Rule 7 - Expenditure Sanction
Original Rule Text
(1) No Authority shall sanction expenditure or advances without the previous consent of the Finance Ministry if it involves the introduction of a new principle or practice likely to lead to increased expenditure in future. (2) A Subordinate Authority shall exercise the power to sanction expenditure subject to any general or special order or direction which the authority delegating or re-delegating such power may issue or prescribe from time to time.
Rule 7: Sanction of expenditure- (1) All expenditure shall require both, sanction and Appropriation. Expenditure can be incurred against a sanction only when funds are made available to meet the expenditure or liability by valid appropriation or Re-appropriation. (2) A sanction to recurring expenditure or liability becomes operative when funds to meet the expenditure or liability of the first year are made available by valid Appropriation or Re-appropriation or by an advance from the Contingency Fund, as the case may be, and remains effective for each subsequent year subject to appropriation in such years and also subject to the terms of the sanction.
(1) Without prejudice to the provisions of rule 12, a Department of the Government of India may sanction expenditure on any scheme, project, as per the powers delegated from time to time by the Finance Ministry, subject to its outlay having been approved by the Competent Authority in accordance with the appraisal and approval process prescribed by the Finance Ministry from time to time and the power of appraisal and approval under this rule shall not be delegated.
(2) In cases where the award of contract or purchase or consultancy is inseparably linked with the Scheme, such expenditure will be processed as per the financial limits laid down for sanction of such Schemes or projects by the authority competent to approve such Schemes or Projects.
Government of India’s decision (1): Expenditure on Public funded Schemes and Projects - General instructions for Ministries/Departments - A Department of Government of India may sanction expenditure on any scheme, projects, as per the powers delegated from time to time by the Finance Ministry, subject to its outlay having been approved by the Competent Authority in accordance with the appraisal and approval process prescribed by the Finance Ministry from time to time.
2. At present, appraisal and approval of public funded Schemes and Projects is being governed by this Department’s O.M. No. 24(35)/PF-II/2012 dated 5thAugust, 2016. These guidelines for formulation, appraisal and approval of public funded schemes and projects will continue till further orders.
3. O.M. dated 5thAugust, 2016 is placed at Appendix- III. [Ministry of Finance DoE O.M. No. 01(14)/2016-E.II(A)(Vol.III), dated 01.04.2024]
What This Means
Rule 7 of the Delegation of Financial Powers Rules, 1978, is all about how government money can be spent. It basically says that just because someone approves spending (that's the 'sanction'), it doesn't mean the money can automatically be used. You also need to have the funds actually available in the budget, which is called 'appropriation'. Think of it like getting permission to buy a car (sanction) but also needing to have the money in your bank account to pay for it (appropriation).
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Expenditure requires both sanction (approval) and appropriation (funds availability).
- 2Funds must be available through valid appropriation or re-appropriation before spending.
- 3For recurring expenses, the initial sanction is valid for subsequent years, provided funds are appropriated each year.
- 4Recurring sanctions are subject to the original terms of the sanction.
Practical Example
The Department of Rural Development wants to launch a new skill development program. The Director, Ms. Sharma, sanctions an expenditure of ₹50 lakhs for the first year. However, the sanction is only valid if the department's budget includes an appropriation of ₹50 lakhs specifically for this program. If the budget only allocates ₹30 lakhs, Ms. Sharma needs to either get a re-appropriation (transferring funds from another head) or request additional funds. The sanction for the program will remain valid for the following years, provided that the department includes the required funds in its budget each year, and the program continues to align with the original sanction's objectives.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Cross References
Frequently Asked Questions
What is the difference between 'sanction' and 'appropriation'?▼
What happens if I have a sanction but no appropriation?▼
If a sanction is for a recurring expense, do I need a new sanction every year?▼
What is re-appropriation?▼
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 7 of the Delegation of Financial Powers Rules, 1978, what are the two prerequisites for incurring any expenditure?