Para 3.16.36 — MSO (Audit)
Original Rule Text
3.16.36 The main principles that would govern expenditure from these funds and its exhibition in estimates and accounts are set out below:
(i) A grant to the Union, State or Union Territory 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 a State or a Union Territory 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
(iii) above and also out of moneys set aside by the Union/State/Union Territory Government from the Consolidated Fund of India or of the State or of the Union Territory as the case may be, the transfers to and the expenditure from the reserves are required to be voted by the Parliament/Legislature (or shown as "charged").
What This Means
Grants from other governments or outside agencies that do not retain control over spending are treated as ordinary revenue of the recipient government. When reserves are created from such grants or from the government's own set-asides, both the transfers into the reserves and the expenditure from them must be voted by Parliament or the Legislature (or shown as 'charged'). This ensures legislative oversight over all money flowing through these funds.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Inter-government grants are treated as ordinary revenue of the receiving government
- 2Grants from agencies without spending control are also treated as government revenue
- 3Transfers to and expenditure from reserve funds require legislative vote or 'charged' classification
- 4Legislative oversight is maintained over all fund transactions
Practical Example
The Central Government gives a state Rs 50 crore under a Swachh Bharat grant without retaining control over how it is spent. The state treats it as ordinary revenue. If the state wants to set aside Rs 10 crore of this into a sanitation reserve fund, both the transfer to the fund and any spending from it must appear in the budget estimates and be voted by the state Legislature.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
Does it matter whether the granting agency retains control over spending?▼
Why must transfers to reserve funds be voted by the Legislature?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.