Para 2.2.19 — MSO (Audit)
Original Rule Text
2.2.19 Under Articles 115 and 205 of the Constitution and under Section 30 of the Government of Union Territories Act, 1963, when a need arises during a financial year for supplementary or additional expenditure upon some new service not contemplated in the annual financial statement for that year, funds will have to be got authorised by the appropriate Legislature before incurring that expenditure from the Consolidated Fund. The term 'New Service' has not been defined in any precise form in the legislations. A new service may be either a 'new form of service' involving the adoption of a new policy or the provision of a new facility, or a 'new instrument of service' which includes an important extension of a previous specific commitment or facility. A new form of service is an altogether new service and irrespective of its financial implications, if it was not contemplated in the annual financial statement, provision of funds by the legislature is necessary before incurring expenditure from the Consolidated Fund. A new instrument of service has also to be treated in the same way as a new form of service, if the expenditure involved is relatively large. The Central Government and the various State and Union Territory Governments have from time to time issued, mainly on the basis of the recommendations of the Public Accounts Committees, instructions laying down the criteria for treating certain categories of expenditure as on a new service. These instructions should be referred to while examining expenditure not contemplated in the annual financial statement. Even in cases where expenditure on a new service can be met by savings within the Grant or Appropriation, the expenditure cannot be incurred without obtaining a token Supplementary Grant or Appropriation from the Legislature.
Note: The financial limits fixed by the Central Government for different categories of expenditure beyond which they constitute expenditure on a “New Service/New Instrument of Service” are contained in the Government of India Decision (1) below Rule 10 of the Delegation of Financial Power Rules.
What This Means
When the government needs to spend on something not included in the annual budget, it requires supplementary authorization from the Legislature before spending. This applies to 'New Service' expenditure, which includes entirely new policies or facilities, as well as major extensions of existing commitments. Even if savings exist within the Grant to cover the cost, a token Supplementary Grant must be obtained from the Legislature. The government has issued specific financial limits beyond which expenditure qualifies as 'New Service/New Instrument of Service'.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Expenditure on new services not in the annual budget needs supplementary legislative authorization
- 2'New form of service' = entirely new policy or facility
- 3'New instrument of service' = major extension of existing commitment
- 4Even if savings exist within the Grant, a token Supplementary Grant is mandatory
- 5Financial limits for classifying new service expenditure are in the Delegation of Financial Power Rules
Practical Example
A state government decides to launch a new skill development scheme for youth not included in the current year's budget. Even though the Labour Department has Rs 50 crore in savings from other sub-heads, the scheme is a 'new form of service' and requires a token Supplementary Grant of Re 1 from the Legislature to authorize this new policy direction. Only after legislative approval can funds be spent on the scheme.
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 'New Service' in budget terminology?▼
Why is a token Supplementary Grant needed even when savings exist?▼
Where are the financial limits for 'New Service' defined?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.