Para 4.11 — MSO

4.11 Although it is the function of Government to determine the source from which capital expenditure shall be financed it is one of the duties of the Accountant General (A&E) to bring to the notice of the proper financial authoirity cases in which their decision seems contrary to the principles of sound financial administration. The principle of prudent finance was once enunciated by the Government of India in the following terms:- Two conditions must be fulfilled before it would be justifiable for Government of India to spend loan funds on unproductive purposes. These are firstly that the objects for which the money is wanted are so urgent and vital that the expenditure can neither be avoided, postponed nor distributed over a series of years and secondly that the amount is too great to be met from the current revenues.

And it may be said generally that the cost of all comparatively small schemes whether productive or unproductive ought to be met from Revenues.