Rule 230 of The General Financial Rules 2017 Principles and Procedure for award of Grantsinaid

Original Rule Text

Rule230 (1) Principles and Procedure for award of Grants-in-aid.Any Institution or Organisation seeking Grants-in-aid from Government will be required to submit an application which includes all relevant information such as Articles of Association, bye-laws, audited statement of accounts, sources and pattern of income and expenditure etc. enabling the sanctioning authority to assess the suitability of the Institution or Organisation seeking Grant. The application should clearly spell out the need for seeking Grant and should be submitted in such form as may be prescribed by the sanctioning authority.The Institution or Organisation seekingGrants-in-aid should also certify that ithas not obtained or applied for grants forthe same purpose or activity from anyother Ministry or Department of theGovernment of India or StateGovernment.Rule 230 (2) In order to obviate duplication inGrants-in-aid, each Ministry orDepartment should maintain a list ofinstitutions or organisations along withdetails of amount and purpose of Grantsgiven to them. These details should alsobe made available on the website of theMinistry/Department.Rule 230 (3) Award of Grants should be consideredonly on the basis of viable and specificschemes drawn up in sufficient detail bythe institution or organisation. The budgetfor such schemes should disclose, interalia, the specific quantified and qualitativetargets likely to be attained against theoutlay. In the cases of the schemeswhere Grants are given as part of theexpenditure on reimbursement basis (i.e.the expenditure has already beenincurred on approved project/schemeand reimbursement from the Governmentin the form of Grant/Subsidy etc. is due)the same will be treated as the CentralFinancial Assistance (CFA) and noUtilization Certificate shall be required insuch cases of reimbursements.Rule 230 (4) Recurring Grant is defined as onewhich is released periodically to the sameorganization for the same purpose. Non-recurring Grant is one time release to anorganization for a special purpose (whichcould be released in installments). Everyorder sanctioning a Grant shall indicatewhether it is recurring or non-recurringand specify clearly the object for which itis being given and the general andspecial conditions, if any, attached to theGrant. In the case of non-recurringGrants for specified object, the order shallalso specify the time limit within which theGrant or each installment of it, is to bespent.Rule 230 (5) Central Autonomous Organisationswhich receive Grants should account forcapital and revenue expenditureseparately. The Government of India,Ministry of Finance has formulatedstandard formats for presentation of finalaccounts, for all Central AutonomousOrganisations. All Grant sanctioningauthorities should enforce the conditionof maintaining and presenting theirannual accounts in the standard formatson all Central AutonomousOrganisations.Rule 230 (6) The Grants sanctioning authoritiesshould not only take into account theinternally generated resources whileregulating the award of Grants but shouldconsider laying down targets for internalresources generation by the GranteeInstitutions or Organisations everyfinancial year, particularly where Grantsare given on recurring basis every year.Rule 230 (7) Unspent Balances: When recurringGrants-in-aid are sanctioned to the sameInstitution or Organisation for the samepurpose, the unspent balance of theprevious Grant should be taken intoaccount in sanctioning the subsequentGrant. For this purpose, the ProgrammeDivision of Ministries/Department shalltake help of PFMS Portal to know thebank balance of the recipients beforemaking each release. The instructions ofDepartment of Expenditure regarding theuse of PFMS Portal for Central SectorSchemes issued from time to time shallbe strictly followed by all Ministries/Departments. The principles of ‘just intime release’, should be applied forreleases in respect of all payments to theextent possible. The following broadprinciples shall be adhered to:(i) Cash balance at a time shouldpreferably not be more than 3months of requirements(ii) Funds should be released as peractual requirements and thatsanction may precede therelease of funds, though itsvalidity may be limited to thatfinancial year.Rule 230 (8) All interests or other earnings againstGrants in aid or advances (other thanreimbursement) released to any Granteeinstitution should be mandatorily remittedto the Consolidated Fund of Indiaimmediately after finalisation of theaccounts. Such advances should not beallowed to be adjusted against futurereleases.Rule 230 (9) In making Grants to Non-Governmentor Quasi-Government Institutions orOrganisations, a condition should be laiddown that, assets acquired wholly orsubstantially out of Government Grants,except those declared as obsolete andunserviceable or condemned inaccordance with the procedure laid downin the General Financial Rules, shall notbe disposed of without obtaining the priorapproval of the authority whichsanctioned the Grants-in-aid.Rule 230 (10) The sanctioning authority mayprescribe conditions regarding quantumand periodicity for release of Grants-in-aid in installments in consultation with theFinancial Adviser. However, the releaseof the last installment of the Annual Grantmust be conditional upon the GranteeInstitutions providing reasonableevidence of proper utilization ofinstallments released earlier. In the caseswhere Central Financial Assistance(CFA) has been sanctioned, the grant willbe released in one installment upon theGrantee Institutions/ Organisationproviding complete evidence of achievingthe specified objectives and expenditureincurred supported by Audited Statementof Expenditure. In these cases, thegrantee institutions will not be required tosubmit Utilization Certificates.Rule 230 (11) In order to finalize the BudgetaryEstimates of Grants in aid to the GranteeInstitutions, the Ministry or Departmentshould impress upon Institution orOrganisation desiring Grants fromGovernment, to submit their requirementwith supporting details by the end ofSeptember in the year preceding the yearfor which the Grants-in-aid is sought. TheMinistry or Department should finalizetheir examination of the requests with theutmost expedition and make thenecessary Budget provision where it isdecided to sanction Grants. TheInstitution or Organisation should beinformed of the result of their requests byApril of the succeeding year.Rule 230 (12)(i) All Grantee Institutions orOrganisations which receivemore than fifty percent of theirrecurring expenditure in the formof Grants-in- aid, shouldordinarily formulate terms andconditions of service of theiremployees which are, by andlarge, not higher than thoseapplicable to similar categories ofemployees in CentralGovernment. In exceptionalcases relaxation may be made inconsideration with the Ministry ofFinance.(ii) Grantee Institutions orOrganisations should beencouraged to take advantage ofthe pension or gratuity schemesor Group Insurance Schemes orhouse buildings loans or vehicleloans schemes etc. available inthe market for employees insteadof undertaking liability on theirown or Government account.Rule 230 (13) The sanctioning authority, whilelaying down the pattern of assistance,may decide whether the ownership ofbuildings constructed with Grants-in-aidmay vest with Government or theGrantee Institution or Organisation.Where the ownership is vested in theGovernment, the Grantee Institution orOrganisation may be allowed to occupythe building as a lessee. In such casessuitable record of details of location, cost,name of lessee and terms & conditions oflease must be maintained in the recordsof the granting Ministry or Department. Inall cases of buildings constructed withGrants-in-aid, responsibility ofmaintenance of such buildings shall be ofthe Grantee Institution or Organisation.Rule 230 (14) Any other special terms andconditions or procedures for transactionof business as Government may desire tobe followed by the Grantee Institution orOrganisation, shall be got incorporated inthe Articles of Association or bye-laws ofthe Institution or Organisation concernedbefore release of Grants-in-aid.Rule 230 (15) Grants-in-aid may be sanctioned tomeet the bonafide expenditure incurrednot earlier than two years prior to the dateof issue of the sanction.Rule 230 (16) The stipulation in regard to refund ofthe un-utilised amount of Grant-in-aidwith interest thereon should be broughtout clearly in the letter sanctioning theGrant as well as in the bond so requiredto be executed.Rule 230 (17) (i) As a precondition to the sanctionof Grants-in-aid to the agencies where:(a) the recipient body employsmore than twenty persons ona regular basis and at leastfifty per cent of its recurringexpenditure is met fromGrants-in-aid from CentralGovernment; and(b) the body is a registeredsociety or a co-operativeinstitution and is in receipt of ageneral purpose annualGrants-in-aid of Rupiestwenty lakhs and above fromthe Consolidated Fund ofIndia;(c) the Grant sanctioningauthority should ensure that asuitable clause is invariablyincluded in the terms andconditions under which theGrants-in-aid are given, toprovide for reservation forScheduled Castes andScheduled Tribes or OBC inposts and services undersuch organizations oragencies. The relativeprovision may be on thefollowing lines: -“… … … … … (Name ofInstitution or Organizationetc.) agrees to makereservations for ScheduledCastes and Scheduled Tribesor OBC in the posts orservices under its control onthe lines indicated by theGovernment of India”.(ii) While sanctioning Grants-in-aid to Institutions orOrganisations referred to in(a) above, the Grantsanctioning authority shouldkeep in view the progressmade by such Institutions orOrganisations in employingScheduled Castes andScheduled Tribes or OBCcandidates in their services.

Visual Summary

Application & Scrutiny

Institutions must submit detailed applications, including financial statements and articles of association, certifying no duplicate grant applications. Ministries maintain lists to prevent duplication.

Grant Conditions & Utilization

Grants are for viable, specific schemes with clear targets. They can be recurring or non-recurring, with specific conditions and time limits for utilization. Reimbursements for Central Financial Assistance (CFA) do not require UCs.

Financial Management & Oversight

Grantee organizations must account for capital/revenue separately, generate internal resources, and remit interest earnings to the Consolidated Fund. Asset disposal requires prior approval, and staff terms should align with Central Government norms. Reservations for SC/ST/OBC are mandated for certain institutions.

Executive Summary

Rule 230 of The General Financial Rules, 2017, outlines the comprehensive principles and procedures for awarding grants-in-aid to various institutions and organizations. It mandates a rigorous application process, emphasizing scheme viability, transparent financial management, and accountability. The rule distinguishes between recurring and non-recurring grants, sets conditions for fund release, and requires adherence to specific accounting and reporting standards, including the use of the PFMS portal and provisions for social equity like reservations.

In-Depth Analysis of the Rule

Introduction: Rule 230 of The General Financial Rules, 2017, serves as a foundational guide for government ministries and departments in the judicious allocation of grants-in-aid. It aims to ensure transparency, accountability, and effective utilization of public funds by recipient institutions and organizations.

Breakdown of the Rule:

Application and Assessment (Rule 230(1)-(2)): Institutions seeking grants must submit comprehensive applications detailing their legal structure, financial health, and proposed activities. A crucial requirement is a certification that no other government entity has been approached for the same grant, preventing duplication. Ministries are mandated to maintain and publish lists of grants awarded to enhance transparency.
Scheme Viability and Grant Types (Rule 230(3)-(4)): Grants are to be awarded only for viable and specific schemes with clearly defined, measurable targets. The rule differentiates between ‘recurring’ grants (periodic for the same purpose) and ‘non-recurring’ grants (one-time for a special purpose, potentially in installments). Each sanction order must specify the grant type, object, and conditions, including time limits for non-recurring grants. Notably, Central Financial Assistance (CFA) on a reimbursement basis does not require a Utilization Certificate.
Financial Accounting and Resource Generation (Rule 230(5)-(8)): Central Autonomous Organisations receiving grants must segregate capital and revenue expenditures and use standard accounting formats. Sanctioning authorities are encouraged to set targets for internal resource generation by grantees, reducing dependence on government funds. The rule emphasizes ‘just-in-time release’ of funds, considering previous unspent balances and utilizing the PFMS portal for monitoring. All interest or earnings from grants (except reimbursements) must be mandatorily remitted to the Consolidated Fund of India.
Asset Management and Installment Release (Rule 230(9)-(10)): Assets acquired substantially with government grants cannot be disposed of without prior approval. Grant releases, especially the final installment, are contingent on evidence of proper utilization of earlier funds. For CFA, the grant is released in one installment upon achieving objectives and providing audited expenditure statements, without requiring Utilization Certificates.
Budgetary Estimates and Staff Conditions (Rule 230(11)-(12)): Grantee institutions are required to submit their grant requirements by September for the next financial year’s budgetary estimates. Institutions receiving over 50% of their recurring expenditure as grants should generally align their employee service terms with Central Government norms, with exceptions requiring Ministry of Finance consultation. They are also encouraged to use market-available schemes for employee benefits.
Asset Ownership and Special Conditions (Rule 230(13)-(16)): The sanctioning authority determines whether ownership of grant-funded buildings vests with the Government or the grantee. Special terms and conditions desired by the Government must be incorporated into the grantee’s legal documents (Articles of Association/bye-laws). Grants can cover bonafide expenditure incurred up to two years prior to sanction. A clear stipulation for refunding unutilized amounts with interest must be included in the sanction letter and bond.
Social Equity (Rule 230(17)): A significant provision mandates reservations for Scheduled Castes, Scheduled Tribes, or Other Backward Classes in posts and services of grantee agencies that meet specific criteria (employing >20 persons, >50% recurring expenditure from Central Government grants, registered society/co-operative receiving >Rs. 20 lakhs annual general purpose grant). The sanctioning authority must consider the progress made by such institutions in implementing these reservations.

Practical Example: Imagine a non-profit organization, “Tech for All,” applies for a non-recurring grant from the Ministry of Electronics and Information Technology to set up a community digital literacy center. Under Rule 230, “Tech for All” must submit a detailed proposal outlining the center’s objectives, budget, and expected outcomes (e.g., number of individuals trained, digital skills acquired). The Ministry would assess the scheme’s viability, ensure “Tech for All” hasn’t sought duplicate funding, and, if approved, sanction the grant with specific conditions, including a timeline for project completion and submission of an Audited Statement of Expenditure. If the grant is released in installments, subsequent releases would depend on evidence of proper utilization of previous funds. The Ministry would also ensure that “Tech for All” adheres to accounting standards and, if applicable, reservation policies for its staff.

Related Provisions

This rule is closely related to:

Rule 228 of The General Financial Rules 2017 Grantsinaid Eligibility: Defines who can receive grants-in-aid.
Rule 229 of The General Financial Rules 2017 Autonomous Organisations Principles: Outlines general principles for setting up and managing autonomous organizations, often recipients of grants.
Rule 231 of The General Financial Rules 2017 Grantsinaid to Voluntary Organisations: Details specific conditions for grants to voluntary organizations.

Learning Aids

Mnemonics

G.A.S.C.A.R.E. for understanding Rule 230’s core aspects:
- Grants: Application & Eligibility
- Are: Assessment & Avoid Duplication
- Scheme-based: Viable Schemes & Targets
- Conditional: Recurring/Non-recurring & Specific Terms
- Accounted: Capital/Revenue Segregation & Interest Remittance
- Reviewed: Unspent Balances & PFMS
- Equitable: Staff Terms & Reservations

Process Flowchart

Multiple Choice Questions

1. Which of the following is NOT a mandatory requirement for an Institution seeking Grants-in-aid under Rule 230 of the General Financial Rules, 2017?

A) Submission of Articles of Association
B) Audited statement of accounts
C) Certification of not applying for grants for the same purpose from other government entities
D) A detailed marketing plan for the scheme’s promotion

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Correct Answer: D) A detailed marketing plan for the scheme’s promotion

2. According to Rule 230(4) of the General Financial Rules, 2017, what is a key characteristic of a ‘non-recurring Grant’?

A) It is released periodically for the same purpose.
B) It is a one-time release for a special purpose.
C) It does not require any specific conditions.
D) It is always adjusted against future releases.

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Correct Answer: B) It is a one-time release for a special purpose.

3. Under Rule 230(8) of the General Financial Rules, 2017, what must be done with interest or other earnings against Grants-in-aid (other than reimbursement)?

A) They can be retained by the Grantee institution for future use.
B) They must be mandatorily remitted to the Consolidated Fund of India.
C) They can be adjusted against future grant releases.
D) They are to be used for staff welfare activities.

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Correct Answer: B) They must be mandatorily remitted to the Consolidated Fund of India.

4. Rule 230(17) of the General Financial Rules, 2017, mandates reservations for SC/ST/OBC in grantee agencies under specific conditions. Which of the following is one of these conditions?

A) The recipient body employs less than ten persons.
B) Less than twenty-five percent of its recurring expenditure is met from Central Government grants.
C) The body is a registered society or co-operative institution.
D) It receives a general purpose annual grant of less than Rupees ten lakhs.

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Correct Answer: C) The body is a registered society or co-operative institution.

5. What principle should be applied for releases of recurring Grants-in-aid, as per Rule 230(7) of the General Financial Rules, 2017?

A) Release funds in a single lump sum at the start of the financial year.
B) Release funds only after a full audit of the previous year’s utilization.
C) Apply the principles of ‘just in time release’ based on actual requirements.
D) Maintain a cash balance of at least six months of requirements.

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Correct Answer: C) Apply the principles of ‘just in time release’ based on actual requirements.