 1.01 3402/30 An expenditure of `101.11 lakh
towards providing Professional
Services (like Specialist Doctors,
General Duty Doctors, Nurses,
Pharmacists, Clinical Laboratory
technicians and physiotherapists)
was incorrectly booked under ‘30-
Other Contractual services’
instead of object head ‘28-
Professional Services’.
40. 0.24 3402/21 An expenditure of ` 23.98 lakh
towards hiring of photocopiers on
rental basis was incorrectly
booked under ’21 –Supplies and
Materials’ instead of object head
‘30- Other Contractual Services’ .
41. 0.53 3402/50 An expenditure of `52.90 lakh
towards payment of supply of
liquid nitrogen was incorrectly
booked under ‘50-Other Charges’
instead of booking it under object
head ‘21-Supplies and Materials’.
42. 1.70 3402/50 Grants-in-aid to the tune of
` 1.70 crore was released to
Centre for Space Science and
Technology Education in Asia and
the Pacific (CSSTE-AP) and
incorrectly booked under object
head ‘50-Other Charges’ instead
of object head ‘32- Contributions’.
43. 17.37 3402/30 An expenditure of ` 17.37 crore
towards engagement of Data Entry
Operator, Technical Assistant, and
Reprographic Assistant, was
incorrectly booked under ‘30 -
Other Contractual Services’
instead of booking it under object
head ‘28-Professional Services’.

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Comments on Accounts

Major/Object
S. Grant No. & Amount
head Audit Observation Reply/rebuttal
No. Name ` in crore)
(`
debited
44. 86-Ministry of 8.53 2852/31 An amount of ` 8.53 crore The Ministry stated
Steel incurred on infrastructure, (September 2017) that the
machines and equipment under Ministry noted the
the Scheme for promotion of observations and started the
Research & Development in Iron process of opening of a new
& Steel Sector, was booked under object head ‘35-Grants for
the object head ‘31-Grants-in-aid- creation of Capital Assets’
General’. The expenditure should under the scheme ‘Promotion
have been correctly classified of Research and
under the Object Head ‘35-Grant Development in Iron and
for Creation of Capital Assets’. Steel Sector’.

45. 87- Ministry of 2.07 2852/31 Grants-in-aid of `2.07 crore Principal Accounts Office
Textiles released to Indian Jute Industries’ stated (August 2017) that the
Research Association (IJIRA), concerned division was
Kolkata, a grantee Institution, was being advised not to book the
utilized for Salaries and wages. expenditure in respect of
The amount was incorrectly Salaries under the object
booked under object head ’31- head ‘Grants-in- aid
Grants-in-aid-General’ instead of General’.
booking it under object head ’36- The object head ‘Grants- in-
Grants-in-aid-Salaries’. aid Salaries’ would be
opened on receipt of the
request from programme
division.
Ministry added (October
2017) that B&A Division had
already been requested to
open a new budget head for
IJIRA for releasing salaries
and wages in the second
batch of Supplementary
Demand for Grant for 2017-
18.
46. 95- Ministry of 6.60 2059/50 An expenditure of `6.60 crore Ministry stated (August
Urban incurred on deployment of 2017) that the provision
Development Security Forces (CISF) at under the appropriate
Samadhi Sthal Complex, was budgetary head would be
booked under the object head ‘50- processed in next Financial
Other Charges’. Instead of Year.
booking under object head ‘28-
Professional Services’.
Total 549.49

4.5.3 Booking of ‘Special Central Assistance’ under incorrect minor head

of account
Special Central Assistance (SCA) is provided by the Ministry of Tribal Affairs
to State Governments as an additional support to the State Tribal sub plan.
While the funds allocated for ‘Tribal Area Sub Plan’ are required to be booked
under specific minor head of account i.e. ‘796- Tribal Area Sub Plan’, a distinct
minor head code i.e. 794 is earmarked for the purpose of booking of ‘Special
Central Assistance for Tribal Sub Plan’ in the general directions to the list of
major and minor heads of accounts.

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Audit noticed that out of the total provision of ` 1,250 crore, the Ministry of
Tribal Affairs released ` 1,195.03 crore as ‘Special Central Assistance for
Tribal Sub Plan’ in the year 2016-17 and booked this under the minor head
‘796-Tribal Area Sub Plan’ in Grant No. 89 pertaining to the Ministry of Tribal
Affairs. The same was required to be provisioned and booked under the minor
head ‘794-Special Central Assistance for Tribal Sub Plan’ as prescribed in the
extant instructions.
The matter had also been pointed out in the CAG’s Report No.1 on Union
Government Accounts for the financial year 2012-13, 2013-14, Report No. 50
for 2014-15 and Report No.34 for 2015-16.
In response to Report No.34 for 2015-16, the Ministry had assured (July 2016)
that the minor head ‘794’ would be opened in the DDG for the year 2017-18
for Special Central Assistance for Tribal-Sub-Plan.
Scrutiny of DDG for the year 2017-18, however, revealed that an amount of
` 1,350.00 crore had been obtained as provision for ‘Special Central Assistance
for Tribal Sub-Schemes’ under Major Heads- 2225, 2552 and 3601 in minor
head ‘796’ instead of ‘794’.
The Ministry stated (August 2017) that the matter has been taken with the
Ministry of Finance for opening of a new Minor head 794 so that expenditure
under the Scheme Special Central Assistance to Tribal Sub Scheme could be
booked under the distinct minor head of 794, as contained in general directions
to the List of Major and Minor Head of Account.

4.6 Unauthorised augmentation through obtaining lump sum

supplementary provision
(a) Special Component Plan for the Scheduled Castes and the Tribal Sub-Plan
for the Scheduled Tribes were initiated by Government as intervention
strategies to cater exclusively to Scheduled Castes and Scheduled Tribes
respectively. The basic objective of both these sub-plans is to channelise the
flow of outlays and benefits from the general sectors in the Central
Ministries/Departments for the development of Scheduled Castes and
Schedules Tribes, both in physical and financial terms. Separate allocations for
the Scheduled Castes Sub Plan (SCSP) and Tribal Sub Plan (TSP) as part of the
plan allocations were made from the financial year 2011-12. Accounting
mechanism to account for such allocations by opening dedicated Minor Head
‘Special Component for Scheduled Castes (Code 789)’ and ‘Tribal Sub Plan
(Code 796)’was put in place. Accordingly, in the Detailed Demands for Grants
of the Central Ministries/Departments, provision under a plan scheme is
obtained distinctly with separate budget lines for ‘general plan’, ‘special
component for scheduled castes’ and ‘tribal area sub plan’. The provisions
made under ‘special component for scheduled castes’ and ‘tribal sub plan’ are

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 Appropriation Accounts:
Comments on Accounts

not allowed to be re-appropriated, except to the same Minor Heads in other

schemes under SCSP and TSP, thereby preventing any possibility of diversion.
Para 4 of Appendix-3 (containing instructions for preparation of Budget) below
Rule 48 of GFR-2005 provides that no lump sum provision will be made in the
Budget except where urgent measures are to be provided for meeting emergent
situations or for meeting preliminary expenses on a project/scheme, which has
been accepted in principle for being taken up in the financial year.
Scrutiny of Appropriation accounts along with Consolidated Abstract/e-lekha
data for the year 2016-17 revealed cases of unauthorized distribution of lump-
sum supplementary across four grants as detailed in Table 4.11 below.
Table 4.11: Unauthorised distribution of lump sum supplementary provision
(` in crore)
Provision
Scheme/Heads Expenditure
BE* NE* TA* SA*
25- Ministry of Drinking Water & Sanitation
3601.02.264.01.01.31 1882.80 391.30 2274.10 3443.59
National Rural Drinking Water
Programme-Normal Programme
3601.02.789.20.01.31 744.79 32.17 776.96 1150.95
-do-
3601.02.796.20.01.31 290.38 51.52 341.90 511.89
-do-
1713.50
3601.02.264.01.02.31 322.99 0.00 322.99 390.99
National Rural Drinking Water
Programme-DDP Areas
3601.02.789.20.02.31 104.49 0.00 104.49 126.49
-do-
3601.02.796.20.02.31 47.49 0.00 47.49 57.49
-do-
Total 3867.93 1713.50 5681.40
3601.02.269.03.01.31 4644.99 869.99 5514.98 1869.00 6908.98
Swachh Bharat Abiyan(Gramin)-
Amount met from Rashtriya
Swachhata Kosh
3601.02.789.19.04.31 1877.99 0.00 1873.99 2309.99
-do-
3601.02.796.19.04.31 853.99 0.00 853.99 1049.99
-do-
Total 8242.96 1869.00 10268.96
The Ministry stated (October 2017) that separate provisions for SCSP and TSP components under the Major
Head 3601 could not be mentioned in the demand sent for additional supplementary to the Ministry of
Finance inadvertently due to oversight. However, the observations made by audit have been noted for strict
compliance in the future.
52-Department of Higher Education
2203.00.112.05.09.35 1398.87 131.75 1530.62 400.00 1786.37
Support to Indian Institute of
Technology
2203.00.789.08.01.35 270.75 25.50 296.25 345.75
-do-
2203.00.796.08.01.35 135.38 12.75 148.13 172.88
-do-
Total 1975.00 400.00 2305.00

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Provision
Scheme/Heads Expenditure
BE* NE* TA* SA*
2203.00.112.80.01.36 274.35 - 274.35 14.00 282.10
Support to Indian Institutes of Science
(IISc) and Indian Institute of Science
Education & Research (IISER)
2203.00.789.71.01.36 12.00 - 12.00 13.50
-do-
2203.00.796.71.01.36 6.00 - 6.00 6.75
-do-
Total 292.35 14.00 302.35
2203.00.112.81.01.36 31.70 - 31.70 6.00 36.35
Support to Indian Institutes of
Information Technology (IIITs)
2203.00.789.14.01.36 1.80 - 1.80 1.87
-do-
2203.00.796.72.01.36 0.90 - 0.90 0.91
-do-
Total 34.40 6.00 39.13
The Department stated (August 2017) that the format of Supplementary Demands for Grants prescribed by
Ministry of Finance includes break-up for Major heads only and it is obtained object-head wise. There is no
mention in Supplementary Demands for Grants of break-up with respect to Minor heads like SCSP (789)
and TSP (796).
The reply is not tenable as other Ministries/Departments had obtained component-wise specific approval of
the supplementary grant from the Parliament during 2016-17.
81-Ministry of Skill Development and Entrepreneurship
2230.03.102.15.05.31 30.93 0.00 30.93 240.00 300.32
Apprenticeship and Training-Grants-in-
aid-General
2230.03.789.08.04.31 6.06 0.00 6.06 44.34
-do-
2230.03.796.09.04.31 3.27 0.00 3.27 9.88
-do-
Total 40.26 240.00 354.54
2230.03.102.15.05.35 16.00 0.00 16.00 30.00 30.61
Apprenticeship and Training-Grants for
creation of Capital Assets
2230.03.796.09.04.35 13.05 0.00 13.05 17.66
-do-
Total 29.05 30.00 48.27
The Ministry stated (August 2017) that the lump sum supplementary of ` 270.00 crore was obtained with
prior approval of the Parliament and the same was distributed under the different components. The proposal
of Supplementary Demand for Grants was sent to the Ministry of Finance specifically mentioning the object-
head.
The reply is not acceptable. As per notification of the Supplementary Demand for Grants issued by Ministry
of Finance, the supplementary grant was obtained under the general component only and no component-
wise break up was shown.
* BE= Budget Estimates, NE= Provision for development of North Eastern Region under
MH 2552/4552/6552, SA= authorisation/approval of Parliament obtained through
Supplementary Demand for grants, TA = Total authorisation

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 Appropriation Accounts:
Comments on Accounts

(b) In accordance with instructions issued by the Ministry of Finance in May

2006 relating to financial limits to be observed in determining cases relating to
New Service (NS)/New Instrument of Service (NIS), augmentation of provision
by way of re-appropriation to the object heads related to ‘Grants-in-aid’ (Object
head-31, 35 and 36) to any body or authority from the Consolidated Fund of
India in all cases can only be made with the prior approval of the Parliament.
Scrutiny of Appropriation Accounts, Consolidated Abstracts and
Supplementary Notification issued by Ministry of Finance, revealed that lump
sum supplementary grants were obtained from the Parliament in respect of two
Grants and irregularly distributed amongst different object heads under the
respective schemes without obtaining object head-wise specific approval of the
Parliament as detailed in Table 4.12 below.
Table 4.12: Unauthorised distribution of lump sum supplementary provision
(`` in crore)
Provision
Scheme/Heads Expenditure
BE* NE* TA* SA*
18-Ministry of Corporate Affairs
3475.00.105.11.00.31 0.00 0.00 0.00 10.00 3.08
Insolvency & Bankruptcy Board of
India-
Grants-in-aid-General
3475.00.105.11.00.35 0.00 0.00 0.00 2.08
Insolvency & Bankruptcy Board of
India -Grants for creation of Capital
Assets
3475.00.105.11.00.36 0.00 0.00 0.00 2.75
Insolvency & Bankruptcy Board of
India -Grants-in-aid-Salaries
Total 0.00 10.00 7.91
The Ministry stated (September 2017) that demand for cash Supplementary of ` 40.00 crore was made
in the first batch of Supplementary Demands for Grants. It was clearly stated in the demand that
expenditure proposed falls under the category New Service/New Instrument of service;
the allocation is sought as cash supplementary; and
the expenditure will be apportioned in Grants-in-aid-General, Grants for creation of Capital
Assets and Grants-in-aid-salaries.
The allocation of ` 10 crore under 1st batch of supplementary demand for grants 2016-17 was a case
neither of token Supplementary nor that of re-appropriation contingent on grant of token
Supplementary.
The reply is not tenable as the amount with specific break up was not mentioned in the Supplementary
Demand for Grants, in terms of para 4 of Appendix-3 below Rule 48 of GFR-2005.
24-Ministry of Development of North Eastern Region
3601.05.101.02.00.31 21.50 0.00 21.50 35.78
Schemes of North East Council-
Special Development Projects-
Grants-in-aid-General
3601.05.101.02.00.35 277.50 0.00 277.50 68.49 497.34
Schemes of North East Council-
Special Development Projects- Grants
for creation of Capital Assets
The Ministry stated (September 2017) that due care would be taken to avoid such inadvertent mistakes.
* BE= Budget Estimates, NE= Provision for development of North Eastern Region under MH
2552/4552/6552, SA= authorisation/approval of Parliament obtained through Supplementary
Demand for grants, TA = Total authorisation

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4.7 Non-operation of detailed head ‘99-Information Technology’ for

booking of expenditure incurred on Information Technology
To ensure common standardization of heads of classification and to facilitate
the monitoring of expenditure incurred by various Ministries/Departments on
‘Information Technology’, Ministry of Finance had decided2, to place
‘Information Technology’ at ‘detailed head’ level at the fifth level of
classification in Detailed Demands for Grants with standard code, i.e. ‘99’ to
serve the purpose of consolidating the expenditure incurred by a
Ministry/Department for furthering the use of information technology,
including acquisition of hardware, software, maintenance, development of
software and training.
Audit scrutiny of the Appropriation Accounts, Consolidated abstract/e-lekha
data and other records for the year 2016-17 revealed that expenditure amounting
to ` 10.08 crore was incurred on purchase of information technology but the
appropriate detailed head ‘99-Information Technology’ was not used for
classifying the said expenditure as was required under extant orders as brought
out in Table 4.13 below.
Table 4.13: Non-operation of detailed head ‘99-Information Technology’
Grant No. &
Reply of the
Name of the Amount
Head of Account Observation Ministry/
Ministry/ ` in crore)
(`
Department
Department
27-Ministry of 2.99 3435.03.102.05.02.11 The Ministry allocated an The Ministry stated
Environment, amount of ` 2.99 crore (August 2017) that the
& Forest & 3435.03.102.05.02.13 towards Information audit observation had
Climate Technology (IT) under the been noted for creating
Change 3435.03.102.05.02.28 said head of accounts and suitable head.
incurred expenditure of
` 2.99 crore without
operating the detailed head-
‘99’ for Information
Technology.
61-Ministry of 0.52 3451.00.090.14.00.13 The Ministry had incurred The Ministry stated
New and an expenditure of ` 52.44 (August 2017) that no
Renewable lakh towards procurement fund was allotted under
Energy related to ‘Information ‘Information
Technology’ and booked it Technology’ head. It
under the detailed head- also stated that audit
‘00’ instead of ‘99- observation was
Information Technology’. circulated to all
concerned divisional
heads of the Ministry for
remedial action to avoid
recurrence in future.

2
OM No.15 (4)/B (D)/2003 dated 9 July 2003

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 Appropriation Accounts:
Comments on Accounts

79-Department 0.11 3451.00.090.23.02.13 The Department had While accepted the facts,
of Bio- incurred IT related Department stated
Technology expenditure of ` 11.23 lakh (August 2017) that while
under detailed head- ‘02’ rationalizing / merging the
instead of detailed head ‘99- heads, the IT detailed head
Information Technology’. was inadvertently left out
and separate head would
be opened from the
financial year 2018-19.

84-Department of 6.46 5402.00.101.08.00.52 The Department had Reply was awaited

Space incurred an expenditure of (October 2017).
` 6.46 crore on purchase of
computer/ software/
hardware and was booked
by PAO ISAC (Centre)
under detailed head ‘00’
instead of ‘99-Information
Technology’
Total 10.08

4.8 Mis-utilisation of Water Cess

The Ministry of Environment and Forests, Government of India, New Delhi3
provided for reimbursement of up to 80 per cent of the cess amount collected
to the State Pollution Control Boards/Committees with the stipulation that the
expenditure incurred on establishment and office expenses of the
Boards/Committees should not exceed 25 per cent so received. The ceiling of
25 per cent was revised in December 2010 to 50 per cent with a stipulation that
the enhanced 25 per cent needs to be earmarked for (i) establishment costs
related to scientific and technical manpower, including augmentation thereof;
and (ii) e-governance and IT applications in the State Boards/Committee
including online consent management. The Water Cess Fund was required to
be utilized for activities related to monitoring of air, water and noise by various
agencies involved in it.
Scrutiny of the Appropriation Accounts along with Re-appropriation Orders of
Grant No. 27 pertaining to Ministry of Environment, Forest & Climate Change,
for the year 2016-17 revealed that contrary to the extant orders , out of total re-
appropriations of ` 96.50 crore from the Water Cess Fund, an amount of
`18.80 crore was re-appropriated from the detailed head 3435.03.102.05.05.30–
Ecology and Environment–Environmental Protection and Monitoring–
Prevention and Control of Water Pollution (Cess)–Other Contractual Services
to the following heads of accounts as detailed in Table 4.14 below:

3
Order No. Q-17011/1/88-CPW dated December 28, 1998

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Table 4.14:Mis-utilisation of Water Cess

Sl. Amount
Re-appropriated from Re-appropriated to Purpose
No. ` in crore)
(`
1. 3435.03.102.05.05.30 – 2406.01.005.06.01.01 1.61 F.S.I. (Salaries)
2. Prevention and Control of 3435.03.103.14.01.01 2.80 B.S.I. (Salaries)
3. Water Pollution (Cess) – 3435.03.103.14.02.01 7.00 Z.S.I. (Salaries)
4. Other Contractual Services 2406.01.005.06.02.01 0.40 N.Z. Park
(Salaries)
5. 3451.00.090.29.00.01 4.79 Sectt. (Salaries)
6. 3451.00.090.29.00.30 1.20 Sectt. (OCS)
7. 3451.00.090.29.00.27 1.00 Sectt. (Minor
Works)
Total 18.80

The Cess Fund of ` 18.80 crore, which was required to be utilized towards
designated activities related to Prevention and Control of Pollution, had been
re-appropriated for salary payments, minor works and other contractual services
pertaining to the Secretariat and other institutions under the control of the
Ministry. Re-appropriation of the Cess Fund amounting to ` 18.80 crore for
salary payments, minor works and other Contractual services pertaining to the
Secretariat and other institutions under the control of the Ministry, was in
violation of the guidelines for utilisation of the Water Cess Fund.
The Ministry stated (July 2017) that in order to avoid any excess appropriation
of fund through Supplementary Grant, it was re-appropriated to the functional
Heads of Accounts so that overall savings under the grant remained on the lower
side. Ministry added stated that similar practice had also been adopted during
2015-16.
The reply is not tenable as the utilisation of cess fund for the purposes like
salaries of regular staff of its constituent units and secretarial staff and for
contractual services was in violation of the purpose for charging Water Cess.
4.9 Misclassification of expenditure due to non-operation of relevant
sub-head
Under the Clause 3.6 of Administrative Instructions on Departmental Canteens
in Government Offices and Industrial Establishments, 2008, Department of
Personnel and Training (DOPT) notified that a separate head of account shall
be opened for maintenance of the Departmental Canteens. The expenditure
incurred for running and maintenance of a departmental canteen was to be
booked under the appropriate object heads, as provided under DFPRs, under the
separate sub-head ‘Department Canteen’ under minor head ‘800-Other
Expenditure’.
Scrutiny of Appropriation Accounts of Grant No. 84 pertaining to Department
of Space for the year 2016-17 revealed that various units of the Department
misclassified an expenditure of ` 4.91 crore incurred on maintenance of
departmental canteen, as detailed in Table 4.15 below.

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Table 4.15: Misclassification due to non-operation of relevant sub-heads

Sl. Major Minor Sub Expenditure
PAO Observation
No. Head Head Head (` in crore)
1. 3402 101 64 ISRO 1.04 Expenditure incurred on
Headquarters departmental canteen,
required to be booked under
a separate sub-head below
‘3402.00.800-Other
Expenditure’ was booked
under the sub head
‘3402.00.101.64’.
2. 3451 090 18 ISRO 0.11 Expenditure incurred on
Headquarters departmental canteen,
required to be booked under
a separate sub-head below
‘3402.00.800-Other
Expenditure’ was booked
under the sub head
‘3451.00.090.18’.
3. 3402 101 10 ISAC Centre 3.69 Expenditure incurred on
departmental canteen,
required to be booked under
a separate sub-head below
‘3402.00.800-Other
Expenditure’ was booked
under the sub head
‘3402.00.101.10’.
4. 3402 101 26 ISTRAC 0.07 Expenditure incurred on
departmental canteen,
required to be booked under
a separate sub-head below
‘3402.00.800-Other
Expenditure’ was booked
under the sub head
‘3402.00.101.26’.
Total 4.91
To a similar observation raised during 2015-16, the Department had stated (July
2016) that booking of expenditures was done under the Object Head 20-Other
Administration Expenses’ which is classified as per Government of India’s
Orders (1) under Rule 8 of DFPRs.
Reply is not acceptable as according to Government of India’s Orders (1) under
Rule 8 of Delegation of Financial Power Rules, expenditure on Departmental
Canteen hospitality is required to be booked under the Object Head “Other
Administrative expenses”. However, expenditure on payment of ‘Pay and
Allowances’ to the employees of Canteens were also booked under the Object
Head ‘20-Other Administrative Expenses’ by Department of Space instead of
the Minor Head ‘800-Other Expenditure’.

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4.10 Misclassification of Salary Expenditure

The Ministry of Defence had incurred an expenditure of ` 1,077.30 crore during
2016-17 on salaries of regular Staff of BRO and classified part of it under Major
Head 3054 – Revenue Works Expenditure and part of it Major Head 5054
Capital Works Expenditure, instead of appropriate Salaries head.
The Ministry stated (August 2017) that the expenditure would, henceforth, be
booked under the Salary Head (Major Head 2052). Further, an expenditure of
` 169.54 crore on account of salaries was booked under Suspense Head (Code
Head-020/74-Pay and Allowances of GREF Civilian) due to non-availability of
budget provision.
As per extant rules, suspense head is operated only for the accounting of
transactions which cannot be taken to the final head of expenditure or receipt
due to want of certain information and documents.
4.11 Understatement of expenditure on Defence Pension
As per the Finance Account, ` 11,184.55 crore were lying in the PSB-Suspense
head as on 31 March 2017. This represented the amount of pension disbursed
by the banks on account of Defence pension but not taken to the final head of
account. Subsequently, Ministry of Defence booked expenditure of ` 2,200
crore on account of pension payment at the final stage of closing of the FY 2016-
17 account (September 2017). Therefore, ` 8,984.55 crore of pension payments
remained to be booked in FY 2016-17. Further, the expenditure of ` 2,200 crore
was booked without budgetary provision which resulted in excess of ` 2,199.55
crore under Revenue Section of Grant No. 21 pertaining to Defence Pension.
CGDA stated (October 2017) that the expenditure of ` 2,200 crore was booked
to clear the pending pension scrolls received from the Banks on the instruction4
of the Budget Division, Department of Economic Affairs, Ministry of Finance.
The reply is not tenable as expenditure was incurred without augmenting the
budget provision. There is an urgent need to review the initial budget estimation
to make it more realistic.
4.12 Misclassification of expenditure under Minor heads
As per List of Major and Minor Heads of Accounts (LMMH), Minor Heads-
091 pertaining to ‘Attached Offices’ may be used for provisioning and booking
of expenditure on attached office under Major Head 3451- Secretariat Economic
Services.
Further, as per LMMH, the minor head ‘091’ will record expenditure on
attached offices of the Government of India, other offices of the State
Government which are not identifiable with any particular function.

4
O.M No. 2(10)-B-(AC)/2017 dated 5 September 2017

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Examination of DDG and Appropriation Accounts of Grant No. 14 pertaining

to Department of Telecommunications for the year 2016-17 revealed that the
Department had operated minor head ‘091’ having the nomenclature ‘General
Administration’ and used it for booking of expenditure amounting to ` 362.91
crore related to ‘Telecom Directorate’, ‘Amount transferred to MH 3201 postal
services on account of share of Audit charges’, ‘Maintenance, Amenities to
Staff’, ‘Stationery and Printing’, ‘TERM CELL’, ‘Controller of
Communication Accounts’ and ‘Central Monitoring System Operation and
Maintenance’. This resulted in misclassification of expenditure under the Minor
Head.
The Department stated (July 2017) that revamping of the existing heads of
accounts was under process in consultation with the office of CGA.
Defence Grants
4.13 Unauthorised transfer of fund from Capital Grant to Revenue
Grant
Para 3.2 of the of the Budget Manual 2010 issued by the Ministry of Finance
states that there are three occasions when a technical supplementary1 is sought
viz. (a) surrender from one of the four sections viz. Revenue (Charged),
Revenue (Voted), Capital (Charged) and Capital (Voted) and utilizing the same
in other section within the Demand, (b) transfer of a scheme from one Demand
to another Demand which will result in surrender of the amount from the
Demand which has transferred the scheme and utilisation of the same in the
other Demand, where the scheme has been transferred, and (c) waivers/write
offs.
After rationalisation of grants, the Ministry of Defence has two Demands for
Grants, one in Revenue Section and one in Capital Section. During the scrutiny
of Appropriation Accounts of Defence Services for the year 2016-17, it was
observed that incorrect Technical Supplementary Demands for Grants
aggregating to ` 6,551.91 crore were obtained from the Parliament through
Second batch (December 2016) and final batch (March 2017) in the revenue
demand for grants. The technical supplementary provisions were obtained out
of savings available in Grant No. 23-Capital Outlay on Defence Services.
Thus, transfer of funds aggregating to ` 6,551.91 crore through technical
supplementary from Demand No. 23 (Capital Grant) to Demand No. 22
(Revenue Grant) was in violation to conditions prescribed in para 3.2 of the
Budget Manual.
Further, scrutiny revealed that out of the total supplementary of ` 6,551.91 crore
obtained through the technical supplementary grants, only ` 3,698.44 crore was
utilised leaving an unspent balance of ` 2,853.47 crore.

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This incorrect practice of obtaining technical supplementary and transferring

funds from one Demand to another had been pointed out in the C&AG Audit
Report No.1 of 2015, 50 of 2015 and 34 of 2016. However, no discernible
measures have been taken by the Ministry to correct this incorrect practice.
The Ministry of Defence stated (July 2017) that the Budget Manual has no
specific provision for Defence Services Estimates (DSE). However, Technical
Supplementary for transfer of funds from Capital Grant to Revenue Grant was
approved by Ministry of Finance, the technical supplementary in question may not
be deemed irregular.
The reply is not tenable as the Ministry had failed to fully utilise the sanctioned
provision for the Capital Grants and had been transferring the savings from the
Capital Grant to the Revenue Grant(s) through technical supplementary resulting
in the violation of provisions of the Budget Manual.
4.14 Examination of selected vouchers of Ministry of Drinking Water
and Sanitation for the year 2016-17
4.14.1 Introduction
Audit of paid vouchers pertaining to the period 2016-17 in respect of Ministry
of Drinking Water and Sanitation (Ministry) was conducted with the objective
to examine the correctness of payment made and allocation of expenditure. The
audit findings are brought out below.
4.14.2 Diversion of Plan fund for Non-Plan expenditure
As per Delegation of Financial Power Rules, 1978 (DFPRs), prior approval of
the Ministry of Finance is required to re-appropriate provisions from Plan to
Non-Plan head both under Revenue and Capital Section.
Further, as per Rule 26 of General Financial Rules-2005(GFRs), it is the duty
and responsibility of a controlling officer in respect of funds placed at his
disposal to ensure that the expenditure is incurred for the purpose for which
funds have been provided.
Audit of paid vouchers pertaining to the period 2016-17 in respect of Ministry
of Drinking Water and Sanitation (Ministry) revealed that during the year 2016-
17, Ministry had obtained provision of ` 9.70 crore under sub-head-
3451.00.090.54 (Secretariat-Economic Services- Secretariat-Drinking Water
and Sanitation) to meet out non-plan expenditure under various object heads
such as ‘01-Salaries’, ‘03-Overtime Allowance’, ‘06-Medical Treatment’, ‘11-
Domestic Travel Expenses’, ‘12-Foreign Travel Expenses’, ‘02-Wages’ and
‘13-Office Expenses’.
Further, to meet out plan expenditure on object head such as ‘11-Domestic
Travel Expenses’, ‘12-Foreign Travel Expenses’, ‘13-Office Expenses’, ‘20-
Other Administrative Expenses’, ‘50-Other Charges’ etc., the Ministry had

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obtained a provision of ` 81.50 crore under sub-head 2215.01.102.19 (National

Rural Drinking Water Programme).
However, during scrutiny of vouchers for the year 2016-17, it was noticed that
the Ministry utilised Plan funds for incurring non-plan expenditure amounting
to ` 1.79 crore (Annexure-4.2) without carrying out any re-appropriation and
obtaining prior approval of Ministry of Finance.
4.15 Conclusion
Deficiencies in Appropriation Accounts relating to violation of Constitutional
provisions and non-observance of financial guidelines have been noticed in
Audit which impact on the accuracy of the compiled accounts. Non-obtaining
of budgetary provision from the Parliament for payment of interest on the
refunds of taxes, non-observance of instructions relating to New Service/New
Instrument of Service and obtaining provisions under incorrect object heads
leading to misclassifications of expenditure having impact on the revenue
deficit, are some of the areas requiring attention of the Chief Accounting
Authority.

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