Para 17.1 — MSO (A&E)
Original Rule Text
17.1 The Government of India releases each year assistance in the form of grants and/or loans to various States/Union Territories Governments for various central and centrally sponsored schemes in accordance with the pattern specified in the sanctions relating to the Schemes. While on certain schemes the entire expenditure is borne by the Government of India, on others the expenditure is shared between the Union and State Government. For State plan schemes the assistance takes the form of block grants which is related to the total outlay approved for the State Plan as a whole by the Planning Commission without linkage with individual schemes except to the extent of certain earmarked categories like power, major irrigation schemes, rural water supply etc.
The grants are accounted for under the major head of account “1601- Grants-in-aid from Central Government” and the loans are taken to the Major Head of Accounts, “6004-Loans & Advances from Central Government” Repayment of Loans is also shown under “6004-Loans and Advances from Central Government” in the books of the Accountant General.
What This Means
The Government of India provides yearly financial assistance to States and Union Territories as grants and/or loans for central and centrally sponsored development schemes. Depending on the scheme type, the Centre may bear the full cost or share it with the State. For State plan schemes, assistance comes as block grants linked to the overall State Plan outlay approved by the Planning Commission, not to individual schemes (except earmarked categories like power and irrigation). In the accounts, grants are recorded under Major Head 1601 (Grants-in-aid from Central Government) and loans under Major Head 6004 (Loans & Advances from Central Government).
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Central Government releases grants and/or loans to States/UTs for development schemes annually
- 2Some schemes are 100% central-funded; others are shared between Centre and State
- 3State plan assistance is a block grant linked to total State Plan outlay, not individual schemes
- 4Exceptions: earmarked categories (power, major irrigation, rural water supply) are linked to specific schemes
- 5Grants: Major Head 1601; Loans and repayments: Major Head 6004
Practical Example
A State receives Rs. 500 crore block grant for its annual plan as approved by the Planning Commission, plus Rs. 50 crore earmarked specifically for a major irrigation project. The Rs. 500 crore is booked under Major Head 1601 and the State has flexibility to allocate it across plan schemes. The Rs. 50 crore must be used only for the specified irrigation project. Any loan component goes under Major Head 6004.
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 the difference between a central scheme and a centrally sponsored scheme?▼
Why are some categories earmarked within block grants?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.