Kerala Budget Manual
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GOVERNMENT OF KERALA KERALA BUDGET MANUAL (THIRD EDITION—FIRST REPRINT) [EMBODYING CORRECTIONS UPTO 30TH JUNE 1982] (ISSUED BY THE AUTHORITY OF THE GOVERNMENT OF KERALA) FINANCE DEPARTMENT PREFACE TO THE FIRST EDITION After the formation of Kerala, the provisions of the Travancore-Cochin Budget Manual were being followed in the matter of budgeting, control of expenditure, etc. Several developments that took place in the recent past have made it necessary to issue a revised edition of the Manual. The Kerala Budget Manual has incorporated not only the amendments made to the Travancore-Cochin Budget Maudlin, but also several modifications to suit the present day requirements of the administration. To ensure co-ordination between the approved annual Plan and the Budget, a new system of preparing consolidated estimates has been introduced so far as Plan Schemes are concerned. Thus, the practice of considering new proposals separately as Part II schemes continues to be in force, only in regard to non-Plan expenditure. The procedure now in vogue has been incorporated in Chapter III of this book. Most of the appendices to the Manual have had to be thoroughly recast, in the light of the revision of the “List of Major and Minor Heads of Account” by the Comptroller and Auditor General of India and the creation of new offices consequent on the vast expansion of the administrative machinery of the Government. The provisions of this Manual replace those of the Travancore-Cochin Budget Manual, which should no longer be cited. Trivandrum, C. T HOMAS , March 1966. Special Secretary (Finance). PREFACE TO THE SECOND EDITION The first edition of the Kerala Budget Manual was published in March, 1966. Since then, a number of important developments have taken place in the field of budgeting and accounting. In 1968, the Administrative Reforms Commission set up by the Government of India recommended the introduction of performance budgeting in departments/organisations which are in direct charge of development programmes. Accordingly, in Kerala, the first Performance Budget was prepared in 1970-71. Thereafter, the Performance Budgets of selected departments are being prepared every year. In 1969, the Government of India appointed a team of officers for the rationalization of Account and Budget Heads. The team made a number of important recommendations on restructuring the budget and accounts, which were implemented by the Central and State Governments with effect from 1st April, 1974. Other notable developments in the field during this period include the constitution of a new Legislature Committeewomen on Public Undertaking November, 1968, adoption of the System of Appropriation Control and the System of Letter of Credit in 1974-75, and changes made in the budgetary and accounting procedure relating to Union (Agency) Subjects in 1976-77. The present edition of the Manual takes all these into account. Consequently, a number of new appendices, sections, and chapters have been added. The list of Major and Minor Heads of Account (Appendix A to the first edition) has been completely recast, and is being brought out as a separate volume (re-numbered Appendix 2), for facility of reference. The Revised List is modelled on the “List of Major and Minor Heads of Account of Central and States' Receipts and Disbursements”, issued by the Comptroller and Auditor General of India, with the approval of the President, in 1973. The list, being a part of the Manual, should be used in conjunction with it. The information contained in the “Handbook on Reforms in the structure of Budgets and Accounts”, brought out by the Finance Department in 1973, has been suitably incorporated in Chapter I and Appendices 1 to 3. 2. While revising the Manual, the contents have been so rearranged as to conform to the four budgetary stages. In the process, Chapter V has been split into two, and the two parts re- numbered Chapters V and VI. Chapter X on Union (Agency) Subjects and the new section on performance budgeting have both been incorporated in the new Chapter V. A fresh chapter IX—on the Audit Report has also been added, which contains mainly executive instructions regarding the disposal of Draft paragraphs, included in the “Handbook of Instructions for the...........timely disposal of Draft Audit Paragraphs, and timely action on matters pertaining to the Public Accounts Committee, contained in this Handbook, have been given in Appendix 15. 3. The List of Disbursing Officers has been deleted from Appendix E; the list will now be appended to the Kerala Treasury Code, to which it rightly relates. The rest of Appendix E and Appendix F have been combined, and adapted to indicate the Estimating Officers (Expenditure Heads) also. The result is the new Appendix 9. 4. The dates on which the Departmental Officers should submit their estimates to Government are mentioned in Chapter III. As such, these have been excluded from Appendix C, now re-numbered Appendix 6. 5. In revising the Manual, it has been the endeavor to present the subject in as simple and lucid a manner as possible, considering the requirements of new entrants, who have to take departmental examinations. The definitions have, therefore, been simplified, statements illustrated and amplified, some of the sections rewritten, and new sections added. 6. Constitutional provisions having a bearing on the budget, finance, and accounts have been extracted and appended to the Manual, for ready reference, vide Appendix 17. 7. Any Officer finding any omission or mistake in this Manual may bring it to the notice of the Finance Department, for rectification. Trivandrum, K. V. R ABINDRAN NAIR , 19 th April 1977. Special Secretary (Finance). PREFACE TO THE THIRD EDITION The present edition of the Kerala Budget Manual was published in April, 1977. This edition incorporates all the amendments issued by the Government up to 30-6-1982. Any Officer finding any omission or mistake in this Manual may bring it to the notice of the Finance Department, for rectification. Trivandrum, K. V. R ABINDRAN NAIR , 2-3-1935. Commissioner & Secretary (Finance). GOVERNMENT OF KERALA Abstract KERALA BUDGET MANUAL —RECOMMENDATION OF THE PUBLIC ACCOUNTS COMMITTEE —APPENDIX 13 R ULINGS ON 'N EW SERVICE ' A MENDMENT —ORDERS ISSUED FINANCE (BUDGET WING F) DEPARTMENT G. O. (P) No. 1803/99/Fin. Dated, Thiruvananthapuram, 15 th September, 1999. ORDER The Committee on Public Accounts 1998-2000 in its 38 th Report has recommended modifications to Appendix 13 of Kerala Budget Manual—Rulings on New Service. Government after examining the recommendations of the Public Accounts Committee are pleased to substitute the following for the existing Appendix 13 of Kerala Budget Manual. AMENDMENT C. S. No. 1/99 "APPENDIX 13 (See Paragraph 94) RULINGS ON 'NEW SERVICE' The criteria to be adopted in the matter of treating any item of expenditure as 'New Service' is determined based on the recommendation of Public Accounts Committee. Under Article 204 of the Constitution, no money shall be with drawn from the Consolidated Fund of the State except under appropriation made by law, and under Article 205 ibid., when a need has arisen during the current financial year for Supplementary or additional expenditure upon some 'New Service' not contemplated in the Annual Financial Statement for the year, funds will have to be got voted by the Legislature before incurring expenditure out of the Consolidated Fund. 2. The term 'New Service' has not been defined in any precise form. Each case has to be decided on its merits. A 'New Service' may be either 'New form of Service', which involves the adoption of a new policy, the provision of a new facility etc., eg. introduction of a State Trading Scheme as a price support policy to help the producers, or a 'New Instruments of Service' which included an important extension of previous specific commitment or facility, such as the provision of a new jail, increase of professional staff in a Collegiate Institution, or original work of any importance. It is necessary to draw a distinction between a 'New form of Service' i.e., an 'altogether new service', and a 'New Instrument of Service' i.e., expansion of an existing Service. So far as 'altogether new services' are concerned, it is considered that, irrespective of their financial implications, if they were not contemplated in the Annual Financial Statements, Vote of the Legislature is necessary before incurring expenditure from the Consolidated Fund. As regards 'New Instrument of Service’, they have to be treated in the same way as a 'New Instrument of Service', they have to be treated in the same way as a 'New form of Service', if the amount of expenditure is relatively large. 3. If any new proposal involving expenditure during the course of a year arises, an important question to be considered is whether the expenditure has been contemplated in the Annual Financial Statement or whether it forms part of a grant voted. If the proposal is outside the scope of the grants or if it has been contemplated in the Annual Financial Statement presented to the Legislature, it is clearly a new service for which a demand for funds has to be placed before the Legislature. It may, in some cases, be that the extra expenditure on the new item can be met by savings within the Demand. Still, expenditure cannot be incurred on the item, as it will constitute a “New Service”, and it is necessary that a Supplementary Demand for a token sum should be presented before the Legislature. The essence of this requirement is that, without a Vote of the Legislature, money shall not be spent beyond the scope of the grant sactioned by the Legislature. 4. It is considered necessary that, in fixing the criteria for treating schemes as 'New Service', monetary limits should be prescribed without abridging Legislative control over public expenditure and at the same time without fettering the freedom of the Executive Government in carrying on the day-to-day administration of the State in the best interest of the Public.