Rule 116 — GFR 2017
Original Rule Text
Rule 116
Principles governing transactions in
connection with the agency functions
entrusted to State Government. The
following procedure shall be followed in
regard
to
transactions
arising
in
connection with the agency functions
entrusted to the State Governments
under Article 258 of the Constitution:
(i)
The expenditure on extra staff
or contingencies which the
State Government have to
incur-The extra cost to the State
Government arising mainly in
respect of the additional staff
employed or contingent and
other expenditure, as in the case
of work devolving on the State
Governments in connection with
the administration of the Census
Act, is reimbursable under Article
258 (3) of the Constitution.
Expenditure in this regard shall
be provided in the State Budget
in the first instance and adjusted
in the accounts of the State
Governments under the normal
Heads of Accounts. These will be
reimbursed in lumpsum to the
State Governments, necessary
provision being made under a
distinct sub-head ”Amounts paid
to
other
Governments,
Departments, etc.”, under the
concerned
Demand
What This Means
This rule explains how financial transactions are handled when the Central Government asks a State Government to perform certain tasks on its behalf, known as 'agency functions,' under Article 258 of the Constitution. Essentially, if the Central Government delegates a function to a State Government, the State Government will incur additional costs to carry out that function.
The State Government is responsible for initially covering these extra expenses, such as hiring temporary staff, managing daily operational costs (contingencies), or other related expenditures. These costs should first be recorded and paid from the State's own budget under their regular accounting categories. Later, the Central Government will reimburse the State Government for these specific extra costs.
When calculating the amount to be reimbursed, the State Government can include not only the direct costs of additional staff and contingencies but also elements like leave and pension contributions for those staff, provided the State's own service and financial rules permit such inclusions. The Central Government, through the relevant Ministry, will make a specific budget allocation to pay back these amounts to the State Government in a single, lump-sum payment.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1The Central Government can assign specific tasks (agency functions) to State Governments under Article 258 of the Constitution.
- 2State Governments are entitled to be reimbursed for any extra costs incurred while performing these delegated Central Government functions.
- 3Reimbursable costs include expenses for additional staff, contingent expenditures, and potentially leave and pension charges if the State's rules allow.
- 4The State Government must initially fund these expenses from its own budget and record them under normal accounting heads.
- 5The Central Government will provide a lump-sum reimbursement to the State Government.
- 6The concerned Central Ministry must make a specific budget provision for these reimbursements under a distinct sub-head.
Practical Example
The Ministry of Environment, Forest and Climate Change (Central Government) decides to launch a nationwide 'Clean Rivers Initiative' which requires extensive local-level monitoring and data collection. They entrust the implementation of this specific data collection phase to the Government of Uttar Pradesh as an agency function under Article 258.
To carry out this task, the Uttar Pradesh Forest Department needs to hire 100 temporary field assistants for six months, rent 20 vehicles, and purchase various supplies like testing kits and GPS devices. The total estimated extra cost for Uttar Pradesh is INR 5 Crore. The Uttar Pradesh government first allocates and spends this INR 5 Crore from its state budget, recording it under the relevant departmental expenditure heads. After the project phase is complete, Uttar Pradesh submits a claim to the Central Ministry of Environment, Forest and Climate Change. The Central Ministry then reviews the claim and, having made a specific budget provision under the sub-head 'Amounts paid to other Governments, Departments, etc.', releases a lump-sum reimbursement of INR 5 Crore to the Government of Uttar Pradesh.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
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This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.