Rule 118 of The General Financial Rules 2017 Adjustments with Foreign Governments Outside Bodies
Original Rule Text
Visual Summary
Services to external entities generally require payment.
Covers foreign governments, non-government bodies, and institutions.
Exemptions require explicit general or special government orders.
Executive Summary
Rule 118 of the General Financial Rules, 2017 establishes a fundamental principle: services rendered by the Government of India to foreign governments, non-government bodies, institutions, or separate funds must be on a payment basis. This rule ensures that public resources are not expended without appropriate compensation when benefiting external entities. The only exceptions to this principle are those explicitly granted by the Government through general or special orders, highlighting a strict control over such financial interactions.
In-Depth Analysis of the Rule
Rule 118 outlines the standard operating procedure for financial transactions involving the provision of services to entities outside the direct purview of the Central Government. It underscores a policy of cost recovery for services rendered to external parties, thereby protecting public funds and ensuring fiscal prudence.
Breakdown of the Rule
- General Principle of Payment: The core tenet is that any service provided by the Government to a foreign Government, non-Government body, institution, or a separate fund must be compensated. This ensures that the cost of providing such services is borne by the recipient.
- Scope of Entities: The rule broadly defines the types of external entities to which this payment principle applies. This includes:
- Foreign Governments
- Non-Government bodies
- Institutions
- Separate funds constituted as such
- Exemptions: The only deviation from this payment requirement is when the Government explicitly grants an exemption. Such exemptions must be issued through “general or special orders,” implying a formal and deliberate decision-making process. This prevents arbitrary waivers of payment.
Practical Example
Consider a scenario where the Indian Government’s meteorological department provides specialized weather forecasting services to a foreign research institution for a project. According to Rule 118, the Indian Government would charge the foreign research institution for these services. However, if the Government of India issues a special order exempting certain international scientific collaborations from such charges, then the service could be provided without payment, provided all conditions of that special order are met.
Related Provisions
Understanding Rule 118 is enhanced by considering other rules that govern financial transactions and inter-governmental adjustments:
- Rule 117 of The General Financial Rules, 2017 Inter-Governmental Adjustments Closure Date: This rule specifies the crucial date for closing inter-governmental adjustments, ensuring timely financial reconciliation.
- Rule 119 of The General Financial Rules, 2017 Recoveries for Services to Non-Government Parties: This rule details how recoveries for services rendered to non-Government parties are to be classified as Government receipts.
- Rule 120 of The General Financial Rules, 2017 Recoveries for Services as Agent: This rule specifies that when the Government acts as an agent, the entire cost of service must be recovered, reducing expenditure to nil.
Learning Aids
Mnemonics
- Rule 118: “Foreign Services = Funds” – Remember that providing services to foreign entities or outside bodies generally requires payment, unless specifically exempted.
Process Flowchart
Multiple Choice Questions (MCQs)
1. What is the primary requirement of Rule 118 of the General Financial Rules, 2017 regarding services rendered to foreign Governments or outside bodies?
- A) Services must be free of charge.
- B) Services must be rendered only after obtaining parliamentary approval.
- C) Services shall not be rendered under any circumstances.
- D) Services shall not be rendered except on payment.
Show Answer
Correct Answer: D) Services shall not be rendered except on payment.
2. According to Rule 118 of the General Financial Rules, 2017, who can grant an exemption from the payment requirement for services rendered to foreign Governments or outside bodies?
- A) The Head of the Department.
- B) The Ministry of Finance.
- C) The Government, by general or special orders.
- D) The Comptroller and Auditor General.
Show Answer
Correct Answer: C) The Government, by general or special orders.
3. Which of the following entities is NOT explicitly mentioned in Rule 118 of the General Financial Rules, 2017 as requiring payment for services rendered by the Government?
- A) Foreign Governments.
- B) Non-Government bodies.
- C) Individual citizens of foreign countries.
- D) Institutions.
Show Answer
Correct Answer: C) Individual citizens of foreign countries.
4. If a service is rendered to an outside body without payment, in violation of Rule 118 of the General Financial Rules, 2017, what is the likely consequence?
- A) The service will be retroactively billed.
- B) It is a breach of financial propriety unless exempted.
- C) The Government will absorb the cost without issue.
- D) The outside body will be blacklisted indefinitely.
Show Answer
Correct Answer: B) It is a breach of financial propriety unless exempted.
5. Rule 118 of the General Financial Rules, 2017 aims to ensure which of the following?
- A) Promotion of international cooperation.
- B) Fiscal prudence and cost recovery for public funds.
- C) Streamlining bureaucratic processes.
- D) Centralized control over all government services.
Show Answer
Correct Answer: B) Fiscal prudence and cost recovery for public funds.
Frequently Asked Questions
Q1: Does Rule 118 of the General Financial Rules, 2017 apply to all international collaborations?
A1: Rule 118 generally applies to services rendered to foreign Governments, non-Government bodies, institutions, or separate funds. However, specific exemptions can be granted by the Government through general or special orders, which might cover certain international collaborations.
Q2: What kind of “services” are covered under Rule 118 of the General Financial Rules, 2017?
A2: The rule broadly refers to “services” without specific enumeration. This implies any form of assistance, expertise, or resource provision by the Government that benefits the listed external entities.
Q3: How are exemptions from Rule 118 of the General Financial Rules, 2017 typically granted?
A3: Exemptions must be formally issued by the Government through either “general or special orders.” This ensures that any deviation from the payment principle is a deliberate policy decision.
Key Takeaways
- Government services to foreign entities or outside bodies generally require payment.
- This principle applies to foreign governments, non-government bodies, institutions, and separate funds.
- Exemptions are only valid if issued by the Government through formal general or special orders.
- The rule promotes fiscal responsibility by ensuring cost recovery for external services.
Conclusion
Rule 118 of the General Financial Rules, 2017 serves as a critical safeguard for public funds, mandating that services provided to external entities are generally on a payment basis. This rule reflects a commitment to financial accountability and ensures that the Government’s resources are managed with prudence, while allowing for strategic exemptions through formal channels.