Rule 124 of The General Financial Rules 2017 Interdepartmental Payments Department Division Principles
Original Rule Text
Visual Summary
Perform core governmental functions, inseparable from the idea of government.
Provide services/supplies on payment, operate on commercial principles.
Defines how departments interact financially for services and supplies.
Executive Summary
Rule 124 of The General Financial Rules, 2017 outlines the principles for classifying government departments into ‘Service Departments’ and ‘Commercial Departments’ specifically for the purpose of inter-departmental payments. Service Departments perform core governmental functions, while Commercial Departments operate on commercial principles, providing services or supplies on a payment basis. This classification is crucial for determining how financial transactions between different government entities are managed.
In-Depth Analysis of the Rule
Introduction
Rule 124 establishes a fundamental framework for understanding financial interactions between different government departments. It categorizes departments based on their operational nature, which directly impacts their approach to inter-departmental payments.
Breakdown of the Rule
- Division into Two Types: Government departments are primarily divided into Service Departments and Commercial Departments.
- Service Departments:
- Core Functions: These departments are integral to the concept of government, performing functions like administration of justice, jails, police, education, medical services, public health, forest management, and defence.
- General Business Conduct: They also include departments essential for the general conduct of government business, such as survey, government printing, stationery, public works (buildings and roads), and central purchase organizations.
- Commercial Departments or Undertakings:
- Service/Supply Provision: These are established to render specific services or provide supplies on a payment basis.
- Commercial Principles: They operate with a focus on financial results, maintaining accounts based on commercial principles, and their functions are not inherently governmental.
Practical Example
If the Ministry of Defence (a Service Department) requires printing services from the Government Printing Department (also a Service Department, but one that might operate on a cost-recovery basis for specific services), Rule 124 guides how this transaction is classified. If the Government Printing Department were a Commercial Department, it would charge for its services based on commercial principles. This distinction ensures appropriate accounting and financial management across government entities.
Related Provisions
Understanding Rule 124 is enhanced by considering these related provisions:
- Rule 123 of The General Financial Rules 2017 Interdepartmental Adjustments
- Rule 125 of The General Financial Rules 2017 Period for Preferment of Claims
- Rule 126 of The General Financial Rules 2017 Procedure for Settlement of Interdepartmental Adjustments
Learning Aids
Mnemonics
- Service Departments Serve Society, Commercial Departments Charge for Commerce.
Process Flowchart
Multiple Choice Questions (MCQs)
1. According to Rule 124 of The General Financial Rules, 2017, for purposes of inter-departmental payments, how are Departments of a Government primarily divided?
- A) Administrative and Executive Departments
- B) Service and Commercial Departments
- C) Regulatory and Operational Departments
- D) Central and State Departments
Show Answer
Correct Answer: B) Service and Commercial Departments
2. Which of the following is an example of a “Service Department” as per Rule 124 of The General Financial Rules, 2017?
- A) A Public Sector Undertaking providing telecommunication services
- B) A Government Printing Department
- C) A state-owned electricity generation company
- D) A railway freight operation
Show Answer
Correct Answer: B) A Government Printing Department
3. As per Rule 124 of The General Financial Rules, 2017, what is a key characteristic of “Commercial Departments or Undertakings”?
- A) They perform functions inseparable from the idea of Government.
- B) They are established mainly for rendering services or providing supplies on payment.
- C) They are exempt from maintaining financial accounts.
- D) Their primary goal is social welfare without financial return.
Show Answer
Correct Answer: B) They are established mainly for rendering services or providing supplies on payment.
4. Under Rule 124 of The General Financial Rules, 2017, Departments of Administration of Justice, Jails, and Police fall under which category?
- A) Commercial Departments
- B) Autonomous Bodies
- C) Service Departments
- D) Public Sector Enterprises
Show Answer
Correct Answer: C) Service Departments
5. What principle guides “Commercial Departments or Undertakings” in their financial operations, according to Rule 124 of The General Financial Rules, 2017?
- A) Operating solely on grants-in-aid
- B) Working to a financial result determined through accounts maintained on commercial principles
- C) Prioritizing social objectives over financial viability
- D) Exclusively serving other Service Departments without charge
Show Answer
Correct Answer: B) Working to a financial result determined through accounts maintained on commercial principles
Frequently Asked Questions
What is the primary distinction between Service Departments and Commercial Departments under Rule 124 of The General Financial Rules, 2017?
The primary distinction lies in their functions and financial operating principles. Service Departments perform core governmental or essential administrative functions, often without direct charges for inter-departmental services. Commercial Departments, conversely, are established to provide specific services or supplies on a payment basis and operate on commercial accounting principles to achieve a financial result.
Why is the classification of departments important for inter-departmental payments as per Rule 124 of The General Financial Rules, 2017?
This classification is crucial because it dictates the financial rules and accounting principles applicable to transactions between government entities. It ensures that core governmental functions are supported appropriately, while commercial-like activities are managed with financial accountability and cost recovery in mind, preventing misallocation of funds and promoting efficiency.
Key Takeaways
- Rule 124 categorizes government departments into Service and Commercial types for inter-departmental payment purposes.
- Service Departments perform core governmental functions (e.g., Justice, Police, Defence) or essential administrative support (e.g., Printing, Public Works).
- Commercial Departments provide specific services/supplies on payment and operate on commercial financial principles.
- This division ensures appropriate financial management and accountability for transactions between different government entities.
Conclusion
Rule 124 of The General Financial Rules, 2017 provides a clear and essential framework for classifying government departments, which is foundational for managing inter-departmental financial transactions. By distinguishing between Service and Commercial Departments, the rule ensures that financial propriety, accountability, and efficiency are maintained across all government operations, aligning financial practices with the functional nature of each entity.