Rule 65 - Preventing Fraud
Original Rule Text
Rule 65 (1) Re-appropriation of Funds. Subject to the provisions of Rule 10 of the Delegation of Financial Powers Rules, and also subject to such other general or specific restrictions as may be imposed by the Finance Ministry in this behalf, re- appropriation of funds from one primary unit of appropriation to another such unit within a grant or appropriation, may be sanctioned by a competent authority at any time before the close of the financial year to which such grant or appropriation relates. The Primary unit in this regard shall be the final unit of appropriation i.e. the Object head of account.
Rule 65 (2) Re-appropriation of funds shall be made only when it is known or anticipated that the appropriation for the unit from which funds are to be transferred shall not be utilized in full or that savings can be effected in the appropriation for the said unit.
Rule 65 (3) Funds shall not be re-appropriated from a unit with the intention of restoring the diverted appropriation to that unit when savings become available under other units later in the year.
Rule 65 (4) An application for re-appropriation of funds shall ordinarily be supported by a statement in Form GFR 1 or any other special form authorized by departmental regulations showing how the excess is proposed to be met. In all orders, sanctioning re-appropriation, the reasons for saving and excess of Rupees 1 lakh or over and the primary units (secondary units, wherever necessary), affected shall be invariably stated. The authority sanctioning the re-appropriation shall endorse a copy of the order to the Accounts Officer.
What This Means
This rule explains how government departments can move money around within their approved budget for a financial year. It's called "re-appropriation of funds." Essentially, if you have money allocated for one specific purpose (called a 'primary unit' or 'object head') but realize you won't spend it all, you can transfer that surplus to another specific purpose within the same overall budget (grant) where you might need more funds. This transfer can be done at any point before the financial year ends, but it must be approved by an authorized officer.
However, there are important conditions. You can only move funds if you genuinely expect savings in the original budget head. You cannot move money out of a budget head with the intention of putting it back later in the year if other savings become available; the transfer must be based on a real, anticipated saving. When you request or approve such a transfer, you usually need to fill out a specific form (GFR 1) explaining why the money is being moved. If the amount being moved is Rs. 1 lakh or more, the reasons for both the saving and the extra need must be clearly written down in the approval order, and a copy of this order must be sent to the Accounts Officer for their records.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Funds can be moved between specific budget categories (object heads) within the same overall grant or appropriation.
- 2This re-appropriation must be sanctioned by a competent authority before the financial year closes.
- 3Funds can only be transferred from a unit if genuine savings are known or anticipated there.
- 4It is strictly prohibited to re-appropriate funds with the intention of temporarily diverting them and then restoring them later.
- 5Applications for re-appropriation typically require Form GFR 1 or a special departmental form.
- 6Sanctioning orders for transfers of Rs. 1 lakh or more must detail reasons for savings and excesses.
- 7A copy of the re-appropriation order must always be sent to the Accounts Officer.
Practical Example
Imagine the Department of Rural Development, under the Ministry of Agriculture, has an annual budget. Within this budget, they have an allocation of Rs. 50 lakhs for "Training Programs for Farmers" (Object Head: 20.01.01) and Rs. 40 lakhs for "Purchase of Agricultural Equipment" (Object Head: 20.01.02). By December, the department realizes that due to fewer training sessions conducted than planned, they anticipate a saving of Rs. 10 lakhs in the "Training Programs" head. Simultaneously, they find that the cost of new, more efficient tractors has increased, and they need an additional Rs. 8 lakhs to purchase the required number of units under "Purchase of Agricultural Equipment."
The Head of Department, Mr. Sharma, identifies this situation. He instructs his team to prepare an application for re-appropriation. They fill out Form GFR 1, clearly stating that Rs. 8 lakhs will be transferred from "Training Programs for Farmers" (where savings are anticipated) to "Purchase of Agricultural Equipment" (where an excess need is identified). Mr. Sharma, being the competent authority, reviews and sanctions the re-appropriation order. Since the amount is over Rs. 1 lakh, the order explicitly states the reason for the saving in training (fewer programs) and the reason for the excess in equipment (increased costs). A copy of this sanctioned order is then promptly forwarded to the Accounts Officer for their records, ensuring all financial movements are properly documented and authorized before the financial year ends on March 31st.
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
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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 65 of the General Financial Rules, 2017, what is the primary responsibility of every government employee?