Para 19.5 — When Ministries or Departments are reorganized and

19.5 BUDGETARY AND ACCOUNTING ARRANGEMENTS CONSEQUENT UPON REORGANIZATION OF MINISTRIES

19.5.1 An amendment to the Government of India (Allocation of Business) Rules, 1961, may involve transfer of some items of work as well as offices/departments dealing with them from one Ministry/Department of the Government of India to another. This may require special arrangements for provisioning of funds and operation of certain sub-heads under the Demand for Grants pertaining to former or the transferor Ministry/Department by the latter or the transferee Ministry/Department. In such cases, the Ministry of Finance would be required to issue necessary sanction for permitting the transferee Ministry/ Department to operate the provisions under the Demand for Grants of transferor Ministry/Department. – Hereafter, this type of case has been referred as Type `A'. Alternatively, the transferee Ministry/Department will take action to obtain supplementary budget allocation under its own DG wherever possible, and the transferor Ministry/Department will surrender the budget available with them - this type has been referred to as Type `B' hereafter.

19.5.2 Instructions pertaining to payment and accounting procedure to be followed in such cases are prescribed below:

General (applicable to both types `A' and `B')

(a) There is a need to avoid dislocation of work that might otherwise be caused due reorganization of Ministries/Departments and sudden switch over. Hence, the transfer of payment and accounting work in the office of the PAO (Transferee) in such cases, will be commenced from the 1st of the month following the date of Presidential Notification and on receipt of the sanction of the Ministry of Finance (DEA referred to above).

(b) The Transferor PAO will furnish a statement to the Transferee PAO, indicating -

(i) The provisions in the existing Demand for Grants against relevant sub-heads, plus supplementary grant if any obtained for the purpose, and break up thereof, if any, among various DDOs as authorized by the Grant Controlling Authority;

(ii) The expenditure booked by him against the respective heads u to the end of the month for which accounts are compiled, plus the amounts for the subsequent month posted in his Expenditure Control Register;

(iii) He will subsequently indicate the actual figure booked by him up to the month for which he was responsible for payment and accounting, as soon as compilation for the last month is finished; and

(iv) If any debits pertaining to the Transferred DDOs are received later, they will be duly forwarded by him to the Transferee PAO for necessary action, under intimation to the accounts authorities from whom the debits originated.

(c) The Transferee PAO will enter the details referred to above in his relevant books e.g.

DDO wise Bill passing cum expenditure Control Register etc and proceed with the payment and accounting work relating to the new offices/departments transferred to his circle, in the usual manner.

Action at the end of the year and preparation of Appropriation Accounts

(d) Type `A'- In cases where supplementary grant is not obtained by the Transferee Ministry/Department, as soon as the accounts for the relevant financial year are closed, the Transferee PAO will forward the following material to the `Transferor' PAO -

(i) The figures of expenditure booked by Transferor PAO and intimated to him as per

(b)

(iii) above;

(ii) The expenditure incurred and booked in his books against the relevant primary units after he started the payment and accounting work relating thereto;

(iii) Total actual expenditure during the entire year vis-a-vis the provisions under eachof the primary units in the original Demand for Grant, Supplementary Grants and Reappropriations (Orders sanctioning Reappropriations in such cases would be issued by the Transferor Ministry/Department) if any, and

(iv) The Principal Accounts Office of the Transferor Ministry/departments will be responsible for including the figures intimated by the Transferee PAO (vide

(iii) above) for the purpose of preparation of the Appropriation Accounts for the Demand for Grant as a whole.

(e) Type `B' - If the Transferee Ministry/Department obtains supplementary funds to cover the relevant expenditure in its own Demands for Grants, the Pr A.O. of the Transferee Ministry/Department would be responsible for the preparation of the Appropriation Accounts after including these heads, as usual.

Applicable to types `A' and `B' 19.5.3 In either case, soon after the accounts for the relevant month are closed, further action would have to be taken by the Transferor Pr.Accounts Office/PAO to effect the transfer of balances under various D.D.R.S. Heads to the Transferee Pr Accounts Office/PAO, keeping in view the provisions of paras 19.4.3. to 19.4.5. (Authority: S.14014/AL/83/TA)

19.6 OPENING OF LETTERS OF CREDIT(LC) BY AUTHORISED BANKS IN FAVOUR OF FOREIGN SUPPLIERS IN CONNECTION WITH THE IMPORT OF EQUIPMENTS AND COMPONENTS BY CENTRAL GOVERNMENT MINISTRIES/DEPARTMENTS

19.6.1 Certain Ministries/Departments are authorized to import equipments and components. Consequently, they are in this connection required to open Letters of Credit (LC) in favour of foreign suppliers.

19.6.2 The Ministries/Departments now have the facility of opening an irrevocable LC with authorized agency banks on payment of the commission charges on the basis of the services rendered without depositing funds with them in advance. Quotation on the commission charges payable would be called from banks including accredited bank of the Ministry/Departments. The bank would be selected based on the quotation received for commission charges. The accredited bank to follow the procedure of directly debiting the amount to the government

account through scrolls. However, the banks other than the accredited banks will get reimbursement from the RBI for the Foreign LC payment made on the basis of debit mandate receipt from the concerned Government Ministries/Departments.

[Authority No: 1(13)(6)/2000/TA/338 dated 17.06.2004] 19.6.3 This is on account of the fact that the turn over commission paid by the Reserve Bank to the banks handling Government business in terms of para 26 of the Memorandum of banking instructions issued by them, is not meant to cover the charges for the work of opening irrevocable LC on behalf of Government.

19.6.4 With effect from 1-9-1980 the Ministry/Department which places a supply order or order for acceptance of tender other than those placed on private firms or individuals in the U.S.A., shall be responsible to arrange for payments against such contracts. For this purpose, the procedure prescribed below may be followed after mutual agreement with the foreign suppliers, with lower costs implications when compared to the system of LC. On receipt of the completed invoice from the foreign supplier along with all the relevant documents required under terms of the contract by the nominated officer in the Ministry/Department or by the bank nominated by the Ministry in India, payment shall be made through bank transfer directly into the payee's prespecified bank account

(s) abroad.

Note: - In cases where the foreign supplier insists on opening of a LC, the concerned Department may insert a suitable provision to that effect in the contract, and arrange to have the LC opened, keeping in view the orders on the subject. (Authority: File No. 1(13) (1)/86/TA)

What This Means

This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.

Key Points

• 1Reorganization of Ministries may require transferring budget provisions from one Demand for Grants to another
• 2The Ministry of Finance coordinates transitional budgetary and accounting arrangements
• 3Re-appropriation of funds and transfer of balances must be handled systematically
• 4PAOs must ensure continuity of accounting records during and after the transition
• 5Special instructions are issued for each reorganization case to avoid disruption of government operations

Practical Example

This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.

Frequently Asked Questions

This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.