Rule 121 of The General Financial Rules 2017 Payments to Outside Body or Fund Through Grant in Aid
Original Rule Text
Visual Summary
Relief for payments to outside bodies is primarily via grant-in-aid.
Applies to payments for services rendered or supplies made.
Relief is not typically provided through remission of dues.
Executive Summary
Rule 121 of The General Financial Rules, 2017, mandates that any financial relief provided for payments related to services rendered or supplies made to an external body or fund should primarily be channeled through a grant-in-aid. This rule explicitly states that such relief should ordinarily not take the form of a remission of dues. It establishes a clear preference for a transparent, accountable mechanism of financial assistance when dealing with external entities.
In-Depth Analysis of the Rule
Rule 121 provides a fundamental principle for how the government extends financial relief to external bodies or funds. It emphasizes the use of grants-in-aid as the standard method, ensuring a structured and auditable approach to financial support.
Breakdown of the Rule:
- Grant-in-Aid as the Primary Method: The core of Rule 121 is the directive that any financial relief for payments to an outside body or fund, whether for services or supplies, should “ordinarily be given through a grant-in-aid.” This establishes a clear preference for this mechanism.
- Scope of Application: The rule specifically applies to “payment for services rendered or supplies made.” This indicates its relevance in scenarios where the government is compensating an external entity for work done or goods provided.
- Exclusion of Remission of Dues: Crucially, the rule states that such relief should be given “rather than by remission of dues.” This explicitly discourages the practice of simply waiving amounts owed to the government by these external bodies, promoting a more formal and transparent grant-based system.
Practical Example:
Imagine a government department contracts a non-profit organization to conduct a public awareness campaign. If, due to unforeseen circumstances, the department decides to provide financial relief to the organization for the services rendered, Rule 121 dictates that this relief should be provided as a grant-in-aid. The department would process a formal grant, outlining the terms and conditions, rather than simply reducing the amount the non-profit owes to the government (e.g., if there were any outstanding penalties or fees).
Related Provisions
Understanding Rule 121 is enhanced by considering other rules that govern financial management and grants:
- Rule 18 of The General Financial Rules 2017 Remission of Revenue: This rule outlines the conditions under which claims to revenue can be remitted or abandoned, providing a contrast to the grant-in-aid mechanism of Rule 121.
- Rule 120 of The General Financial Rules 2017 Recoveries of Expenditure for Services Rendered as an Agent: Details how recoveries for services rendered as an agent are handled, which are taken as a reduction of expenditure, differing from the grant-in-aid approach.
- Rule 228 of The General Financial Rules 2017 Grants in Aid: Provides the general principles for sanctioning grants-in-aid, which is the preferred mechanism under Rule 121.
Learning Aids
Mnemonics:
- G.R.A.N.T.S. – Grant-in-aid Rather Always Not Through Subtraction (remission).
Process Flowchart:
Multiple Choice Questions
1. According to Rule 121 of the General Financial Rules, 2017, how should financial relief for payments to an outside body or fund ordinarily be given?
- A) By direct cash transfer
- B) Through a grant-in-aid
- C) By remission of dues
- D) As a loan with concessional interest
Show Answer
Correct Answer: B) Through a grant-in-aid
2. Rule 121 of the General Financial Rules, 2017, applies to financial relief for which of the following?
- A) Capital expenditures only
- B) Recurring expenditures only
- C) Payments for services rendered or supplies made
- D) Tax exemptions
Show Answer
Correct Answer: C) Payments for services rendered or supplies made
3. What mechanism does Rule 121 of the General Financial Rules, 2017, explicitly state should NOT ordinarily be used for providing financial relief to outside bodies?
- A) Subsidies
- B) Grants
- C) Remission of dues
- D) Direct budgetary allocations
Show Answer
Correct Answer: C) Remission of dues
4. The primary purpose of Rule 121 of the General Financial Rules, 2017, is to ensure:
- A) Maximum profit for the government
- B) Simplified accounting procedures
- C) A structured and transparent approach to financial assistance to external entities
- D) Reduction in overall government expenditure
Show Answer
Correct Answer: C) A structured and transparent approach to financial assistance to external entities
5. If a government department wishes to provide financial support to a non-governmental organization for a project, Rule 121 of the General Financial Rules, 2017, suggests the use of:
- A) A direct loan
- B) A tax rebate
- C) A grant-in-aid
- D) A waiver of outstanding debts
Show Answer
Correct Answer: C) A grant-in-aid
Frequently Asked Questions
Q1: What is the primary method for providing financial relief to outside bodies under Rule 121 of The General Financial Rules, 2017?
A1: The primary method for providing financial relief to outside bodies or funds for services rendered or supplies made is through a grant-in-aid.
Q2: Does Rule 121 of The General Financial Rules, 2017, allow for remission of dues as a form of financial relief?
A2: No, Rule 121 explicitly states that relief should ordinarily be given through a grant-in-aid rather than by remission of dues.
Q3: What types of payments are covered by Rule 121 of The General Financial Rules, 2017?
A3: The rule covers payments for services rendered or supplies made to any outside body or fund.
Key Takeaways
- Rule 121 mandates that financial relief to outside bodies for services or supplies should primarily be through grants-in-aid.
- It explicitly discourages the use of remission of dues as a method for providing such relief.
- The rule promotes transparency and structured financial assistance mechanisms when dealing with external entities.
Conclusion
Rule 121 of The General Financial Rules, 2017, is a concise yet impactful provision that streamlines the process of providing financial relief to external organizations. By prioritizing grants-in-aid over remission of dues, it reinforces principles of good governance, accountability, and fiscal transparency in government dealings with outside bodies and funds.