Para 3.17.17 — MSO (Audit)
Original Rule Text
3.17.17 The lending agency requires that the proceeds of any loan are used only for the purpose for which loan was granted with due attention to consideration of economy, efficiency and effectiveness without any political or non-economic influences.
# Audit of implementing Agencies
What This Means
When a government body receives a loan from an external agency like the World Bank, the money must be spent only on the specific project it was approved for. The spending must follow principles of economy, efficiency, and effectiveness, and no political or unrelated influences should affect how the funds are used.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Loan proceeds must be used exclusively for the sanctioned purpose
- 2Spending must demonstrate economy, efficiency, and effectiveness
- 3Political or non-economic influences must not affect expenditure decisions
- 4The lending agency monitors compliance with these conditions
Practical Example
A state government receives a World Bank loan for building rural roads. A local politician pressures the project director to divert some funds to construct a community hall in his constituency. The auditor flags this as a violation because the loan proceeds are being used for a purpose outside the original loan agreement, influenced by political considerations.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
What happens if loan funds are used for an unauthorized purpose?▼
Who decides whether expenditure meets economy and efficiency criteria?▼
Does this apply to all externally aided projects?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.