Para 4.15.3 — MSO

4.15.3 The method of accounting which, having regard to the aforesaid principles, should be applied to the reserves mentioned in sub-para (2) above will be as follows:-

The grants from outside agencies who do not retain control over the expenditure met therefrom and the grants from other Governments will, in the first instance, be taken to the relevant receipt head of account of the Government. Simultaneously, an amount equivalent to the grant received and credited to the receipt head will be transferred to the

(i) A grant to the Union or State Government by another Government should be treated as ordinary revenue of the recipient Government irrespective of whether the grantor Government retains control over the expenditure from the grant or not.

(ii) A grant from an outside agency to the Union or State Government made without reserving control over the expenditure therefrom should also be treated as ordinary revenue of Government.

(iii) Where reserves are created out of the grants mentioned in sub paras

(i) and

(ii) above and also out of moneys set aside by the State Government from the Consolidated Fund of the Union or State [vide Item

(ii) of the categories of reserves referred to in sub-para (1) above], the transfers to and the expenditure from the reserves are required to be voted by the Legislature (or shown as "charged").

relevant head in the Deposit Section of accounts by debit to the minor head "Transfers to/from Reserve Funds/ Deposit Accounts" to be opened under the functional Major Head or Sub Major Head concerned. In the case of fund of the second category referred to in sub para (1) above, the amounts set aside by the Union or State Governments from the Consolidated Fund of the Union or States to provide reserves for expenditure to be incurred by themselves on particular purposes should likewise be taken to the Deposit Head opened for the purpose. In both cases, in order to bring the actual expenditure from the fund into the Appropriation Accounts, the expenditure should be accounted for under the relevant programme minor head under the functional Major/Sub Major Head concerned under which provision of funds has been made and an equivalent amount will be credited under the functional Major Head concerned by a Deduct entry under a distinct sub head for each Reserve Fund/Deposit Account styled "deduct Amount met from……………Reserve Fund/Deposit Account".

Note:-In cases where the outside agencies retain control over the expenditure met from the grants given by them, the budgetary and accounting procedure to be followed should be decided by the Government in consultation with the Accountant General concerned.