KartavyaDesk

Rule 214 - Surplus Inventory | KartavyaDesk

GFR 2017

Original Rule Text

Note: As the inventory carrying cost is an expenditure that does not add value to the material being stocked, a material remaining in stock for over a year shall generally be considered surplus, unless adequate reasons to treat it otherwise exist. The items so declared surplus may be dealt as per the procedure laid down under Rule 217.

What This Means

Rule 214 of the General Financial Rules (GFR), 2017, focuses on managing inventory effectively. It essentially states that if materials remain in stock for more than a year, they should generally be considered surplus. The core idea is that keeping items in storage incurs costs (like storage fees, potential spoilage, etc.) without adding any value to the material itself. This rule aims to prevent government departments from accumulating unnecessary stockpiles of materials.

This rule applies to all government departments and organizations that maintain inventories. If an item has been sitting in storage for over a year, the department needs to justify why it shouldn't be declared surplus. If no valid reason exists, the item should be declared surplus and dealt with according to Rule 217, which outlines the procedures for disposing of surplus items. This ensures that public funds aren't wasted on storing unused materials and that such materials are disposed of efficiently and effectively.

The rule affects all government employees involved in procurement, stores management, and financial management. It emphasizes the importance of regular stocktaking, efficient inventory management, and timely disposal of surplus items. Proper implementation of this rule helps in reducing unnecessary expenditure and improving the overall efficiency of government operations.

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

Key Points

  • •Materials in stock for over a year are generally considered surplus.
  • •Inventory carrying cost is an expenditure that does not add value.
  • •Departments must provide adequate reasons if items over a year old should NOT be declared surplus.
  • •Surplus items should be dealt with as per Rule 217.
  • •The rule aims to reduce unnecessary expenditure on storing unused materials.

Practical Example

The Public Works Department (PWD) purchased 500 rolls of electrical wiring in January 2023 for a large infrastructure project. However, due to project delays, only 200 rolls were used by January 2024. The remaining 300 rolls have been sitting in the PWD's warehouse. According to Rule 214, these 300 rolls should be considered surplus unless the PWD can provide a valid reason for keeping them.

If the PWD anticipates using the remaining wiring within the next few months for a related project, they can document this justification. However, if there's no foreseeable use, the PWD must declare the 300 rolls as surplus and follow the procedures outlined in Rule 217 to dispose of them, potentially through auction or transfer to another department. This prevents the PWD from incurring further storage costs and potential degradation of the wiring.

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 'adequate reasons' for not declaring an item surplus?▼
Adequate reasons could include a confirmed upcoming project requiring the material, a strategic reserve policy, or a temporary delay in usage due to unforeseen circumstances. These reasons must be documented and approved by the competent authority.
What happens if we don't declare surplus items and they remain in stock?▼
Failure to declare surplus items can lead to unnecessary storage costs, potential obsolescence or damage to the materials, and audit objections. It also violates the principles of efficient financial management.
Does this rule apply to all types of materials?▼
Yes, Rule 214 applies to all types of materials held in stock by government departments and organizations, unless specifically exempted by any other rule or regulation.
What is Rule 217 and how does it relate to Rule 214?▼
Rule 217 outlines the procedures for the disposal of surplus, obsolete, and unserviceable stores. Once an item is declared surplus under Rule 214, Rule 217 provides the guidelines for how to dispose of it, such as through auction, tender, or transfer to another department.
Who is responsible for identifying and declaring surplus items?▼
The responsibility typically lies with the stores in-charge or the officer responsible for inventory management in each department. They should conduct regular stocktaking and identify items that meet the criteria for being declared surplus.

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 214 of GFR 2017, under what circumstance is a material generally considered surplus?

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

Need help understanding this rule?

Ask Niti — your AI assistant for GFR 2017 and other government rules