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Rule 18 - Government Trading | KartavyaDesk

DFPR 1978delegation

Original Rule Text

(a) for the purchase of commodities not intended for Government consumption, but for sale or issue to the public, State Governments or any other agency; (b) for fixing of prices in respect of direct trading operations of Government; and (c) from Government companies and undertakings which may be referred to the Government for fixation of prices for their products or stocks,

What This Means

Rule 18 of the Delegation of Financial Powers Rules, 1978, deals with the financial powers related to trading and pricing activities conducted by the government. It essentially outlines who has the authority to make decisions about buying goods for resale, setting prices for government trading operations, and determining prices for products or stocks from government-owned companies when these matters are referred to the government. This rule ensures that these crucial financial decisions are made at the appropriate level, maintaining accountability and preventing misuse of funds.

This rule applies when the government is involved in direct trading activities, meaning buying and selling goods rather than using them directly. It also comes into play when government-owned companies need the government to set prices for their products. The rule affects various government departments and agencies involved in trading, as well as government companies whose pricing policies are subject to government approval. Understanding this rule is crucial for government employees involved in procurement, sales, and financial management, as it dictates the extent of their decision-making power.

In essence, Rule 18 provides a framework for financial control and transparency in government trading operations and pricing decisions related to government-owned entities. It helps ensure that these activities are conducted efficiently and in the best interest of the public.

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

Key Points

  • •Deals with financial powers related to government trading and pricing.
  • •Covers purchase of commodities for resale, not for government consumption.
  • •Addresses fixing prices for direct trading operations of the government.
  • •Includes price fixation for products/stocks of government companies referred to the government.
  • •Ensures accountability and prevents misuse of funds in trading activities.

Practical Example

The Ministry of Textiles is involved in procuring cotton from farmers for sale to textile mills through a government-run cooperative. Under Rule 18, the Director-General of Procurement, Mr. Sharma, has the delegated authority to approve the purchase of cotton up to ₹50 crore per transaction. If the purchase exceeds this amount, it needs approval from the Secretary of the Ministry. Similarly, Bharat Electronics Limited (BEL), a government undertaking, develops radar systems. If BEL wants the government to approve the price of a new radar system, the decision-making power to set the price, based on market analysis and production costs, would fall under the purview of Rule 18, with the final approval resting with a designated authority within the Ministry of Defence, depending on the value and strategic importance of the system.

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

Frequently Asked Questions

What constitutes 'commodities not intended for Government consumption' under Rule 18?▼
These are goods purchased by the government with the explicit intention of selling or issuing them to the public, State Governments, or other agencies, rather than using them directly within the government.
Who decides which government companies' pricing needs to be referred to the government?▼
The specific circumstances and regulations governing each government company determine whether their pricing requires government approval. This is usually outlined in their charter or relevant government directives.
Does Rule 18 apply to all types of government trading operations?▼
Yes, it applies to all direct trading operations where the government is directly involved in buying and selling goods, regardless of the specific commodity or sector.
What happens if a government employee exceeds their delegated financial powers under Rule 18?▼
Exceeding delegated financial powers can lead to disciplinary action, including penalties, suspension, or even legal consequences, depending on the severity of the violation and the intent behind it.
How does Rule 18 relate to other financial rules and regulations?▼
Rule 18 works in conjunction with other financial rules and regulations, such as the General Financial Rules (GFR), which provide a broader framework for financial management in the government. It provides specific guidance on delegation of powers within that broader framework.

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

Test Your Knowledge

Question 1 of 3

According to Rule 18 of the Delegation of Financial Powers Rules, 1978, which of the following scenarios falls under its purview?

Related Rules

Annexure IIDFPR 2024 - Annexure IIAppendix IDFPR 2024 - Appendix IRule 20DFPR 2024 - Rule 20 - (Expenditure from or incidence of charges on contingency fund of India)Rule 10DFPR 2024 - Rule 10 - (Re-appropriation)Rule 14DFPR 2024 - Rule 14 - (Insurance of Government property)

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