Rule 114 of The General Financial Rules 2017 Claims of State Governments Agency Functions
Original Rule Text
Visual Summary
State Governments claim extra costs for functions under Article 258.
Settlement governed by President’s directions issued periodically.
Functions entrusted to States under Article 258 of the Constitution.
Executive Summary
Rule 114 of the General Financial Rules, 2017, outlines the procedure for dealing with claims made by State Governments for the extra costs incurred while performing agency functions. These functions are those entrusted to them by the Central Government under Article 258 of the Constitution. The rule specifies that the settlement of such claims will be guided by directions issued periodically by the President of India.
In-Depth Analysis of the Rule
Rule 114 addresses a critical aspect of cooperative federalism in India, specifically the financial implications when the Union Government delegates its executive functions to State Governments. This delegation is enabled by Article 258 of the Constitution, which allows the President to entrust functions to a State Government, or to its officers, with the consent of the State Government.
Breakdown of the Rule:
- Scope of Claims: The rule specifically covers claims from State Governments for the “extra cost” incurred in performing “agency functions.” This implies that the routine costs of a State Government’s own functions are not covered, but rather the additional financial burden arising from undertaking tasks on behalf of the Central Government.
- Constitutional Basis: These agency functions are those “entrusted to them under Article 258 of the Constitution.” This constitutional provision is key, as it provides the legal framework for such delegation and subsequent financial adjustments.
- Settlement Authority: The claims “shall be dealt with and settled in accordance with such directions as may be issued by the President in this regard from time to time.” This centralizes the authority for setting the terms and conditions of settlement with the President, ensuring uniformity and adherence to national policy.
Practical Example:
Imagine the Central Government entrusts a State Government with the task of implementing a new national scheme for disaster management, which requires the State to deploy additional personnel, procure specialized equipment, and conduct extensive training. The State Government would incur “extra costs” beyond its regular budget for its own disaster management functions. Under Rule 114, the State Government can then submit a claim to the Central Government for these additional expenses. The President’s directions would then guide how these claims are processed, verified, and settled, ensuring that the State is appropriately reimbursed for its role as an agent of the Union.
Related Provisions
Understanding Rule 114 is enhanced by considering other related provisions in the General Financial Rules, 2017, and the Constitution:
- Rule 115 of The General Financial Rules, 2017: This rule further elaborates on the principles to be observed when dealing with claims preferred by State Governments under Clause (3) of Article 258 of the Constitution.
- Rule 116 of The General Financial Rules, 2017: This rule details the procedure for transactions arising in connection with agency functions entrusted to State Governments under Article 258.
Learning Aids
Mnemonics:
- “State Claims Agency Functions, President Directs Settlement” – Helps remember the key elements: State claims for agency functions, settled by Presidential directions.
Process Flowchart:
Multiple Choice Questions
1. What is the primary subject of Rule 114 of the General Financial Rules, 2017?
- A) Budget formulation procedures
- B) Claims of State Governments for agency functions
- C) Procurement of goods and services
- D) Management of public debt
Show Answer
Correct Answer: B) Claims of State Governments for agency functions
2. Under which Article of the Constitution are agency functions entrusted to State Governments, as per Rule 114 of the General Financial Rules, 2017?
- A) Article 266
- B) Article 283
- C) Article 258
- D) Article 112
Show Answer
Correct Answer: C) Article 258
3. Who is responsible for issuing directions for dealing with and settling claims under Rule 114 of the General Financial Rules, 2017?
- A) The Ministry of Finance
- B) The Comptroller and Auditor General
- C) The President
- D) The State Governments themselves
Show Answer
Correct Answer: C) The President
4. Rule 114 of the General Financial Rules, 2017, focuses on claims related to:
- A) Revenue collection targets
- B) Extra cost of agency functions
- C) Remission of revenue
- D) Capital expenditure projects
Show Answer
Correct Answer: B) Extra cost of agency functions
5. The directions for settling claims under Rule 114 of the General Financial Rules, 2017, are issued:
- A) Once annually
- B) From time to time
- C) Only at the start of a new financial year
- D) By mutual agreement between Central and State Governments
Show Answer
Correct Answer: B) From time to time
Frequently Asked Questions
What are “agency functions” as per Rule 114 of the General Financial Rules, 2017?
Agency functions refer to those executive functions of the Union Government that are entrusted to State Governments or their officers under Article 258 of the Constitution. State Governments perform these tasks on behalf of the Central Government.
How are claims for extra costs of agency functions settled under Rule 114 of the General Financial Rules, 2017?
Claims are dealt with and settled according to specific directions issued by the President of India from time to time, ensuring a standardized approach to reimbursement.
Does Rule 114 of the General Financial Rules, 2017, cover all costs incurred by State Governments?
No, it specifically covers “extra costs” incurred by State Governments for performing agency functions entrusted to them, implying costs beyond their normal operational expenses for their own functions.
Key Takeaways
- Rule 114 governs claims by State Governments for extra costs of agency functions.
- These functions are delegated under Article 258 of the Constitution.
- The President issues directions for the settlement of these claims.
- The rule ensures financial propriety and accountability in inter-governmental financial transactions.
Conclusion
Rule 114 of the General Financial Rules, 2017, is fundamental to maintaining financial harmony and accountability between the Central and State Governments when the latter undertake responsibilities on behalf of the former. By clearly stipulating that claims for extra costs of agency functions are to be settled as per Presidential directions, it provides a structured mechanism for inter-governmental financial adjustments, crucial for the smooth functioning of India’s federal system.