DFPR1978

Delegation of Financial Powers
Rules, 1978
Public Exchequer R.T.I.Jammu 1

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Session Overview
In the previous session we discussed the
General Financial Rules,, 2005 and their
application in disciplining the financial and
budgetary
g y control in government
g spending
p g
etc.

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Session Overview
Another tool of public exchequer control is
well defined p
powers of different
functionaries in the Government for
incurring
g expenditure
p from public
p funds.

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Session Overview
The General Financial Rules, 2005 are
supplemented
pp by
y the Delegation
g of
Financial Powers Rules, 1978, which lay
down the financial p powers of different
functionaries for incurring expenditure of
ppublic funds for better and effective control
and monitoring of Government spending
out of the allotted funds.
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Session Overview
In this session we will discuss the main
features of delegation
g of financial ppowers as
laid down in the Delegation of Financial
Powers Rules,, 1978.

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Learning Objective
At the end of the session the trainees will be
able to state the p
powers of various
Government Officers and other
functionaries as laid down in the Delegation
g
of Financial Powers Rules, 1978.

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Rules, 1978
All powers to incur expenditure out of public
funds (Consolidated Fund of India) vest with the
Government in the Ministry of Finance.
The structure of governance in India and the area

of governance is so vast that it is not possible for
th Mi
the Ministry
i t off Finance
Fi to
t authorize
th i all ll the
th
expenditure of Government of India.

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Rules, 1978
It was necessary to delegate financial
ppowers to incur expenditure
p out of public
p
funds to subordinate authorities of various
p
other Ministries/Departments of
Government of India.

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Rules, 1978
The Delegation of Financial Powers Rules,
1978 is the compendium
p containing
g all the
orders delegating powers to authorities
other than the Ministry
y of Finance.

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Rules, 1978
These Rules came in to force with effect
from the 1st August,
g , 1978 repealing
p g the
Delegation of Financial Powers Rules, 1958
The Rules have been amended from time time-
to-time since their publication in the
Gazette of India,
India dated the 22nd July,
July 1978.
1978

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Rules, 1978
The President has the powers under Rule 2
of these rules to:
relax all or any provisions of these rules in
relation to any authority;
delegate to any authority powers in addition
to the powers delegated under these rules;

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Rules, 1978
reduce the powers delegated to any
authority
y to the extent specified
p in the order;;
impose conditions in addition to those
specified by these rules ;and
for specified reasons withdraw from any
authority all/any of the powers delegated
under these rules.

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Basic Concepts
The definitions of some of the frequently
used terms in the Rules are as under;;
Appropriation means the assignment to
p
meet specified expenditure
p of funds
included in a primary unit of appropriation

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Basic Concepts
Contingent Expenditure means all incidental
and other expenditure including expenditure on
stores which is incurred for the management of an
office, for the working of technical establishment,
office eexpenses
penses and the like bbutt does not incl
include
de
any expenditure which has been specifically
classified as falling under some other Head of
expenditure, such as Works, tools and Plant.

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Basic Concepts
Head of the Department in relation to an office
or offices under his administrative control, means
an authority/person as the concerned department
in the Central Government may, by order, specify,
as a Head of the Department.
Department Such
S ch person has to
be the Head of an identifiable organization and the
minimum of his revised scale of pay should not be
lower than that of a Deputy Secretary to
Government of India.
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Basic Concepts
Head of Office means a Gazetted Officer
declared as such under Rule 14 of these rules
(Rule 14 specifies that the Central Government,
Administrators and Heads of Departments shall
have power to declare any Gazetted Officer
subordinate to them as Head of an Office for the
purpose of theses rules, and not more than one
Gazetted Officer shall be declared as Head of
Office in respect of the same office/establishment
office/establishment,
unless such office/establishment is distinctly
separated from one another).

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Basic Concepts
Recurring expenditure means the
expenditure
p which is incurred at periodical
p
intervals. Expenditure other than recurring
expenditure
p is Non-recurring g
expenditure.
Primary
Primary unit of Appropriation
Appropriation means a
primary unit of Appropriation referred to in
Rule 8.
8
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Basic Concepts
Re-appropriation means the transfer of
funds from one pprimary
y unit of
appropriation to another such unit.
Subordinate
Subordinate Authority
Authority means a
Department of the Central Government or
any authority subordinate to the President

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General limitations on power to
sanction expenditure
No expenditure shall be incurred from the
public revenue except
p p on legitimate
g objects
j
of public expenditure,
The financial powers not specifically
delegated to any authority (known as
Residuary Financial Powers) vest in the
Finance Ministry. (Vide Rules 4 and 5).

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Effect of sanction
Expenditure against a sanction shall be
incurred only
y when funds to meet the
expenditure/liability are made available by
valid Appropriation/Re-appropriation
pp p pp p

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Effect of sanction
In the case of a recurring
expenditure/liability, sanction becomes
operative when funds for the first year are
made available by valid Appropriation/re-
appropriation
i ti or byb an advance
d from
f the
th
Contingency Fund, as the case may be, and
it remains effective for each subsequent
year subject to appropriation in such years
and subject to the terms of the sanction.
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Effect of sanction
It is not within the competence of a
Department
p of the Central Government to
order/agree to re-appropriation without the
concurrence of the Ministry y of Finance
from the funds provided for new items in
g ((Govt. of India decision under
the budget.
Rule 9)

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General restrictions on Appropriation/ Re-
appropriation (Rule 10)]
No funds will be appropriated/ re-

appropriated
pp p to meet expenditure
p which has
not been sanctioned by an authority
competent
p to sanction it
Funds provided for charged expenditure
shall not be appropriated/re-appropriated
appropriated/re appropriated to
meet votable expenditure and vice versa.

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Re-appropriation from one

Grant/Appropriation
pp p for Charged
g
Expenditure to another Grant/Appropriation
for Charged
g Expenditure
p is also not
permissible.

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Funds shall not be appropriated /re-appropriated to
meet expenditure on a new service/new instrument
of service not contemplated in the budget as
approved by Parliament.
The limits for deciding New service/New

I t
Instrumentt off Service,
S i haveh been
b discussed
di d vide
id
Government of Indias decisions under Rule 10

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Prior approval of the Parliament for

expenditure
p from the Consolidated Fund
is required,
for setting up a new undertaking
taking up a new activity by an existing
departmental undertaking and involving
Capital Expenditure or

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for setting up a new public sector company
splitting up of an existing
company/amalgamation of two or more
companies, or
taking up a new activity by an existing company
or
in respect of investments to be made for the first
time in private sector companies/private
institutions except in units coming under
Government Management (with the approval of
Parliament)
Parliament).
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Approval of the Parliament is also required
in the cases of additional investments
above rupees one crore in an existing
undertaking/private sector
companies/private
i / i t institutions
i tit ti andd in
i the
th
case of additional investments in loans
above rupees twenty lakhs to an existing
public sector company, where there is no
Budget Provision.
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In the cases where there is budget provision

and ppaid upp capital
p of the company
p y is
between Rupees 1crore to rupees 100 crore,
the limit for seekingg approval
pp of the
Parliament ranges between above twenty
lakh to rupees
p 15 crores

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The expenditure below the limits (shown for
reference to the Parliament for approval) can be
met from the re-appropriation
re appropriation of savings in a grant
subject to report to the Parliament. Expenditure
above Rs.10 lakhs and uptop Rs.50 lakhs,, on new
Works (Land, Buildings and/or Machinery) can be
met from savings in a grant by re-appropriation
subject to report to Parliament and with the prior
approval of the Parliament if it exceeds Rs.50
lakhs.
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In the case of Grant-in aid to statutory and

other ppublic/private
p institutions under
Revenue Expenditure, the prior approval of
the Parliament for meeting g the expenditure
p
out of the Consolidated Fund of India is
required
q

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the prior approval of the Parliament is

required
q above the following
g limits:
Institutions in receipt of Rs.10 lakh, (limits apply
grant in aid up to Rs.1
grant-in-aid Rs 1 with reference to money
crore disbursed by an individual
Ministry/
y Department
p and
not by the Government as a
whole.

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Institutions in receipt of 10% of the Budget

grant-in-aid above RsRs.11 provision or Rs
Rs. 2 crores,
crores
crore whichever is less.
Grants-in-aid to private Above Rs.5 lakhs

institutions other than for
Export Promotions
Schemes, Recurring

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Grants-in-aid
Grants in aid to private Above Rs
Rs.10
10 lakhs
institutions other than
for Export
p Promotions
Schemes, Non-
Recurring

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Write off of Government loans above Rs.1

lakh ((individual case)) has to be referred to
the Parliament.

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Ministries/Departments have full powers

for re-appropriation
pp p of funds from one
plan head to another plan head in a Grant,
p in cases involving
except g foreign
g exchangeg
provided that
no re-appropriation
re appropriation from Capital to
Revenue and vice versa is made,

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commitments are not made beyond the
allocations for the schemes during the plan
period.
Savings in Revenue Section are not

available for re-appropriation in Capital
Section and vice versa in the same Demand
for Grants.

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Funds from salary cannot be re-appropriated to
any other head.
The Financial Advisors have not to allow
diversion of funds /re-appropriation of funds to
augment provisions
ii for
f travell expenses.
The Administrative Ministries/Departments may
enhance
h provision
i i under
d travel
t l Expenses
E up to
t
10%.

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Powers of subordinate authorities relating to
creation of posts and abolition of posts.
Rule 11to 13 deals with powers of

subordinate authorities relatingg to creation
of posts and abolition of posts.
Rule 11 provides that no post shall be
created in the Secretariat office/department
of the Central Government unless the
scale/rate of pay on which the post is
created has been approved by the President
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Powers of subordinate authorities relating to
creation of posts and abolition of posts.
No post on permanent basis can be created

without the p
previous consent of the Finance
Ministry.

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Powers of subordinate authorities relating to creation
The subordinate authority authorized to

create a permanent post may create similar
supernumerary post (a shadow post i.e. no
duties are attached to such post) for the
purpose off accommodating
d ti the
th lien
li off a
Government servant who, though entitled to
hold a lien against regular permanent post
cannot be so accommodated because of
non-availability
non availability of such a post.
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Powers of subordinate authorities relating to creation
The supernumerary post has to be created

only
y if another vacant ppermanent post
p is not
available to provide lien.
The creation of supernumerary posts is
guided by the principles given in Rule11 (5)

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Powers of subordinate authorities relatingg to creation
Abolition of posts is covered under Rule

12,, which states that a subordinate authorityy
may sanction the abolition of post which it
is competent
p to create.

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Powers of subordinate authorities
The powers vested in the departments of the
Central Government/Administrators and
Heads of Departments in relation to,to
creation of permanent posts, temporary posts,
Appropriation and re re-appropriation,
appropriation
incurring of contingent or miscellaneous
p
expenditure, , write off of losses
are specified in Schedules II to VII of these
Rules.

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No powers can be delegated to any
subordinate authority in respect of:
Creation of posts;
Write off of losses;; and
Re-appropriation of funds exceeding 10
ppercent of the original
g budget
g pprovision for
either of the primary units of
appropriation/sub head.
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Rule 16 provides that a Head of Office may

have p
power to authorize a Gazetted Officers
serving under him to incur
contingent/miscellaneous
g expenditure
p on his
behalf subject to restrictions as may be laid
down by y him.

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The Administrator/Head of the Department

shall,, however,, continue to be responsible
p
for the correctness, regularity and propriety
of the decisions taken byy the Gazetted
Officer to whom powers have been
delegated.
g

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Insurance of the Government
Property
Government property both movable and
immovable is not to be insured and no
expenditure has to be incurred/liability
undertaken in connection with the insurance
of such property without the previous
y
consent of the Finance Ministry.

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Property
Motor vehicles owned by the Central
Government used for purposes not
connected with any commercial enterprise,
are exempt from compulsory insurance
against
i t thirds
thi d party
t risk
i k by
b virtue
i t off sub-
b
section (2) of Section 94 of the Motor
Vehicle Act,
Act 1939.
1939 Such vehicles shall not
therefore be insured, with certain exceptions
(Rule 15)
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Property
In cases where it has been decided to insure
pproperties/goods
p g under the direct/indirect
control of the Central Government, the
p
departments shall affect the insurance onlyy
with a Nationalized Insurance Organization
and follow the pprocedure that may y be laid
down by the Ministry of Finance from time
to time.
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Remission of disallowances by Audit and writing
off of overpayments to Government servants
Rule 17 specifies the principles for

remission of disallowances by
y audit and
writing off of overpayments made to
ggovernment servants

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Expenditure on Schemes or
Projects
A Department of the Central Government
mayy sanction expenditure
p on anyy scheme/
project, the total outlay on which does not
p
exceed rupees one crore fifty
y lakhs,, , if
the scheme has been approved by the
Finance Ministry. y

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Projects
The limit includes the entire cost of the
scheme upto
p the date of completion,
p , both
recurring/ non-recurring), cost of the works,
even where the pprovision for such work is
made in a demand under the control of
another Department
p

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Projects
Approval of the Finance Ministry shall not
be required
q to sanction excess expenditure
p
over the original estimates of a sanctioned
scheme up p to ten p
per cent or rupees
p five
crores which ever is less (in the case of
plan scheme),
p ), and ten p
percent or rupees
p
three crores which ever is less (in the case
of non-plan
p scheme
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Projects
In relation to public works this is subject to
the p
provisions of the Central Public Works
Department Code/ Central Public Works
Account Code,, etc

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Projects
The powers to sanction expenditure on
schemes in respect of the Departments of
Central Government having Integrated
Finance Advice System under plan
schemes
h h
have been
b enhanced
h d tto schemes
h
costing less than Rs.50 crores (provided the
scheme has been accepted by the
Ministry of Finance at the pre-budget
stage
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Projects
The enhanced powers are, however, to be
exercised subject
j to the approval
pp of the
schemes of specified costs by the prescribed
authorities. ((Rule 18))

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Projects
The increase in the cost will be approved by the
Administrative Ministry/Department in
consultation with the Planning Commission,
where such increases are due to:
(a)
( ) Increase in
i statutory levies;
l i
(b) Exchange rate variations within the originally
approvedd project
j t time
ti scale.
l Government
G t off
Indias decision 2 below Rule 18

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Projects
Where the Revised Cost Estimates exceed
5% of the approved
pp completion
p cost
(excluding changes in statutory levies and
g rate variation)) due to scope
exchange p
change, addition deletion etc., the same
shall be submitted to the Public Investment
Board (PIB)/Cabinet Committee on
Economic Affairs ((CCEA)) for approval.
pp
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Projects
Any further increases above 3 % is also
required
q to be ggot approved
pp byy the
PIB/CCEA.
The powers for preparation of Feasibility
Report in all cases involving cost of less
than Rs.
Rs 10 crores is delegated to the
Administrative Ministries [GOI decision 3

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Sanction of Non-Plan Expenditure
The Secretary of a Department with

Integrated
g Finance Scheme can sanction
Non-plan expenditure on schemes costing
up
p to Rs.5 crores,, but no Non-plan
p ppost
would be created under this power.

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Major works costing up to Rs.5
Rs 5
lakhs
Ministries/Departments of the Central
Government may y issue expenditure
p sanction
in respect of Major Works costing up to
Rs.5 lakhs without consulting
g the Ministryy
of Finance.

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Power to Release Funds
The Departments of the Central
Government have powers to release funds
for investment as equity capital of statutory
corporations/ companies wholly owned by
th Central
the C t l Government,
G t within
ithi the
th
allotment in the Budget/Appropriation/Re-
appropriation of funds or advance
sanctioned for the purpose from the
Contingency Fund. (Rule 19)
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Grants and Loans
Rule 20 prescribes the principles as regards
ppowers to sanction grants-in-aid
g including
g
scholarships and loans.

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Indents, Contracts and Purchases
A department of the Central Government shall
have full powers to sanction expenditure for
purchase and execution of contracts subject to
the:
Delegation of financial powers in the DFP
Rules, 1978;
Purchasing powers delegated from time-to-time
to the indenting departments for making
purchases directly and not through the Central
Purchase Organization
Organization.
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Previous consent of the Finance Ministry

is required
q in the followingg cases:
a) any purchase or contract the value of
which exceeds Rs Rs. 5 crore ,
b) any negotiated or single tender contract
exceeding RsRs. 1 crore in value,
value a limited
or open tender

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c) any indent for stores of a propriety nature ,

the value of which exceeds Rs. 60 lakh;;
d) any agreement or contract for technical

collaboration or consultancy services with
firms or foreign governments

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e) any purchase which has normally to be

affected through
g the Central Purchasingg
Organization, but which is proposed to be
made direct on the ggrounds of emergency,
g y, if
the value exceeds Rs. 50 lakh.

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In the case of Department of Supply, the

monetary y limits under (a),
( ), ((b)) and ((c)) shall
be Rs. 5 crore for purchases made by the
Central Purchasing g Organization
g in India or
abroad.

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Cases where the consent of the
Finance Ministry is essential
Sl No
Sl. Details Reference (DFP
Rules, 1978)
1 Lump provisions in budget Govt. of Indias

for certain urgent schemes Decision under
not ready in sufficient detail Rule 7
at the pre budget stage.

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Cases where the consent of the
Finance Ministry is essential
2 Re-appropriation from the G.O.Is decision
funds pprovided for new items under Rule 9
3 Excess of expenditure beyond Rule 10(5)
15 per cent over the approved/
sanctioned amount for a work
where savings are available
under
d appropriate
i t wordsd head.
h d

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Cases where the consent of the Finance Ministry is essential
4 Re-appropriation for a new public Rule 10

workk costing
i rupees 10 lakhs
l kh or
above but less than rupees 50
lakhs
5 Re-appropriation from and to the Rule
provisions for the Secret Service 10(6)
Expenditure
6 Re-appropriation of funds to G.O.Is
augment the secretariat decision
expenditure
di under
d
Public Exchequer
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R.T.I.Jammu Rule 10 72
7 Re-appropriation of funds between G.O.Is

direct expenditure in the Revenue decision
Section to Grants-in-Aid
Grants in Aid to under Rule
States/Union territories in the same 10
Section and vice versa
8 Re-appropriation of funds between G.O.Is
Capital
p Outlayy and loans or vice decision
versa. under Rule
10

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9 All cases of re-appropriation GOIs

involving savings of more than decision
Rs.10 lakhs under individual plan below
schemes and more than Rs.100
Rs 100 lakh Schedule V
for the plan heads relating to the
Ministry/department as a whole
10 Any purchase/contract the value of Rule 21
which exceeds rupees
p five crores,,
any negotiated/single tender
contract exceeding rupees one
crore, etc
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Delegation of Financial Powers in
IA&AD
Under Article 148(5) of the Constitution of
India,, the conditions of service of ppersons
serving in the Indian Audit and Accounts
Department
p and the administrative powers
p
of the Comptroller and Auditor General
may y be prescribed
p byy rules made byy the
President after consultation with the
Comptroller
p and Auditor General.
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Delegation of Financial Powers in
IA&AD
The financial and administrative powers of the
Comptroller and Auditor General of India under
the provisions of the Delegation of Financial
powers Rules, 1978, and the General Financial
R les 2005 and the po
Rules, powers
ers delegated to the
subordinate authorities in the Indian Audit and
Accounts Department are compiled in the
Comptroller and Auditor Generals Manual of
Standing Orders (Administrative) Volume II
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DFPR1978

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Delegation of Financial Powers

Public Exchequer R.T.I.Jammu 1

Public Exchequer R.T.I.Jammu 2

Public Exchequer R.T.I.Jammu 3

Public Exchequer R.T.I.Jammu 5

Public Exchequer R.T.I.Jammu 6

The structure of governance in India and the area

Public Exchequer R.T.I.Jammu 7

Public Exchequer R.T.I.Jammu 8

Public Exchequer R.T.I.Jammu 9

Public Exchequer R.T.I.Jammu 10

Public Exchequer R.T.I.Jammu 11

Public Exchequer R.T.I.Jammu 12

Public Exchequer R.T.I.Jammu 13

Public Exchequer R.T.I.Jammu 14

Public Exchequer R.T.I.Jammu 16

Public Exchequer R.T.I.Jammu 18

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No funds will be appropriated/ re-

Public Exchequer R.T.I.Jammu 23

Re-appropriation from one

Public Exchequer R.T.I.Jammu 24

The limits for deciding New service/New

Public Exchequer R.T.I.Jammu 25

Prior approval of the Parliament for

Public Exchequer R.T.I.Jammu 26

In the cases where there is budget provision

Public Exchequer R.T.I.Jammu 29

In the case of Grant-in aid to statutory and

Public Exchequer R.T.I.Jammu 31

the prior approval of the Parliament is

Public Exchequer R.T.I.Jammu 32

Institutions in receipt of 10% of the Budget

Grants-in-aid to private Above Rs.5 lakhs

Public Exchequer R.T.I.Jammu 33

Public Exchequer R.T.I.Jammu 34

Write off of Government loans above Rs.1

Public Exchequer R.T.I.Jammu 35

Ministries/Departments have full powers

Public Exchequer R.T.I.Jammu 36

Savings in Revenue Section are not

Public Exchequer R.T.I.Jammu 37

Public Exchequer R.T.I.Jammu 38

Rule 11to 13 deals with powers of

No post on permanent basis can be created

Public Exchequer R.T.I.Jammu 40

The subordinate authority authorized to

The supernumerary post has to be created

Public Exchequer R.T.I.Jammu 42

Abolition of posts is covered under Rule

Public Exchequer R.T.I.Jammu 43

Public Exchequer R.T.I.Jammu 44

Rule 16 provides that a Head of Office may

Public Exchequer R.T.I.Jammu 46

The Administrator/Head of the Department

Public Exchequer R.T.I.Jammu 47

Public Exchequer R.T.I.Jammu 48

Rule 17 specifies the principles for

Public Exchequer R.T.I.Jammu 51

Public Exchequer R.T.I.Jammu 52

Public Exchequer R.T.I.Jammu 53