Rule 238 of The General Financial Rules 2017 Utilization Certificates

Rule 238 of The General Financial Rules 2017 Utilization Certificates

Original Rule Text

Rule 238 (1) Utilization Certificates. In respect of non-recurring Grants to an Institution or Organisation, a certificate of actual utilization of the Grants received for the purpose for which it was sanctioned in Form GFR 12-A, should be insisted upon in the order sanctioning the Grants-in-aid. The Utilization Certificate in respect of Grants referred to in Rule230 (10) should also disclose whether the specified, quantified and qualitative targets that should have been reached against the amount utilised, were in fact reached, and if not, the reasons therefor. They should contain an output-based performance assessment instead of input-based performance assessment. The Utilization Certificate should be submitted within twelve months of the closure of the financial year by the Institution or Organisation concerned. Receipt of such certificate shall be scrutinised by the Ministry or Department concerned. Where such certificate is not received from the Grantee within the prescribed time, the Ministry or Department will be at liberty to blacklist such Institution or Organisation from any future grant, subsidy or other type of financial support from the Government.Rule 238 (2) In respect of recurring Grants, Ministry or Department concerned should release any amount sanctioned for the subsequent financial year only after Utilization Certificate on provisional basis in respect of Grants of preceding financial year is submitted. Release of Grants-in-aid in excess of seventy five per cent of the total amount sanctioned for the subsequent financial year shall be done only after utilisation certificate and the annual audited statement relating to Grants-in-aid released in the preceding year are submitted to the satisfaction of the Ministry/Department concerned. Reports submitted by the Internal Audit parties of the Ministry or Department and Inspection Reports received from Indian Audit and Accounts Department and the performance reports if any received for the third and fourth quarter in the year should also be looked into while sanctioning further Grants.[Note: As a special measure Scientific Departments are permitted to release subsequent Grants in aid on receipt of UCs confirming utilization of 75% of the total value of previous Grant(s) from a Grantee Body.]Rule 238 (3) Utilization certificates need not be furnished in cases where the Grants-in-aid / CFA are being made as reimbursement of expenditure already incurred on the basis of duly audited accounts. In such cases the sanction letters should specify clearly that the Utilization Certificates will not be necessary.Rule 238 (4) In respect of Central Autonomous Organisations, the Utilization Certificate shall disclose separately the annual expenditure incurred and the funds given to suppliers of stores and assets, to construction agencies, to staff for (House Building and Purchase of conveyance) which do not constitute expenditure at that stage but have been met out of Grants and are pending adjustments. These shall be treated as unutilized Grants allowed to be carried forward. While recording the Grants in the subsequent year the amount carried forward shall be taken into account.Rule 238 (5) In the case of Private and Voluntary Organizations receiving recurring Grants-in-aid from Rupees ten lakhs to less than Rupees fifty lakhs, all the Ministries or Departments of Government of India should include in their Annual Report a statement showing the quantum of funds provided to each of those organizations and the purpose for which they were utilized, for the information of Parliament. The Annual Reports and accounts of Private and Voluntary Organizations receiving recurring Grants-in-aid to the tune of Rupees fifty lakhs and above should be laid on the Table of the House within nine months of the close of the succeeding financial year of the Grantee Organisations.Rule 238 (6) In the case of organizations receiving one-time assistance or non-recurring Grants as Grants-in-aid from Rupees ten lakhs to Rupees five crore, all Ministries or Departments of Government of India should include in their Annual Reports, statements showing the quantum of funds provided to each of these organizations and the purpose for which the funds were utilized, for the information of Parliament. The Annual Reports and Audited Accounts of Private and Voluntary Organizations or societies registered under the Registration of Societies Act, 1860, receiving one-time assistance/non-recurring Grants of Rupees Five Crore and above should also be laid on the Table of the House, within nine months of the close of the succeeding financial year of the grantee Organisations. [Note: Increase in monetary ceiling in laying of Annual Reports and Audited Accounts of various organisations receiving funds from Govt. of India].

Visual Summary

Purpose of UCs

Ensure grants are used for sanctioned objectives.

Submission Deadline

Non-recurring UCs due within twelve months.

Consequences

Non-compliance may lead to blacklisting.

Executive Summary

Rule 238 of The General Financial Rules, 2017, outlines the critical requirements for Utilization Certificates (UCs) to ensure proper accountability and transparent use of government grants. It mandates UCs for non-recurring grants within twelve months, specifies conditions for recurring grants, and details reporting obligations for various organizations. The rule also highlights the consequences of non-submission, such as blacklisting, and provides exemptions for reimbursement-based grants, thereby strengthening financial oversight and promoting efficient resource allocation.

In-Depth Analysis of the Rule

Introduction: Utilization Certificates (UCs) serve as a cornerstone of financial accountability in government grant management. Rule 238 meticulously details the procedures and expectations surrounding these certificates, ensuring that public funds are expended for their intended purposes and that grantees are held responsible for their financial conduct.

Breakdown of the Rule:

  • Rule 238(1) – Non-recurring Grants: This sub-rule mandates the submission of a Utilization Certificate (Form GFR 12-A) for all non-recurring grants. The UC must provide an output-based performance assessment, detailing whether specified targets were met. It must be submitted within twelve months of the financial year’s closure. Failure to submit the UC within this timeframe can lead to the blacklisting of the institution or organization from future government financial support.
  • Rule 238(2) – Recurring Grants: For recurring grants, a provisional UC for the preceding financial year is required before any amount for the subsequent financial year is released. For releases exceeding seventy-five percent of the total sanctioned amount, a full utilization certificate and annual audited statement from the preceding year are necessary. Internal audit reports and inspection reports are also considered during this process.
  • Rule 238(3) – Exemptions: UCs are not required for grants-in-aid or Central Financial Assistance (CFA) that are provided as reimbursement for expenditure already incurred and duly audited. Sanction letters for such grants must explicitly state this exemption.
  • Rule 238(4) – Central Autonomous Organisations: UCs for these organizations must separately disclose annual expenditure incurred and funds provided to suppliers, construction agencies, or staff (e.g., for house building or conveyance) that are pending adjustments. These pending amounts are treated as unutilized grants carried forward.
  • Rule 238(5) & (6) – Private and Voluntary Organizations: These sub-rules outline reporting requirements for private and voluntary organizations receiving recurring or non-recurring grants. Depending on the grant amount, Ministries/Departments must include statements in their Annual Reports for Parliament, detailing funds provided and their utilization. For larger grants (recurring ≥ ₹50 lakhs, non-recurring ≥ ₹5 crore), the organizations’ Annual Reports and Audited Accounts must be laid before Parliament within nine months of the financial year’s close.

Practical Example: Imagine the Ministry of Health sanctions a non-recurring grant of ₹2 crore to a research institution for a specific project to develop a new vaccine. According to Rule 238(1), the institution must submit a Utilization Certificate (Form GFR 12-A) within twelve months of the financial year’s end, detailing how the ₹2 crore was spent, what research milestones were achieved (output-based assessment), and if the project targets were met. If the institution fails to submit this UC or if the UC reveals significant discrepancies, the Ministry has the authority to blacklist the institution, preventing it from receiving future grants for other projects.

Related Provisions

Understanding Rule 238 is enhanced by examining its connections to other rules within the General Financial Rules, 2017:

Learning Aids

Mnemonics
  • Utilization Certificates Ensure Proper Accountability, Timely Submission, and Prevent Blacklisting.
Process Flowchart
Grant SanctionedGrantee Utilizes FundsSubmit UC (12 months)UCSatisfactory?YesProcess CompleteNoBlacklist GranteeRelease SubsequentGrant

Multiple Choice Questions

1. According to Rule 238 (1) of the General Financial Rules, 2017, what is the deadline for submitting Utilization Certificates for non-recurring grants?

  • A) Six months
  • B) Nine months
  • C) Twelve months
  • D) Twenty-four months
Show Answer

Correct Answer: C) Twelve months

2. Under Rule 238 (2) of the General Financial Rules, 2017, what percentage of the total sanctioned amount for recurring grants requires both a utilization certificate and an annual audited statement before release for the subsequent financial year?

  • A) Fifty percent
  • B) Seventy-five percent
  • C) Ninety percent
  • D) One hundred percent
Show Answer

Correct Answer: B) Seventy-five percent

3. As per Rule 238 (3) of the General Financial Rules, 2017, in which scenario are Utilization Certificates NOT required?

  • A) Non-recurring grants for capital assets
  • B) Recurring grants for salaries
  • C) Grants-in-aid made as reimbursement of expenditure already incurred
  • D) Grants to private voluntary organizations
Show Answer

Correct Answer: C) Grants-in-aid made as reimbursement of expenditure already incurred

4. What is a potential consequence for a Grantee Institution or Organisation that fails to submit a Utilization Certificate within the prescribed time, according to Rule 238 (1) of the General Financial Rules, 2017?

  • A) A penalty fine
  • B) A reduction in the next grant by 10%
  • C) Blacklisting from future financial support
  • D) Mandatory audit by the Comptroller and Auditor General
Show Answer

Correct Answer: C) Blacklisting from future financial support

5. Rule 238 (4) of the General Financial Rules, 2017, states that for Central Autonomous Organisations, the Utilization Certificate should disclose what separately?

  • A) Only capital expenditure
  • B) Only revenue expenditure
  • C) Annual expenditure incurred and funds given to suppliers/agencies/staff pending adjustments
  • D) Only unspent balances from previous years
Show Answer

Correct Answer: C) Annual expenditure incurred and funds given to suppliers/agencies/staff pending adjustments

Frequently Asked Questions

What is the primary purpose of Utilization Certificates under Rule 238 of the General Financial Rules, 2017?

The primary purpose of Utilization Certificates (UCs) is to ensure that grants-in-aid received by institutions or organizations from the government are actually utilized for the specific purpose for which they were sanctioned, promoting financial accountability and transparency.

Are there any exceptions to the requirement of submitting Utilization Certificates as per Rule 238 of the General Financial Rules, 2017?

Yes, Rule 238 (3) specifies that Utilization Certificates are not required in cases where grants-in-aid or Central Financial Assistance (CFA) are provided as reimbursement for expenditure that has already been incurred and duly audited. The sanction letters for such grants must explicitly state this exemption.

What happens if a grantee fails to submit a Utilization Certificate on time under Rule 238 of the General Financial Rules, 2017?

If a grantee institution or organization fails to submit the Utilization Certificate within the prescribed time (typically twelve months for non-recurring grants), the Ministry or Department concerned may blacklist them from receiving any future grants, subsidies, or other financial support from the Government.

Key Takeaways

  • Utilization Certificates (UCs) are mandatory for non-recurring grants, requiring an output-based performance assessment and submission within twelve months of the financial year’s closure.
  • For recurring grants, provisional UCs are needed for subsequent year’s releases, with full UCs and audited statements required for releases exceeding seventy-five percent of the sanctioned amount.
  • Failure to submit UCs on time can lead to blacklisting from future government financial support.
  • UCs are not required for grants provided as reimbursement for already incurred and audited expenditure.

Conclusion

Rule 238 of The General Financial Rules, 2017, is indispensable for maintaining fiscal discipline and accountability in the allocation and utilization of government grants. By clearly defining the requirements for Utilization Certificates, it ensures that public funds are not only spent but also contribute effectively to stated objectives, fostering trust and efficiency in financial governance.

Related posts:

  1. Rule 256 of The General Financial Rules 2017 Utilization Certificate Reports Statements
  2. Rule 242 of The General Financial Rules 2017 Performance Parameters and Reports
  3. Rule 230 of The General Financial Rules 2017 Principles and Procedure for award of Grantsinaid
  4. Rule 240 of The General Financial Rules 2017 State Government Utilization Certificate for Local Body Expenditure