Rule 282 - Government Guarantees | KartavyaDesk
Original Rule Text
Controller General of Accounts, for onward submission to Budget Division. Based upon the inputs, a statement of Guarantees given by the Central Government is depicted as an annexure in the Receipt Budget. (ii) While furnishing the Statement of guarantees to the Ministry of Finance, the Administrative Ministries or Departments should ensure and certify that the amounts shown tally with the total figures in the statement to be included in the Detailed Demands for grants. (iii) While furnishing the summary statements, the Ministries or Departments should also certify that the information tallies with the material furnished to the Controller General of Accounts for the purpose of inclusion in the Finance Accounts of the relevant year and is compliant with Indian Government Accounting Standard-1 (IGAS-1) relating to Government Guarantees. Rule283 (1) Invocation of Guarantee. A Guarantee Redemption Fund (GRF) has been established in the Public Account of India for redemption of guarantees given to CPSEs, Financial Institutions, etc., by the Central Government whenever such guarantees are invoked. The funding to the Guarantee Redemption Fund is to be done through budgetary appropriations, as considered appropriate, under the head 'Transfer to Guarantee Redemption Fund' through the Demands for Grants of the Department of Economic Affairs. Rule283 (2) The Administrative Ministries/ Departments should inform any case of impending/likely invocation, well in advance, to the Budget Division, along with the proposed corrective measures. Rule283 (3) In the event of invocation of a guarantee, the obligation may be discharged by sanctioning loan to the borrowing entity equal to the amount of guarantee outstanding with the approval of Budget Division, Ministry of Finance. However, any payment on this account will finally be charged to the Guarantee Redemption Fund maintained in the Public Accounts.
What This Means
Rule 282 of the General Financial Rules (GFR) 2017 deals with how the government accounts for and manages guarantees it provides. Think of a guarantee as the government promising to pay a debt if someone else (like a public sector company) can't. This rule ensures that all guarantees given by the central government are properly recorded and reported. The Controller General of Accounts (CGA) compiles a statement of all these guarantees, which is then included in the Receipt Budget. This helps everyone understand the government's potential financial obligations.
Administrative Ministries or Departments are responsible for making sure the guarantee information they provide to the Ministry of Finance is accurate and matches the figures in their Detailed Demands for Grants. They also need to certify that this information aligns with what they've given to the CGA for the Finance Accounts and that it follows Indian Government Accounting Standard-1 (IGAS-1), which specifically covers government guarantees. This ensures consistency and transparency in financial reporting. Rule 283 further elaborates on what happens when a guarantee is invoked, including the use of a Guarantee Redemption Fund (GRF) and the need to inform the Budget Division in advance of any likely invocation.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- •Deals with accounting and reporting of guarantees given by the Central Government.
- •Controller General of Accounts (CGA) compiles a statement of guarantees for the Receipt Budget.
- •Administrative Ministries/Departments must ensure accuracy and consistency of guarantee information.
- •Information must be compliant with Indian Government Accounting Standard-1 (IGAS-1).
- •Rule 283 outlines procedures for invocation of guarantees and the use of the Guarantee Redemption Fund (GRF).
Practical Example
The Ministry of Textiles provides a guarantee of ₹500 crore to the National Jute Manufacturers Corporation (NJMC) to help them secure a loan for modernization. According to Rule 282, the Ministry of Textiles must report this guarantee to the Controller General of Accounts (CGA) for inclusion in the Receipt Budget. They must also ensure that the ₹500 crore guarantee is accurately reflected in their Detailed Demands for Grants.
Later, the NJMC faces financial difficulties and is likely to default on its loan. The Ministry of Textiles, following Rule 283, informs the Budget Division of the impending invocation of the guarantee and proposes a corrective action plan. If the guarantee is invoked, the payment will be made from the Guarantee Redemption Fund (GRF) after obtaining approval from the Budget Division, Ministry of Finance.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
What is a government guarantee in the context of GFR?▼
Who is responsible for reporting government guarantees?▼
What is the Guarantee Redemption Fund (GRF)?▼
What is IGAS-1 and why is it relevant to Rule 282?▼
What should a Ministry do if a guarantee is likely to be invoked?▼
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 282 of GFR 2017, which entity is responsible for compiling a statement of guarantees given by the Central Government for inclusion in the Receipt Budget?
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