Rule 22 of the General Financial Rules 2017 Expenditure from Public Funds

Rule 22 of the General Financial Rules 2017 Expenditure from Public Funds

Visual Summary

Executive Summary

Rule 22 is a fundamental principle of government financial discipline. It states that no government authority can spend, promise to spend, invest, or deposit any money from public funds unless a designated ‘competent authority’ has officially approved (sanctioned) it. This rule ensures that every financial transaction involving public money is properly authorized, preventing unauthorized use and maintaining accountability.

In-Depth Analysis of the Rule

Introduction
Rule 22 of the General Financial Rules, 2017, serves as the gatekeeper for all government expenditure. It establishes a clear and non-negotiable prerequisite for any financial outflow from the government’s coffers: prior sanction from a competent authority. This rule is crucial for ensuring that public money is spent in a controlled, accountable, and authorized manner.

Breakdown of the Rule
The rule can be broken down into a few key components:

• The Prohibition: The rule starts with a clear prohibition: “No authority may incur any expenditure or enter into any liability involving expenditure or transfer of moneys for investment or deposit…”. This is a wide-ranging ban that covers several actions:
  • Incurring Expenditure: Directly spending money.
  • Entering into Liability: Committing the government to a future payment, such as signing a contract for services. This is important because it prevents authorities from creating financial obligations without approval, even if no money is paid immediately.
  • Transfer for Investment or Deposit: Moving money from public accounts for investment or deposit purposes.
• The Source of Funds: The rule specifies that this prohibition applies to all “public funds,” which are explicitly defined as the Consolidated Fund, the Contingency Fund, and the Public Accounts. In simple terms:
  • Consolidated Fund: The main bank account of the government where all revenues are deposited and from which all expenditure is made.
  • Contingency Fund: An emergency fund used for unforeseen expenses, pending approval from Parliament.
  • Public Accounts: Funds held by the government in trust, such as provident funds of employees.
• The Only Exception: The entire prohibition is lifted by one condition: “…unless the same has been sanctioned by a competent authority.” This is the core of the rule. A ‘sanction’ is a formal approval, and a ‘competent authority’ is an officer or body that has been officially delegated the financial power to grant that approval.

Practical Example
Imagine the head of a government research institute needs to purchase a new high-tech microscope costing ₹50 lakhs. According to Rule 22, they cannot simply place an order with a supplier. They must first prepare a proposal and seek a ‘sanction’ from the ‘competent authority’. In this case, the competent authority might be the Secretary of the administrative Ministry, as defined in the Delegation of Financial Powers Rules. Only after receiving the formal sanction order can the institute’s head proceed with the procurement process and ‘incur the expenditure’. If they signed a purchase agreement before getting the sanction, they would have violated the rule by ‘entering into a liability’.

Conclusion
Rule 22 is a cornerstone of fiscal prudence in government. By mandating that no expenditure can occur without a valid sanction from a competent authority, it creates a system of checks and balances. This ensures that public funds are used only for approved purposes and that there is a clear audit trail for every financial transaction, thereby upholding the principles of accountability and transparency in public financial management.

Related Provisions

Rule 22 is a foundational rule that works in conjunction with several other provisions to ensure a robust system of financial control. Understanding these related rules provides a more complete picture of how government expenditure is managed:

• Rule 21: Standards of financial propriety – While Rule 22 provides the procedural requirement for a sanction, Rule 21 lays down the ethical principles for spending public money, such as exercising the same vigilance as a person of ordinary prudence would with their own money.
• Rule 23: Delegation of Financial Powers – This rule explains how the ‘competent authorities’ mentioned in Rule 22 get their power. It details the system by which financial powers are delegated from the highest levels of government to various subordinate authorities.
• Rule 25: Provision of funds for sanction – This rule complements Rule 22 by stating that any sanction for expenditure must indicate that funds are available in the budget to meet it. A sanction is meaningless if there is no money allocated for the purpose.

Learning Aids

Mnemonics

• SAFE: Remember that spending public money is only Safe with Authority For Expenditure. This highlights the need for a sanction before any spending.
• A-OK: Before spending, you need the Authority’s OK. This simple phrase reinforces the core message of getting approval first.

Mindmap

Multiple Choice Questions (MCQs)

Frequently Asked Questions

Key Takeaways

• Always obtain a formal ‘sanction’ (approval) before spending any government money.
• This rule applies not just to immediate spending, but also to creating future financial commitments (liabilities).
• The approval must come from an officer who is officially designated as a ‘competent authority’ for that specific type of expenditure.
• The rule covers all forms of public funds, ensuring comprehensive financial control.