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Rule 108 - State Adjustments | KartavyaDesk

GFR 2017

Original Rule Text

Rule 108 Adjustments with State Governments. Subject to the relevant provision of the Constitution or of law made by Parliament or any orders issued thereunder, adjustments in respect of financial transactions with State Governments shall, unless otherwise provided for, be made in such manner, and to such extent as may be mutually agreed upon between the Central Government and the State Government concerned. However, adjustments with State Government in respect of the matters mentioned below shall be regulated by the rules contained in Appendix-5 to the Government Accounting Rules, 1990. The rules are based on reciprocal arrangements made with the State Governments and are, therefore, binding on all of them: -

What This Means

Rule 108 of the General Financial Rules (GFR) 2017 deals with how the Central Government and State Governments handle financial transactions between them. Think of it as setting the ground rules for how they settle accounts when money moves between the Centre and the States. The core idea is that these adjustments should be based on mutual agreement, respecting the Constitution, laws passed by Parliament, and any specific orders issued. This ensures transparency and fairness in financial dealings between the two levels of government.

However, the rule also specifies that certain types of transactions are governed by a specific set of rules outlined in Appendix-5 of the Government Accounting Rules, 1990. These rules are based on agreements made with the State Governments and are therefore binding on all of them. This ensures uniformity and consistency in handling these specific financial matters. In essence, Rule 108 provides a framework for financial coordination and accountability between the Central and State Governments, promoting smooth and efficient governance.

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 adjustments between the Central and State Governments.
  • •Adjustments are generally based on mutual agreement.
  • •Must comply with the Constitution, Parliamentary laws, and relevant orders.
  • •Specific transactions are governed by Appendix-5 of the Government Accounting Rules, 1990.
  • •Appendix-5 rules are based on reciprocal arrangements and are binding on all states.

Practical Example

The Central Government's Ministry of Rural Development allocates funds to the State Government of Uttar Pradesh for the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA). After the financial year ends, Uttar Pradesh submits its expenditure report. There's a discrepancy of ₹5 crore between the amount released by the Centre and the amount reported as spent by Uttar Pradesh. According to Rule 108, officials from both the Central and State governments must meet to reconcile the accounts. They review the supporting documentation and agree that ₹2 crore was spent on permissible items but incorrectly classified, and ₹3 crore remains unaccounted for. The State Government agrees to either provide further documentation for the remaining ₹3 crore or refund the amount to the Central Government. This adjustment process follows the principles of mutual agreement outlined in Rule 108.

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

Frequently Asked Questions

What happens if the Central and State Governments can't agree on an adjustment?▼
Rule 108 emphasizes mutual agreement. If an agreement cannot be reached through discussion and reconciliation, the matter may need to be escalated to higher authorities within both governments for resolution. Legal and constitutional provisions may also be invoked if necessary.
Where can I find the specific rules mentioned in Appendix-5 of the Government Accounting Rules, 1990?▼
You can access the Government Accounting Rules, 1990, including Appendix-5, from the official website of the Controller General of Accounts (CGA), Department of Expenditure, Ministry of Finance, Government of India. You can also consult your department's finance or accounts section.
Does Rule 108 apply to all types of financial transactions between the Centre and States?▼
Rule 108 provides the general framework. However, specific agreements or guidelines related to particular schemes or projects may have their own adjustment mechanisms. Rule 108 acts as a fallback in the absence of specific provisions.
What is the purpose of having reciprocal arrangements with State Governments?▼
Reciprocal arrangements ensure uniformity and consistency in accounting practices across different states. This simplifies the process of financial adjustments and promotes transparency and accountability in inter-governmental financial transactions.

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 108 of the General Financial Rules, 2017, adjustments in respect of financial transactions between the Central Government and State Governments are primarily based on:

Related Rules

Rule 271General Financial Rules 2017 (amended July 2024) - Rule 271 - Chapter 10Rule 109General Financial Rules 2017 (amended July 2024) - Rule 109Rule 146General Financial Rules 2017 (amended July 2024) - Rule 146 - Chapter 6Rule 169General Financial Rules 2017 (amended July 2024) - Rule 169 - Chapter 6Rule 215General Financial Rules 2017 (amended July 2024) - Rule 215 - Chapter 6

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